Tata Elxsi Q2 Revenue Rises 2.3% with 21.9% EBITDA Margin

Q2 FY27 Financial Results:

Operating Revenue: ₹1,055.7 crores, representing 2.3% growth in constant currency terms
EBITDA: ₹231.4 crores, growing 7.1% quarter-on-quarter and 19.7% year-on-year
EBITDA Margin: 21.9%, showing 70 basis points improvement over previous quarter

Transportation Vertical:

Grew 2% quarter-on-quarter in constant currency terms
Notable win: Strategic multi-year deal from leading automotive OEM for next-generation, cloud-based telematics and connected vehicle ecosystem
Aerospace segment showed business traction with strategic collaboration with Sarla Aviation for development of Shunya, India's first indigenous electric vertical takeoff and landing (eVTOL) aircraft
Won strategic engagement from global aerospace supplier for development of test rig and validation of commercial aircraft systems

Media and Communications Vertical:

Grew 3.4% quarter-on-quarter in constant currency terms
Growth driven by sustained ramp-ups across key engagements and AI-led deal wins
Secured strategic AI engagement with global technology leader to develop GenAI-powered virtual assistant focused on multilingual intelligence

Healthcare and Life Sciences Vertical:

Grew 3.5% quarter-on-quarter in constant currency terms
Notable deal: Win from global renal care leader to develop next-generation home dialysis systems, spanning end-to-end product engineering

Workforce Management:

Implemented wage increase across workforce as part of commitment to retaining and rewarding talent
Focus on delivery excellence enabled margin expansion despite annual wage revision impact
Current utilization rate: 78% (disclosed in Q&A session)
Peak utilization historically reached 81-82%
Management focusing on pyramid correction over next 2-3 quarters to improve margins

Geographic Performance:

Growth Sustainability:

Confident of growth in US and India geographies for transportation vertical
Europe continues to be soft with delayed decision-making from large OEMs
Media and communication vertical showing consistent growth over last two quarters
Healthcare business bottomed out last quarter with good visibility of deal pipelines
Expect H2 FY27 to be better than H1 across most businesses

Margin Trajectory:

Q2 margin expansion driven by 60-70 bps cross-currency benefits and operational leverage
Wage hikes offset by operational improvements and one-timers going away
Expect slightly upward margin trajectory through rest of the year
Targeting operational leverage to play out with costs under control

Deal Ramp-up Timeline:

Europe situation remains uncertain with delayed decision-making from automotive OEMs
No ramp-downs in Europe, but slow ramp-up or status quo maintained
Relative importance of Europe decreasing with each quarter as other geographies grow
Onsite-offshore ratio maintained at approximately 25:75

Growth in automotive business primarily coming from outside group customers
Tata Motors and JLR remain important customers but concentration risk reducing
Healthcare vertical diversifying with new customers across geographies (Bayer from Germany, Terumo from Japan)

Enterprises continuing to commit AI budgets for transformation, impacting discretionary R&D budgets
Growing pragmatism in AI spending with more ROI-focused approach
Company strengthening position in rapidly evolving GenAI ecospace

Q3 typically a short quarter with fewer working days
Awaiting customer-specific direction on possible furloughs
Focus on sustaining growth while investing in AI-first offerings and operational excellence