Tata-Group multibagger IT-software company delivers resilient performance in Q1FY26

Tata Elxsi, a global leader in design and technology services, announced a resilient performance for the first quarter of fiscal year 2025-26, ending June 30, 2025. The company reported operating revenue of Rs 892.1 crore for the quarter. Key highlights include an EBITDA of Rs 186.7 crore, with an EBITDA margin of 20.9 per cent. Profit Before Tax (PBT) stood at Rs 196.3 crore, achieving a PBT margin of 21.1 per cent, while Profit After Tax (PAT) was Rs 144.4 crore, with a PAT margin of 15.5 per cent. These results underscore Tata Elxsi's continued strong position in the design-led technology services sector.

Mr. Manoj Raghavan, CEO and Managing Director, Tata Elxsi, commenting on the company’s performance in the first quarter of FY26, said:

“For the first quarter of FY26, Tata Elxsi reported an operating revenue of Rs 892.1 crores. EBITDA margins stood at 20.9 per cent and PBT margin was reported at 21.1 per cent. This quarter was challenging across key markets, with macroeconomic uncertainties, industry and customer-specific issues impacting R&D spend and decision-making cycles across geographies. The company has demonstrated resiliency in protecting business in our largest vertical, executing on large deal wins across key verticals to create sustained revenue streams and expanding our relationships with our customers. Our transportation business, which represents over 50 per cent of our overall revenues, recovered smartly to report a 3.7 per cent growth QoQ in actual currency and flat in constant currency terms.

We are starting to realise the positive impact of large deals won last quarter, including SDV-related deals with Mercedes-Benz and a European OEM and with Suzuki a quarter prior. We are executing on our adjacency strategy, with two strategic deal wins in the quarter. We see continued recovery and growth of our transportation business through the rest of the year, backed by the deals we have won, a healthy pipeline of large deals and new customer logos. Our Media and Communication Business (MCV) reported a decline of 5.5 per cent QoQ in constant currency. While the overall business environment in this industry continues to be subdued, the drop is largely due to transition investments for the large deals we won last quarter. We expect to bring back growth in Q2 and beyond, on the back of these large deal ramp-ups and a healthy deal pipeline.

In this quarter, we also won a strategic multi-million-dollar design-digital deal with a US tech leader for next-generation AI and product-feature development. In the Healthcare and Lifesciences Segment (HLS), our next-gen product development and digital offerings delivered two key wins, including a global pharma and biotech leader from Europe and a Medtech leader from Japan. HLS declined 6.7 per cent QoQ in constant currency, primarily affected by tariff-related impact on medical device engineering programs and spend with two key customers in the US. We expect recovery in this region in the second half of FY26.

Our Design and Systems Integration teams successfully delivered a prestigious experiential project in Japan. We are proud of our association and the part we played in the Bharat Pavilion at the World Expo 2025 in Osaka, which was ranked among the Top 5 pavilions alongside the US, Italy, Japan and France. We expect steady improvement in bottom line and margin through the year, even as our two largest businesses, transportation and media & communication, return to growth in Q2 FY26 and beyond and utilisation improves on the back of the ready capacity and capability we have invested in over the past few quarters. Our re-imagined website launched at the start of this quarter, reflects the AI-first and human-centric approach to going beyond technology and product to designing experiences that simplify complexity, enhance human lives and drive sustainable progress – what we call designing purpose-driven experience.”

About the Company

Tata Elxsi is among the world’s leading providers of design and technology services across industries, including automotive, broadcast, communications, healthcare and transportation. Tata Elxsi works with leading OEMs and suppliers in the automotive and transportation industries for R&D, design and product engineering services from architecture to launch and beyond. It brings together domain experience across autonomous, electric, connected vehicle technologies and software-defined vehicles (SDV), supported by a worldwide network of design studios, development centres and a global talent pool of over 13,000 engineers and specialists.

The company has a market cap of over Rs 38,000 crore and has been maintaining a healthy dividend payout of 55 per cent. The shares of the company have an ROE of 29 per cent and an ROCE of 36 per cent. The stock is up by 34 per cent from its 52-week low of Rs 4,601.05 per share and has given multibagger returns of over 500 per cent in 5 years.

Disclaimer: The article is for informational purposes only and not investment advice.