Tata Elxsi, incorporated in 1989, is a global leader in design and technology services, serving industries like Transportation, Media, Communications, and Healthcare. Offering integrated services from research to deployment, it leverages IoT, Cloud, Mobility, VR, and AI to help customers reimagine products. With over 30 years of expertise, Tata Elxsi drives innovation through design thinking and global development centers.
In this article we are going to discuss the summary of the management commentary that was delivered on Q4FY25 performance.
Financial Highlights
For FY 2024-25
Revenue
- Reported Revenues at Rs. 3,729.0 Cr., +5.0% YoY
- Revenue in CC terms grew by 3.1% YoY
Profit
- EBITDA at 26.1%; PBT at 26.3%
- PBT at Rs. 1,028.4 Cr, -1.9% YoY
- PAT at Rs. 784.9 Cr, -0.9% YoY
Segment Highlights
- Transportation growth at 11.8% YoY in CC terms, aided by large deals and
sustained traction in Software Defined Vehicles - Healthcare declines by 9.4% YoY in CC terms, ends the year with a strong
exit in Q4’25 - Media and Communications declines by 5.5% YoY in CC terms, amidst a
challenging industry environment
For Q4 2024-25
Revenue
- Reported Revenue at Rs. 908.3 Cr, +0.3% YoY, -3.3% QoQ
- Revenue decline of 2.9% YoY in CC, 5.3% QoQ in CC
Profit
- EBITDA at 22.9%; PBT at 23.3%
- PBT at Rs. 221.4 Cr, -15.6% YoY, -13.4% QoQ
- PAT at Rs. 172.4 Cr, -12.4% YoY, -13.4% QoQ
Segment Highlights
- Transportation declined by 9.7% QoQ in CC terms, impacted by project
pauses with some customers for the quarter - Media and Communications revenue declined by 6.3% QoQ in CC terms
amidst continued industry softness and cautious technology spend - Healthcare grew by 3.5% QoQ in CC terms with new customer wins and
traction from digital and Gen AI powered offerings.
Business Segment Highlights
Healthcare & Life Sciences
Reported a healthy quarter-on-quarter growth of 3.5% in constant currency terms in the quarter.
The company have added 13 new customers and expanded into AI-powered diagnostics and sustainability.
Automotive
witnessed challenges in the quarter as some OEMs and suppliers paused new program starts in the face of geopolitical and market uncertainties and are focused on conserving cash.
saw delays in ramp-ups planned for ongoing deals won in the previous quarters that we expect to resume starting Q1 ’26.
won a strategic EUR50 million multiyear SDV and software engineering deal with a Europe headquartered global car OEM. That will actually start ramping starting Q1 FY ’26.
Media & Communications
Reported a strategic multi-year product engineering consolidation deal of over USD100 million with a marquee operator in the media and communications vertical, the largest single deal in company’s history.
Also won a strategic USD10 million consolidation deal with a global broadcaster for a streaming video platform engineering.
Aerospace & Defense
The company is expanding its vertical presence with the addition of aerospace and defense, addressing emerging opportunities for space, unmanned aerial vehicles, software-defined systems and indigenization in the sector.
The company have been associated with HAL (Hindustan Aeronauticals Limited) for the Combat Air Teaming System, (CATS) Warrior an unmanned autonomous combat air vehicle, which was displayed at the Aero Show in February 2025.
The company has signed strategic partnerships with NAL and Garuda Aerospace and have been empanelled with 2 global aerospace majors and a new age eVTOL company.
Awards and Recognitions
The company won the UX award for GameSense, its experiential solution that brings together UX design, AI and digital technologies to deliver enhanced fan engagement and monetization for global sports and live events.
The company also won an IF award for product design with our next-generation racing simulator gear design for Turtle Beach, a leader in gaming technologies.
Question and Answer Session Highlights
First question is on the large deals that you’ve announced. Just wanted to check, especially on the consolidation deals. What’s the net new component there in the media vertical?
It’s a multiyear deal. It’s a 3-year deal. So the net new component would be approximately 25% to 30%.
With respect to the auto vertical, given that there have been changes globally with respect to tariff announcement, etcetera. Some of our clients, especially the top client, have made some certain announcements with respect to certain strategic changes that they are considering. So just wanted to understand how does that have any bearing on the business that we do with them?
Actually, in this quarter, we have seen a number of projects that we are working on – especially with our top customer – witnessing pauses. We are hoping that over the next couple of quarters, we will have a lot more clarity on this.
At this point in time, it’s too early for us to have that clarity. However, with the new large deal wins that we have announced today, we’re really hopeful that those projects will ramp up and some of these weaknesses will get covered up. We are in discussions with our key customers to navigate this difficult scenario.
Can recent deal wins reverse declines in non-Automotive industry verticals?
The company has faced challenges in two of its three industry verticals over the past three years, with Automotive being the primary growth driver.
Recent large deal wins in the current quarter are expected to stabilize and potentially reverse declines in the other two verticals (Healthcare and Media & Communication).
Healthcare is projected to grow strongly in the next financial year, leveraging significant client wins from the last year.
In Automotive and Media & Communication, large deal wins provide long-term stability, reducing downside risk. The focus for FY ’26 is to deepen client relationships (“mine these accounts”) to drive faster growth.
Will margins improve with expected revenue growth?
Margin declines have been primarily due to revenue weakness in the non-Automotive verticals.
With anticipated revenue stability or growth starting from Q4, margins are expected to improve as revenue growth resumes.
The company’s key strategy for FY ’26 is to restore revenue growth, which will drive margin recovery, by capitalizing on recent deal wins and scaling existing client accounts effectively.
Given the typical IT industry seasonality (strong first half, weaker second half), will growth start slow and accelerate through the year, or is building that trajectory challenging?
Large deal wins will drive expansion starting in Q1, though Q1 and Q2 may be slower due to the nature of consolidation deals, requiring supplier transitions and initial investments.
From Q2 onward, the full value of these deals is expected to materialize, leading to accelerated sequential growth throughout the financial year.
Will there be a change in the on-site/offshore mix due to consolidation of competition, and how should we think about hiring given recent headcount reductions for cost control?
No significant change is expected in the on-site/offshore mix, as large consolidation deals focus on servicing from best-cost countries, aligning with customer preferences to avoid high-cost on-site resources.
The company’s traditional strength in offshore delivery supports this approach, and deal structures emphasize best-cost locations over high-cost ones.
Temporary shifts in the on-site/offshore ratio may occur during deal transitions, but in the mid-to-long term, the current ratio will remain stable.
Given the significant capital expenditure on semiconductor fabrication and assembly plants in India, particularly by Tata Electronics, are there opportunities for Tata Elxsi, a leader in semiconductor design (e.g., VLSI design), to collaborate with these new plants?
Tata Elxsi is actively engaging with companies, including those setting up semiconductor fabrication plants in India, to explore collaboration opportunities.
Discussions are ongoing regarding Tata Elxsi’s design offerings (such as VLSI design) and its manufacturing and Industry 4.0 solutions.
Currently, these companies are focused on establishing factories, so chip design discussions are in early stages, as the priority is not yet on developing new chips.
Tata Elxsi is keen to support and contribute to India’s growing semiconductor ecosystem as opportunities evolve.
Without providing specific guidance, is it reasonable to expect FY ’26 growth to surpass FY ’25, given the weaker exit and anticipated growth acceleration from Q1 onward?
The management team is focused on achieving stronger growth in FY ’26 compared to FY ’25.
Confidence stems from recent deal wins in the last quarter, with a full four quarters available to scale these deals, positioning the company to deliver improved performance in FY ’26.