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Sequential Revenue Growth: 2.2% increase to INR 1,296 crore.
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Services Segment Revenue: 2% sequential growth to INR 1,005 crore, comprising 78% of total revenues.
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Technology Solutions Segment Revenue: 2.8% sequential growth, driven by 19.5% growth in the education business.
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Products Business Revenue: Decline of 21% due to seasonality.
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Operating EBITDA Margin: 18.2%, flat quarter on quarter.
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Profit Before Tax: INR 218 crore, a 1% sequential decline.
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Effective Tax Rate: 27.6%, an increase of 140 basis points from the previous quarter.
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Profit After Tax: INR 157 crore, a 2.9% decline.
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Net Cash on Balance Sheet: $145.3 million, up from $131.4 million in the previous quarter.
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Free Cash Flow: Approximately INR 453 crore.
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Employee Headcount: 12,680, an increase of 1.4% or 175 employees.
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Employee Utilization Rate: Improved by 120 basis points to just under 88%.
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Voluntary Attrition Rate: 13.1%, down from 13.7% in the previous quarter.
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On-site and Offshore Revenue Mix: Offshore revenue increased by 470 basis points to 43.7%.
Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Tata Technologies Ltd (BOM:544028) achieved a sequential revenue growth of 2.2% in Q2 FY25, with the services business returning to growth.
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The tech solutions segment saw a 2.8% sequential growth, driven by a 19% increase in the education segment.
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The company secured significant wins, including partnerships with the Maharashtra and Tamil Nadu Industrial Development Corporations.
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Tata Technologies Ltd (BOM:544028) announced a strategic alliance with Telechips to co-develop innovative solutions for software-defined vehicles.
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The partnership with BMW in India is expected to significantly contribute to the company's financial results in the coming years.
Negative Points
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There is a slight delay in customer decision-making due to geopolitical tensions and uncertainty surrounding elections.
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Recent deal wins have been smaller in size as customers adopt a cautious approach to larger projects.
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The products business saw a decline of 21% due to seasonality, expected to reverse in the second half of the fiscal year.
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The profit before tax saw a 1% sequential decline, and profit after tax declined by 2.9% to INR157 crore.
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The company faces challenges in the automotive segment due to the threat from Chinese OEMs and regulatory uncertainties in Europe.
Q & A Highlights
Q: Can you provide more color on the current border environment for your core automotive segment, especially regarding EV investments and growth drivers? A: Warren Harris, CEO and MD: Medium to long term, we expect increasing EV adoption rates despite short-term challenges. In North America, the election presents polarized policy positions on clean energy, affecting customer decision-making. In Europe, there's concern about competition from China, with regulatory help anticipated early next year. We foresee short-term headwinds but expect accelerated growth to resume in the coming years.