Tata Elxsi : Financial Reporting Document

April 21, 2025
DGM - Corporate Relations	The Listing Department
BSE Ltd.	National Stock Exchange of India Ltd.
Phiroze Jeejeebhoy Towers	Exchange Plaza, Plot No. C-1, Block G
Dalal Street	Bandra - Kurla Complex Bandra (East)
Mumbai - 400 001	Mumbai - 400 051
Scrip Code: 500408	Scrip Code: TATAELXSI
Dear Sirs / Madam,

Sub.: Transcripts of the Investors' Conference Call for the quarter and year ended March 31, 2025

Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, please find enclosed the transcript of the Investors' Conference Call for the quarter and year ended March 31, 2025, held on April 17, 2025.

The transcript of the earnings conference call can be accessed on the Company's website at: https://www.tataelxsi.com/investors

This is for your information and records.

Thanking you,

Yours faithfully,

For Tata Elxsi Limited

Cauveri

Sriram

Digitally signed by Cauveri Sriram Date: 2025.04.21 16:50:06 +05'30'

Cauveri Sriram

Company Secretary & Compliance Officer

Encl: As above

"Tata Elxsi Limited

Q4 FY '25 Earnings Conference Call"

April 17, 2025

MANAGEMENT: MR. MANOJ RAGHAVAN - MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER - TATA ELXSI LIMITED MR. NITIN PAI - CHIEF MARKETING AND CHIEF STRATEGY OFFICER - TATA ELXSI LIMITED

MR. GAURAV BAJAJ - CHIEF FINANCIAL OFFICER - TATA ELXSI LIMITED

MS. CAUVERI SRIRAM - COMPANY SECRETARY - TATA ELXSI LIMITED

MODERATOR: MR. SHASHANK GANESH - ERNST & YOUNG

Tata Elxsi Limited

April 17, 2025

Moderator:Ladies and gentlemen, good day, and welcome to Tata Elxsi Limited Q4 FY '25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded.

I now hand the conference over to Mr. Shashank Ganesh from EY. Thank you, and over to you Mr. Ganesh.

Shashank Ganesh: Thank you very much. Good evening to all the participants on the call. Good morning if you're joining us from the Western side. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors, therefore, must be viewed in conjunction with the business risk that could cause the result performance or achievements that differ significantly from what is expressed or implied by such statements.

To take you through the results and answer your questions today, we have the senior management of Tata Elxsi represented by Mr. Manoj Raghavan, Managing Director and CEO; Mr. Nitin Pai, Chief Marketing and Chief Strategy Officer; Mr. Gaurav Bajaj, Chief Financial Officer; and Ms. Cauveri Sriram, Company Secretary. We will start the call with a brief overview of the past quarter by Mr. Raghavan followed by a Q&A session.

We would appreciate your cooperation in restricting yourself to two questions to allow participants an opportunity to interact. If you have any further questions, you may join the queue and we will be happy to take them forward.

With that, I would like to hand over the call to Mr. Manoj Raghavan. Over to you, Manoj.

Manoj Raghavan: Thank you, Shashank. Good evening, and good morning to everybody who's joining us on this earnings call today. For the fourth quarter of FY '25, we reported an operating revenue of INR

908.3 crores and a PBT margin at 23.3%. We ended the financial year with a revenue of INR

3,729 crores and a PBT margin of 26.3%.

The Board of Directors have recommended a final dividend of 750%, that is INR 75 per equity share of par value of INR10 each for the financial year ending 31st March 2025, subject to approval by the shareholders. Coming to the business. We reported a healthy quarter-on-quarter growth of 3.5% in constant currency terms in the quarter for Healthcare & Life Sciences segment.

We have established a strong foundation for continued growth in our Healthcare & Life Sciences business with addition of 13 new marquee customers in the year and expanded capabilities and platforms in new growth areas such as sustainability and AI-powered diagnostics and therapies.

Our automotive business 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

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on conserving cash. We also saw delays in ramp-ups planned for ongoing deals won in the previous quarters that we expect to resume starting Q1 '26.

