Financial Performance Q1 FY27

  • Constant Currency revenue growth: 0.1% YoY
  • USD revenue decline: 0.6% YoY
  • Quarter-on-quarter Constant Currency revenue decline: 3.6%
  • EBITDA margin: 17.2%
  • EBIT margin: 12.3%
  • PAT: INR 1.17 billion
  • Profitability impacted by forex loss and share of loss from Qorix

Deal Wins and Business Development

  • Secured USD 257 million in wins during the quarter
  • Primary focus areas: Connected cars, aftersales transformation, and autonomous driving
  • Deal wins distributed across geographies

Geographic Performance

  • Europe: Approximately 4% decline for the quarter, with further impact expected in Q2
  • Americas: Showed growth with balanced performance across portfolio
  • SIMA (Southeast Asia, India, Middle East and Africa): Expected to show significant growth
  • JKC (Japan, Korea, China): Impacted by program cancellations

Strategic Initiatives and Outlook

Broad-based Revenue Strategy:

  • Increasing wallet share with existing OEMs through expanded offerings
  • Cost reduction programs leveraging Caresoft acquisition
  • Aftersales transformation (branded as I-Dart)

New Client Expansion:

  • Engaging with stable OEMs in Japan, Korea, and Europe not previously worked with
  • Focus on off-highway and trucks segment with new logos across US, Europe, and Asia
  • Software-defined machines (SDM) showing tailwind in off-highway segment

Products and Solutions:

  • Multiple products including N-Dream, I-Dart, Technica products, and Cymotive cybersecurity
  • Integration across software development cycle powered by Beacon automotive intelligence platform
  • Partnership with Microsoft for global go-to-market in automotive
  • Margin accretive over time

Adjacencies:

  • Micro mobility with wins in last mile connectivity
  • Deep tech opportunities being explored
  • Hydrogen technology development (long-term opportunity)

Management Commentary on Market Conditions

Automotive industry facing challenges globally due to:

  • Extreme competition from China
  • Geopolitical situations including tariffs
  • War impacting supply chain and input costs
  • European OEMs most affected due to China market impact and Chinese competition in Europe
  • Resulting in job cuts, profit warnings, pay cuts, restructuring, and significant writeoffs

Specific Program Impacts

  • One SDV program in Europe nearing completion (planned)
  • One SDV program in Japan cancelled at last minute
  • Both programs coming to natural end

Margin Outlook

  • Margins expected to improve incrementally but significantly only when revenues return to growth
  • Qorix losses expected to continue for at least next quarter or two
  • European cost reduction takes longer than other regions
  • Medium-term margin aspiration of 22-24% by FY29 remains, driven by product/solution growth

Business Model Evolution

  • Fixed price contracting increasing 600-700 basis points versus last year
  • AI tools and Beacon platform improving delivery efficiency
  • Multiple business models including subscription-based platforms
  • Maintaining premium pricing against competition

China Strategy

  • Engaging with two Chinese OEMs, with one nearing meaningful engagement
  • Traction for products and solutions in China
  • Leveraging global OEM partnerships in China
  • Patient, long-term approach to China market

European OEM Engagement Shift

  • Conversations shifting to helping OEMs reduce product costs by 30-40%
  • Focus on reducing production costs
  • Helping reduce time to market for new models
  • Vendor consolidation exercises ongoing

Recent Contract Highlight

  • N-Dream in-vehicle gaming platform contract with Tata Motors
  • First such platform launched in any vehicle in India
  • License model with per vehicle charge

Operational Details

  • Wage hikes delayed but planned in stages, starting with younger grades
  • Senior people to receive increments over period
  • 50%+ revenue comes from Europe currently, but targeting balanced growth across four geographies

Forward Guidance

  • H2 FY27 expected to be better than H1
  • Return to growth expected by Q4 FY27
  • Profitability to return largely when revenues come back
  • Growth driven by broad-based strategy across clients, practices, and adjacencies