Tata Elxsi Ltd. expects revenue to improve in the second half of FY27, but continued weakness in Europe and uncertainty over new deal closures remain risks for its automotive business. The company also warned that customer-specific furloughs could affect the December quarter, which typically has fewer working days.
Chief Executive Officer Manoj Raghavan said Europe remained soft, with the situation largely unchanged from the previous quarter. While the company has large opportunities in the region, their conversion into signed deals remains uncertain.
"There are deals, there are large deals, there are opportunities. But again, deal closures, we are still, you know, it's a wait and watch," Raghavan said during the company's earnings call on Tuesday.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
Europe Slowdown
The company has not seen ramp-downs in projects already signed in Europe, but their ramp-up has been slow, Raghavan said. Some projects have also ended, adding to the pressure on the business.
He said developments that could restrict Chinese vehicle imports into Europe were unlikely to change the near-term outlook for Tata Elxsi. European automakers still need to address structural issues, including their cost base and the transition to electric vehicles.
The comments indicate that a recovery in European automotive spending remains uncertain, even as the company expects growth in other markets. Raghavan said Tata Elxsi was confident of growth in the US and India, while Japan remained relatively flat.
H2 Outlook
Tata Elxsi expects its Media and Communications and Healthcare and Life Sciences businesses to sustain growth in the second half, supported by signed deals and continuing opportunities. Raghavan said healthcare had bottomed out in the previous quarter and returned to growth.
The company reported revenue of Rs 1,055.7 crore in Q2 FY27, up 3.4% sequentially in rupee terms and 2.3% in constant currency. Revenue grew across all three key business verticals: Transportation rose 2%, Media and Communications increased 3.4%, and Healthcare and Life Sciences advanced 3.5%, all in constant currency terms.
READ | Tata Elxsi Q2 Results: Margin, Revenue Sees Marginal Rise | Check Key Numbers
Chief Financial Officer Nalin Kansal said currency benefits contributed about 60-70 basis points to the margin improvement. Operational leverage and the reversal of one-off costs also helped, although wage increases offset part of the gains. He expects margins to improve gradually through the rest of the year.
Raghavan said the company remained positive about H2, while cautioning that automotive growth would depend partly on Europe and the ability to sustain momentum in the US and India.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