We 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. We are transforming our customer base with a continued shift towards OEMs and SDV in automotive industry, providing us with a set of customers and a platform for our long-term growth.

Our Media and Communication business saw some customer-specific issues in the quarter due to M&As and business restructuring, while the overall industry continues to exercise caution in R&D spend and innovation. But I'm pleased to report a strategic multiyear product engineering consolidation deal of over USD100 million with a marquee operator in the media and communications vertical, which is the largest single deal in our company's history. We also won a strategic USD10 million consolidation deal with a global broadcaster for a streaming video platform engineering. Both these deals are with existing customers, and we won against some of the best global competition. This again lends a strong foundation for the coming year as we look to bring back growth in this segment.

Our system integration and support business is pivoting to value-added services and innovation- led products such as experience centers. It worked with our design team to deliver the design and technology implementation to the prestigious Bharat Pavilion at the World Expo 2025 in Osaka, Japan, that was inaugurated earlier this month.

I'm delighted with the international recognition for our design digital proportions, with two IF award wins for 2025. We won the UX award for GameSense, our experiential solution that brings together UX design, AI and digital technologies to deliver enhanced fan engagement and monetization for global sports and live events. We also won an IF award for product design with our next-generation racing simulator gear design for Turtle Beach, a leader in gaming technologies.

Our design-led revenues have grown at over 25% in the year, clearly underscoring the strength of our design digital proposition. We are expanding our 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. We are pleased to 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.

We have signed strategic partnerships with NAL and Garuda Aerospace and have been empanelled with 2 global aerospace majors and a new age eVTOL company. We continue to invest strongly in digital, AI, engineering technologies across the verticals targeting efficiency and quality in product engineering and novel applications of GenAI combined with domain and design expertise to solve complex business, product and engineering problems.

Over 70% of our talent base is now AI ready, and we have built a pool of over 500 specialists across domains and application areas. We enter the new financial year, the foundation for

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	stability and long-term growth led by the large deal wins, the continued confidence of our
	customers across the world and a strong deal pipeline and a differentiated design-led proportion
	for innovation and product engineering.
	So thank you, and let's start the Q&A session.
Moderator:	Thank you very much. The first question is from the line of Sulabh Govila from Morgan Stanley.
	Please go ahead.
Sulabh Govila:	So the 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?
Manoj Raghavan:	It's a multiyear deal. It's a 3-year deal. So the net new component would be approximately 25%
	to 30%.
Sulabh Govila:	Okay. Understood. And then 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?
Manoj Raghavan:	Yes. So I think it's not just us, but I'm sure many other companies are facing the same challenges
	with our OEM customers, especially in automotive industry due to all these geopolitical issues
	and the tariff issues. So 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.
Sulabh Govila:	Okay. Understood. Just a follow-up there, and this is maybe both for auto and the media vertical.
	And given that there are multiple moving parts here, with respect to the current quarter which
	we are currently in, how would you think about the visibility currently given that there were
	certain pauses which were there and some deals which will ramp up?
	So on a net-net basis, how should we think about the visibility that we have? Do you think that
	we can improve from the fourth quarter that we had and get into the growth trajectory or that
	would be some time away?
Manoj Raghavan:	The entire focus of the management team is to ensure that we grow back from Q4. I would say
	we have decent visibility and a lot of encouraging discussions with some of our key customers.
	We strongly believe that we will be able to grow back in Q1.

