Financial Performance Summary

Revenue Performance:

  • Revenues from operations increased 22.2% year-on-year in constant currency to US$178 million
  • Services revenue grew 4.3% sequentially and 26.2% year-on-year to US$142 million, contributing approximately 80% of total revenue
  • Services revenue excluding ES-Tec grew 22.1% year-on-year
  • Technology Solutions grew 9.2% year-over-year in constant currency but declined 6.6% sequentially to ₹343 crores
  • Total revenue from operations increased 2.1% sequentially to ₹1,699 crores

Profitability Metrics:

  • Operating EBITDA margin remained resilient at 16.1% despite absorbing annual salary increments representing more than 100-basis-point headwind
  • EBITDA grew 2.2% quarter-on-quarter and 31.5% year-on-year to ₹273 crores
  • Operating profit (EBIT) increased 25.3% year-on-year to ₹239 crores
  • Profit before tax rose 7% year-on-year to ₹242 crores
  • Underlying PBT (adjusting for non-cash foreign exchange movements) grew 16.4% year-on-year
  • Net income for the quarter was ₹171 crores compared with ₹166 crores in the same period last year
  • Excluding non-cash items, profit after tax would have increased 13% year-on-year

Revenue Recognition Change:

Effective July 1, 2026, revenue from certain OEM-hosted SaaS license contracts within the product business is being recognized over the license term rather than upfront, in line with evolving accounting guidance under Ind AS 115. This change reduced Technology Solutions revenue by ₹12.6 crores during the quarter.

Business Highlights and Strategic Updates

Order Wins and Pipeline:

  • Secured five large deals during Q2 FY27
  • Landmark US$138 million full vehicle engineering program with a leading European luxury automotive OEM, spanning two vehicle programs with 2.5-year timeline
  • Engagement with leading North American commercial vehicle manufacturer for end-to-end development of new vehicle platform and digital SDV infrastructure
  • Pipeline conversion remains strong with expectation of additional large deal announcements before end of calendar year

Sector Performance:

  • Automotive business grew 7.6% QoQ excluding ES-Tec
  • Non-automotive business grew 7.5% sequentially in US dollar terms
  • Aerospace emerging as important second growth engine with strong demand across sector
  • ES-Tec demand remains subdued, particularly from largest customer in Germany, with additional softness expected in Q3 but stabilization anticipated in 2027

Joint Venture Performance:

  • Share of profit from BMW TechWorks India increased 20% sequentially and 115% year-on-year to ₹11.4 crores
  • Including deferred income of ₹8.3 crores, the venture contributed total of ₹19.7 crores during the quarter

Operational Metrics

Headcount and Talent Management:

  • Total headcount stood at 12,895 associates at quarter end, representing net increase of 316 employees (2.5% sequentially)
  • Trailing 12 months voluntary attrition improved to 15.6% sequentially
  • Delivered over 27,000 learning hours and trained more than 5,000 associates
  • Expanded AI readiness through programs covering over 1,000 employees

Balance Sheet and Liquidity:

  • Net cash position stood at approximately ₹330 crores compared to ₹880 crores at end of Q1
  • Sequential reduction primarily driven by dividend payout of nearly ₹475 crores during quarter
  • DSO stood at 102 days (billed DSO: 63 days, unbilled DSO: 39 days)

Management Commentary and Outlook

Growth Guidance:

  • Reiterated expectation of delivering strong double-digit consolidated revenue growth for FY27
  • Confident in maintaining strong double-digit growth supported by strong demand, ongoing program ramp-ups, healthy pipeline conversion, and improving retention trends
  • Expect more meaningful contribution from large engineering engagements and full vehicle programs during second half of the year

Margin Outlook:

  • Expect sequential margin improvement through disciplined execution and productivity initiatives
  • Committed to margin improvement with 18% and 20% as North Star targets
  • Expect product business recovery in Q3 benefiting from seasonal demand patterns
  • Education segment likely to face near-term pressure due to slower infrastructure readiness at customer sites

Strategic Positioning:

  • Company positioning as strategic product realization partner capable of owning complex engineering outcomes
  • Nearly 1,000 associates developing and deploying AI agents across engineering and business processes
  • Transitioning from AI-assisted to AI-native ways of working across value chain
  • Combination of product realization expertise, full vehicle development capability, and AI-native delivery seen as competitive advantage

Industry Context

Management highlighted structural shift in automotive industry with Chinese OEMs establishing new benchmarks, leading Western OEMs to become leaner and fundamentally rethink engineering approaches. OEMs increasingly focusing on brand-defining elements while outsourcing more engineering and product development activity.

Geographic Performance

Germany market facing headwinds due to customer restructuring and cost-optimization measures, particularly affecting ES-Tec business. Company remains committed to German market expecting R&D globalization trend to benefit them long-term.