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Informist, Thursday, Jan. 9, 2025

 

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By Ayushman Mishra

 

MUMBAI – The current financial year is going to be soft for technology services provider Tata Elxsi amid geopolitical uncertainty, currency volatility, and automotive industry-related challenges in the US and Europe, the company's management said in a post-earnings conference call Thursday. 

 

However, the transportation vertical, which accounted for 55% of the total revenue of the company in Oct-Dec, is expected to recover in the coming quarters on the back of major deals, including the launch of an offshore development centre for Suzuki Motor Corp. in Pune, the management said. 

The European automotive industry will take a few more quarters to recover, the management said. The company is looking to ramp-up investments in the software-defined vehicles segment and advanced driver assistance system technologies.

 

The company said the passenger and commercial vehicle makers are interested in software-driven technology and intends to capitalise on the demand. With the ramp-up in the electric vehicle demand, the management expects the software-driven technology to be instrumental in the commercial and passenger vehicle space.

 

Further, the management said that despite having invested heavily in the rail segment, the demand has plateaued. The company is trying to increase the number of rail operator clients. The management said it is also focussing on demand from passenger and commercial vehicles and aerospace companies to be the growth drivers of the transportation business.

 

Jaguar Land Rover has been one of the major customers of the company. However, the management said its dependence on the Tata Group-owned automobile maker has been declining while demand from other automakers has been rising. This is on account of an increase in the number of other original equipment makers, the management said in a post-earnings conference call.

 

In the context of the company's media and healthcare verticals, the management expects sales growth to pick up from Apr-Jun. The company won a large multi-year deal with a US-headquartered operator to manage a portfolio of applications that will ramp up over the next two quarters.

 

The management said wage hikes made in the December quarter were responsible for softer margins in the quarter. Employee attrition in the latest quarter was 12.4%, down marginally compared to the year-ago period. The automotive markets in the Asia-Pacific region performed well in the quarter on the back of new customers added in this region, the management said.

 

The management said it is on the lookout to acquire small-sized companies that have a positive business outlook as part of its growth strategy. Tata Elxsi announced its earnings for the December quarter late on Thursday. The company reported a net profit of INR 1.99 billion for the quarter, down 13.3% from INR 2.29 billion a quarter ago. On Thursday, shares of the company closed at INR 6,439.95 on the National Stock Exchange, down 0.5%.  End

 

Edited by Deepshikha Bhardwaj

 

 

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