Tata Technologies Limited

Tata Technologies reported a strong start to FY27, with total revenue reaching INR 1,665 crores, marking a 5.9% sequential growth in INR and 4.3% in constant currency. Year-on-year constant currency revenue growth stood at 25.2%. Operating EBITDA for the quarter was INR 267 crores, translating to a margin of 16.1%, an increase of 10 basis points sequentially. The company's adjusted PAT grew 11.3% QoQ to INR 181 crores, demonstrating underlying profitability improvement.

The company's diversification strategy continues to yield results, with automotive non-anchor revenue growing 6.7% QoQ and 56.3% YoY to $43.9 million. Aerospace revenue increased by 6.4% QoQ and 38.1% YoY to $10.2 million, while IHM revenue reached $15 million. Europe emerged as a significant growth engine, contributing $67.9 million in Q1 revenue, up 10.1% QoQ. The contribution from anchor accounts to services revenue reduced to 48.9%, an improvement of 150 basis points sequentially, indicating a healthier and more diversified revenue profile.

Tata Technologies secured a landmark $100 million strategic engagement with Tenneco, a 5-year deal encompassing engineering, digital technologies, AI-enabled processes, and operational modernization, with ramp-up commencing in Q2 FY27. Additionally, the company won a strategic engagement with a leading North American industrial equipment manufacturer and continued progress on a full vehicle development program with a Japanese OEM. Management highlighted strong momentum in large deal conversions and a robust pipeline, expressing confidence in closing further full vehicle programs.

AI is a central pillar of the company's strategy, viewed as a force multiplier for productivity and a strategic differentiator. Through 'chromosome.ai', Tata Technologies is codifying engineering knowledge into repeatable frameworks to improve productivity and delivery speed. The company also invested in talent development, delivering over 9,000 learning hours across GenAI, software-defined vehicles, and cybersecurity to over 2,000 employees, and BMW TechWorks crossed the 2,000-engineer milestone.

While the EBITDA margin improved sequentially to 16.1%, the company noted near-term margin dilution due to upfront investments required for the ramp-up of several large strategic wins and full vehicle programs. The services business saw a healthy 120 basis points improvement in gross margins, partially offset by a 250 basis points decline in Technology Solutions margins due to an unfavorable business mix. Management anticipates absorbing the cost impact of Q2 annual wage increases but remains committed to quarter-over-quarter margin expansion.

Management reiterated its guidance for strong double-digit organic revenue growth for FY27, with services as the primary growth engine. They expressed high confidence in growth accelerating significantly in the second half of the fiscal year. The company aims to balance investments for capturing growth opportunities with its ambition for sequential margin improvement. The Aerospace vertical is targeted to reach $100 million in revenue within the next 2-3 years, driven by strategic partnerships and market demand.