Tata Technologies Projects Soft Q1 FY26, Strong Recovery In Q2

Tata Technologies anticipates the first quarter of the current financial year (Q1FY26) to be soft with recovery likely in the coming quarters. Though FY25 was largely flat, the company is projecting a strong rebound in the second quarter of FY26.

Speaking to NDTV Profit, the Tata Group firm’s MD and CEO, Warren Harris, attributed current investment delays to global uncertainties, following the conclusion of the 2024 US election cycle. With political clarity now in place, he anticipates the return of a heavy spending phase.

“Heavy spending will come back again ... there is no question in my mind. The future is predominantly electric, and it will be driven by software. We see the current pause and delay as essentially a technical pause,” Harris said in an interview on June 24.

Overall, Harris expects the second half of FY26 to be stronger than the first half.

The CEO's remarks echoed broader industry sentiment, also reflected in KPIT Technologies’ mid-quarter business update on Tuesday. Pune-based KPIT Tech noted that the overall business environment for FY26 remains uncertain, citing rising geopolitical tensions and ongoing ambiguity around global tariff policies.

When asked if Tata Technologies is facing a similar situation, Harris acknowledged that the recent tariff announcements have added to the uncertainty. However, he noted deal conversions had picked up in the last few weeks of Q1FY26 quarter, boosting confidence for a stronger Q2 and full-year performance.

“I think that the tariff announcements have compounded the uncertainty. We expected a much stronger first three months to this fiscal and that's not played out. But what we have seen, toward the end of the quarter over the last three or four weeks is deals start to get converted. And that's what gives us confidence in terms of the second quarter and the full year.”

He emphasised that the automotive industry's future remains firmly electric and will be driven by software and artificial intelligence.

“Now, whether we like the current policy or not, at least we have clarity. As far as the direction of the industry is concerned, we do not see any compromise on the move to electric. There is certainly an importance in investing in software-defined and AI-defined vehicles. These will define the competitive position of OEMs and their supply chains in the future,” the CEO added.

When asked about margin outlook for FY26, Harris said that the company will continue focusing on operational efficiency and margin protection.

"Even though revenues tapered towards the end of the year (FY25), we were able to protect margins. We posted better than 18% margins for the fourth year in a row. We'll continue to apply the traditional levers that drive improvement in gross profit and operating margins. One of the things we are doing pervasively throughout our company is applying AI to every key process and function, and that's having a material impact on our productivity...and by association, on margins,” he said.

In FY25, Tata Technologies reported revenue of Rs 5,168.5 crore, marking a modest 1% increase over Rs 5,117.2 crore in FY24. Operating EBITDA came in at Rs 934 crore, slightly lower than Rs 941.3 crore in the preceding fiscal. The operating EBITDA margin declined to 18.1% in FY25 from 18.4% in FY24. The company posted a nearly flat net profit of Rs 676.95 crore in FY25 compared to Rs 679.37 crore in FY24.

Shares of Tata Technologies were trading 0.71% higher at Rs 704.5 apiece at 10:19 a.m., compared to a 1.05% rise in the benchmark Nifty50 at 25,234.7.