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	Tata Elxsi Limited
	April 17, 2025
Sulabh Govila:	Understood. And just one last question on the margins bit. The other expenses, they fell very
	sharply on a Q-on-Q basis. So just wanted to understand what led to that? And what should be
	a sustainable number going forward?
Manoj Raghavan:	Yes, I will have Gaurav respond to that.
Gaurav Bajaj:	Sulabh, I think this is a soft quarter and difficult times with uncertainty. So we have been very
	disciplined in terms of some of the discretionary spend that we have been doing. Along with
	some of the other expenses, non-people costs, we have been very cautious in terms of how much
	is to be spent and where it is to be spent. And most of that saving is coming from some of the
	third-party contractors, consultants, the travels and the visas and the office consolidation. So
	most of those savings are coming from those discretionary spend, which we believe can be
	avoided for the time being until the time we see the better growth on the top line.
	I think we put those measures into consideration and executions even before this quarter. So
	those started to give us some better results in the quarter, and we continue to measure those as
	we move forward in the next quarter and the next financial year.
Moderator:	Next question is from the line of Manik Taneja from Axis Capital. Please go ahead.
Manik Taneja:	I actually wanted to clarify on a couple of things. Number 1 thing is that if I see your last 3 years'
	performance, you've had challenges in 2 of the 3 industry verticals, Automotive was the one
	which is driving growth. With some of these deal wins that you've announced in the current
	quarter, do you think we begin to essentially reverse the course of declines that we've seen in
	the other 2 industry segments. That's question number one.
	The second question was with regards to margins. Once again, I would presume that some of
	the margin decline is on account of revenue weakness as you are now saying that we should
	probably be looking at stability to improvement in growth from Q4 levels. Does that mean that
	we should probably start to see an improvement in margins as well?
Manoj Raghavan:	Yes, definitely, margins would improve with the growth in business. I think one of the key
	reasons for the margin decline has been the revenue degrowth. So very clearly, our focus is to
	bring back the revenue growth which will automatically bring back the margin growth.
	Regarding in each of these industry verticals, we have announced large deal wins.
	Our healthcare business continues to grow, and we really expect that to continue to grow strongly
	over the next financial year. We won some very, very good logos in the last financial year. And
	for us, the focus would be really to go deeply and mine those logos that we have won in the last
	financial year.
	In the case of Automotive and Media and Communication, the good part is because of the large
	deal wins, we will have stability in our long-term businesses. It is very important to really protect
	the sort of downside for us. And so these large deal wins gives us that confidence.

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Now we really need to go and see how we can mine these accounts and grow faster, right? So those are the activities that we will really focus. And so FY '26 will all be about growing back, getting that momentum back and really focusing on these key deal wins that we have and really scaling them and mining them faster and better.

Manik Taneja: Manoj, just a question with regards to whatever we've been hearing from some of your IT peers in the course of recent deals. Typically, you've seen first half being seasonally strong, second half because of the calendar effect and the usual seasonality tends to be weak. With the current backdrop, do you think you probably start slow and see an acceleration in sequential growth rates through the course of the year or do you think it is difficult to essentially building that kind of a trajectory at the current moment?

Manoj Raghavan: No, I think for us, these large deal wins would mean that we really need to start expanding the relationship right from Q1. Of course, Q1 and Q2 would be a bit slow because these are consolidation deals, we would need to take over from existing suppliers, and there will be some amount of investments that we would need to put in to really build that business.

But from Q2 onwards and subsequently, we expect the full value of the deal to come in play. So for us, we would really expect that, look, we will see an accelerated growth as we move into the financial year.

Manik Taneja: Sure. So the last clarification is, do we also envisage a change in our typical on-site offshore mix as we consolidate some of our competition as well as how should we be thinking about hiring now even we've been trying to essentially keep cost in control and then thereby through the course of this year, we've cut headcount.

Manoj Raghavan: Yes. From an on-site offshore mix, I don't think we will see too much of a change because some of these large consolidation deals have also been focused on servicing them from the best cost countries. Customers don't really want us to spend additional budgets by having people on site and so on.

So the signature of the deals that we see going forward are a lot more on to best-cost countries rather than high-cost countries. So that is the signature of the deals that we see, whatever deals that we are closing. So that aligns with our philosophy as well that we are traditionally strong at delivering offshore.

So we don't see a big change there in terms of either having a lot more resources on site and so on. There could be some temporary blip as we take over and transition work and so on. But in the midterm to long term, we will be at the sort of on-site offshore ratios that we see today.

