Tata Elxsi reported a largely flat net profit for the September quarter, even as revenue and operating profit improved sequentially, supported by growth across its transportation, media and communications, and healthcare businesses.
The company's net profit declined 0.2% quarter-on-quarter to ₹170.3 crore from ₹170.6 crore in the June quarter. Revenue from operations rose 3.4% to ₹1,055.7 crore from ₹1,021.1 crore, while earnings before interest and tax (EBIT) increased 7.2% to ₹207.7 crore from ₹193.7 crore.
The EBIT margin expanded to 19.68% from 18.97% in the previous quarter.
On a year-on-year basis, revenue increased 15% from ₹918.1 crore in the corresponding quarter last year, while net profit grew 10% from ₹154.8 crore, according to the company's investor presentation.
Operating margins improve
Tata Elxsi's earnings before interest, tax, depreciation and amortisation (EBITDA) rose 7.1% sequentially to ₹231.4 crore from ₹216 crore. The EBITDA margin expanded 70 basis points to 21.9% from 21.2% in the June quarter.
Profit before tax increased 2.9% quarter-on-quarter to ₹239.1 crore.
The improvement in operating performance came despite salary revisions implemented across the company's employee base during the quarter.
“Our focus on operational efficiencies across the organization has resulted in improved EBITDA margins, with EBITDA expanding 70 bps QoQ, despite salary revisions implemented across the entire employee base in the quarter,” said Manoj Raghavan, CEO and managing director of Tata Elxsi.
Growth across key businesses
The transportation vertical, which accounts for more than 55% of the company's software development and services segment, grew 2% sequentially in constant currency terms. Tata Elxsi said it continued to see traction in adjacent businesses, particularly aerospace.
The media and communications vertical, which contributed 33.6% of revenue from the software development and services segment, grew 3.4% quarter-on-quarter in constant currency terms. The company attributed the growth to deal ramp-ups among existing customers and new wins.
Its healthcare business recorded 3.5% sequential growth in constant currency terms.
“During the second quarter of FY27, Tata Elxsi reported operating revenue of Rs. 1,055.7 crores, growing 3.4% QoQ in rupee terms and 2.3% QoQ in constant currency terms. This growth was broad-based across all three key verticals,” Raghavan said.
The company said new engagements were also reflecting its investments in generative artificial intelligence and AI-led product engineering.
“We are continuing to invest ahead in applying Gen AI and AI thoughtfully to the innovation and product engineering context in our chosen verticals and domains,” Raghavan said.
He added that Tata Elxsi would focus on sustaining growth in the second half of the financial year while continuing to invest in AI-first offerings and operational efficiency.
Shares of Tata Elxsi ended 5.21% higher at ₹3,426.70 apiece on the NSE on Tuesday. However, the stock has declined more than 35% over the past year, significantly underperforming the Nifty 500, which has fallen nearly 5% over the same period.