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Informist, Monday, Oct. 28, 2024

By Jahanvi Kothari

MUMBAI – The business environment in the September quarter was impacted by a delay in customers' decision-making, Tata Technologies Ltd. said Monday in a post-earnings analyst conference call. The delay in decision-making was on account of customers awaiting the outcome of the US presidential elections next month, and the regulatory environment in Europe, the management said. 

As both presidential candidates in the US election are seen favouring different energy policies, clients are awaiting some clarity. In Europe, original equipment manufacturers are facing competition from the Chinese players in the electric vehicle space, which has continued to build over the last 12 months, the company said. European clients are expecting a slowdown, particularly in the automotive market affected by the "chip threat" from China, Tata Technologies' management said. In the short term, the company expects tapering of demand.

The company is anticipating some headwinds in the next six to nine months but expects things to turn around from Jan-Mar. The company said a strong orderbook and a good pipeline would help it perform better in the second half of the current financial year. Tata Technologies expects the EV adoption rates to increase in the long term after it gets through the short-term challenges.

The automotive and engineering, research and development services firm expects the top line to be affected by the festivals and holiday season. The operating margin could also be impacted in the next quarter owing to the company's decision to roll out merit increases in October, the management said. However, it expects the margin to recover in Jan-Mar.

The company's 50-50 joint venture with BMW group, BMW TechWorks India, is aimed at developing automotive software and train information technology professionals. Answering a question asking for more clarity on the deal, the company said it was constrained by confidentiality agreements, but it is bullish on the deal. For the investments, the company answered by saying it has invested in the transfer of resources, and in the setting up of infrastructure in Pune, Bengaluru, and Chennai, which it expects to be recovered in the short-term. Looking forward, the company said it would focus on leveraging offshore revenues for better utilisation.

The company Monday announced a collaboration in the aerospace vertical with Tata Group-owned Air India. Under this collaboration, Tata Technologies would help Air India modify and upgrade the interiors of its aircraft to meet customer needs, the company said in an investor presentation. The company announced its results for the September quarter post market hours.

On Monday, the shares of Tata Technologies closed at INR 999.50 on the National Stock Exchange, down 1.2%.  End.

Edited by Akul Nishant Akhoury

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