Manik Taneja: Sure. And any questions or any response on the headcount metrics as to how should we see that play out, given you cut headcount in the course of the year focused on improving utilization, et cetera?

Manoj Raghavan: Yes. when I say cut headcount, we have natural attrition that we have not replaced because we have a very good quality bench that is available. And we have been very careful to add laterals.

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	Of course, we do add laterals also on a need basis, but we have been very, very selective in the
	type of people that we bring in. So I think we would continue to be cautious over the next 2
	quarters, I would say. Having said that, we will have a few freshers coming in this quarter and
	next quarter. But from a lateral perspective, we will definitely be a lot more cautious, and it will
	all be based on the business growth that we see.
Manik Taneja:	And there is enough kind of bench strength to improve utilization and service the so-called
	improvement in demand that you foresee over the next 3-to-6 months?
Manoj Raghavan:	Yes, absolutely.
Moderator:	Next question is from line of Ashwini Singh from Statpro Fintech. Please go ahead.
Ashwini Singh:	As you would be well aware that there's a huge capex currently underway for semiconductor
	fabrication and assembly plants in India. The largest being from Tata Electronics, which is a
	promoter group entity. So I'd like to understand if there's any opportunity for Tata Elxsi because
	I understand that Tata Elxsi is a leader in semiconductor space design such as VLSI design,
	etcetera. So whether you are in talks of some of the semiconductor companies which are coming
	up? And if you look at some opportunities over there.
Manoj Raghavan:	Yes. So of course, yes, we are in discussion with the companies that are planning to set up fabs
	and so on. Right now, they are in the factory setup stage and so on. So there are discussions
	ongoing with these customers from a viewpoint of our design offerings. Also, our manufacturing
	and Industry 4.0 offerings. We are having discussions with them.
	It's pretty early from a chip design side because the focus right now is not really building new
	chips and so on. But however, those are discussions that we are having, but these are still early
	stages, I would say. We would definitely be interested to see how we can support the India
	semiconductor ecosystem moving forward.
Ashwini Singh:	Sir, can you quantify what kind of opportunity size you're looking at like in the coming few
	years in this space?
Manoj Raghavan:	It's very, very early, I would say, to give what you say, a business value. However, we are in
	close discussions with a few of these customers to see how we can be relevant to their plans. I
	think it will take at least another couple of quarters before we can formally get back and say
	what sort of value proportion we have for these customers.
	So however, today, we are engaging with them. We are supporting them where we have
	capabilities, especially from the design side and the manufacturing side. And those are areas that
	we are focused on. On the chip design side, we are on a wait and watch, right, to see what sort
	of opportunities evolve right for us.
Moderator:	Next question is from the line of Hasmukh from Tata Mutual Fund. Please go ahead.

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Hasmukh:	Just have one question around FY '26 growth. So I do understand that you don't provide
	guidance, but considering the weaker exit and acceleration of growth from Q1 onwards, would
	it be fair to assume that you will be growing better than FY '25 in FY '26?
Manoj Raghavan:	That is the clear focus of the management team, and we are a little more confident because of
	some of the deal wins that we have had in the last quarter, and we have entire 4 quarters now
	really to scale up some of these deal wins. So we're really hoping that we will be able to deliver
	better performance than FY '25.
Hasmukh:	Okay. Got it. But just one follow-up here. So these large deal wins, are you witnessing any delay
	in ramp-up or those are, let's say, getting started on time probably as per you?
Manoj Raghavan:	We have been in discussions over the last 4 quarters and finally the announcements are
	happening. And we are happy that we are seeing light at the end of the tunnel. So to that extent,
	I'm really happy that things are moving. So definitely, we really don't see too much of delays
	moving forward because the customers also have the need and the necessity to ramp up and
	move quickly. So this financial year, definitely, we will see a lot of revenue uptick coming in
	from these deals.
Moderator:	Next question is from the line of Nitin from Green Capital. Please go ahead.
Nitin:	My question pertains more as an investor. Now obviously, there are some risk mitigation
	strategies that the management would have liked to undergo in terms of trying to change the
	revenue mix, maybe reducing U.S. exposure and increasing exposure to rest of the world, China,
	Japan or increasing exposure to India or to EU?
	Just wanted to get a sense of what the initial chats or feedback have been from some of your
	larger clients in terms of IT spending and some risk mitigation strategies towards that? Would
	love to hear the management thoughts?
Manoj Raghavan:	Sure. I think as you would have seen this, the geopolitical situation with the tariffs and so on and
	with the war going on, of course, we are seeing Europe and U.S. two large geographies, really
	showing a slowdown across both automotive and media and communication. So consciously, if
	you look at it, we have been really expanding beyond the 2 main markets. We're really looking
	at emerging markets, including India, Japan, the Middle East, Africa, LatAm and Southeast Asia.
	So we have consciously really expanded the bucket, expanded the markets that we would go
	into.
	And I think we have had decent successes, I would say. Japan business grew pretty well for us
	in the financial year. Similarly, our India business really accelerated in the financial year. And I
	think that gives us a lot of confidence that there are a lot more companies based in India now
	who really appreciate the design digital offerings. And we have some wonderful successes in
	the Indian automotive industry.
	We work with all the major players supporting them in a lot of the new product launches, a lot
	of the connectivity platforms that you see car companies launching in India have been powered
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	by Tata Elxsi's Tether platform. So there are a lot of interesting stuff that we are doing with India
	and India-based customers as well.
	Of course, GCCs are a strategic play for us and we've also seen an increase in the GCC business,
	in our Automotive as well as in Media and Communication and the Healthcare space. So I think
	for us, India and the emerging markets will continue to be an important market for us in the
	coming financial year as well.
Nitin:	Yes. So the follow-up to that is like I do see over the year in terms of revenue mix and the U.S.
	exposure has reduced from approximately 38% to 31%. India exposure has increased from
	approximately 16% to 19%, and rest of the world exposure has increased about 5.6% to 8.3%.
	So I'm sure that there has already been a movement within the company to hedge a lot of
	exposure away from U.S. and maybe reduce Europe and get more specifically into LatAm, as
	you said, or Africa or Southeast Asia or more towards Japan or East Europe. So having said that,
	is it so easy for a company to change the revenue mix so quickly? Or does it take time?
	And does it take like a quarter or two? Or will it be also clear with the situation maybe once the
	U.S. clients are clearer maybe after the quarter as to what specific tariffs and taxes are applying
	and how their spending is getting affected because not everyone will be painted with the same
	boat. Just some thoughts on that?
Manoj Raghavan:	Yes. So these emerging markets that we talked about, it is not a 1-quarter play, right? We have
	been investing and actually building relationships, building local partnerships, building sales
	channels, over more than 4 to 6 quarters, I would say. And I think that is the derisking strategy
	that we planned even the previous financial year has actually helped us now. I mean nobody
	could have predicted the current geopolitical situation and the tariff issue that we are seeing.
	But our strategy of expanding the universe of markets that we go after, right, has actually helped
	us in this particular situation. So it's not a knee jerk reaction only for the last one quarter. This
	has been planned out and it is that strategy of really looking out for newer markets has really
	helped us in this current difficult situation in both U.S. and Europe.
Nitin:	Thanks, all the best of the management team go through this tough period, and I hope we come
	out of this much better as we go across the year.
Moderator:	Next question is from the line of Amit Chandra from HDFC Securities. Please go ahead.
Amit Chandra:	So my question is related to the large deals in the Media and Communication verticals that you
	have announced. So if you can throw some more light in terms of what is the tenure of the deal?
	And in terms of margin, is the margin similar to the company average or generally the larger
	deals have a bit lower margins at the beginning. So is it similar to that? And is there any like
	rebadging also involved in this?
Manoj Raghavan:	Yes. So this is an existing customer, as I talked about. It's a 3-year deal. Of course, since it's a
	consolidation deal, it is a deal that has been won over all the major global competition.
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