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    Tata Technologies Limited

    TATATECH
    Information Technology·16 Jan 2026
    Management Summary

    Tata Technologies reported a resilient Q3 FY26 with sequential revenue growth of 3.2% in INR, despite fewer billing days and a cybersecurity incident impacting billing at a large customer. Services revenue grew 4.7% sequentially, with strong performance in Aerospace and IHM verticals. However, EBITDA margin compressed to 14.1% due to wage hikes and temporary revenue impact, alongside one-time exceptional expenses of Rs.164 crores. The company anticipates strong momentum in Q4, projecting over 10% sequential revenue growth and EBITDA margins exceeding Q2 levels, with a target for double-digit organic growth in FY27.

    Highlights

    6

    • Services business delivered sequential revenue growth of 4.7% in Indian rupees, contributing to an overall sequential revenue increase of 3.2%.

    • In constant currency, Services revenue grew 1% quarter-on-quarter organically.

    • Aerospace and IHM verticals delivered 10% QoQ revenue growth in USD terms, driven by sustained demand.

    • Within Technology Solutions, the Products business grew 30% sequentially.

    • The joint venture with BMW saw its share of profit grow 37% sequentially to Rs.7.3 crores.

    • The company expects sequential revenue growth in excess of 10% in Q4 and targets double-digit organic growth in FY27.

    Concerns

    5

    • Q3 was impacted by fewer billing days and a temporary disruption from a cybersecurity incident at a large customer, preventing billing for nearly a full month.

    • The Education business saw a 22% decline sequentially due to temporary softness in demand and slower decision cycles.

    • EBITDA margin for the quarter was 14.1%, a decline from the normalized 16.4% in Q2, primarily due to wage hikes and the temporary revenue impact.

    • Exceptional one-time expenses totaled Rs.164 crores, including Rs.140 crores for employee benefits due to new labor legislation and Rs.24 crores for ES-TEC acquisition costs.

    • Net cash position decreased to $58 million from $123 million as of Q2, and Days Sales Outstanding (DSO) increased modestly to 111 days from 109 days.

    Key financials

    Single quarter

    10 metrics
    1. 01Revenue from operations₹1,366 Cr+3.2%QoQ
    2. 02Services revenue (INR)₹1,060 Cr+4.7%QoQ
    3. 03Services revenue (CC organic)—+1%QoQ
    4. 04EBITDA Margin14.1%-13.9%QoQ
    5. 05Profit before tax (adjusted)₹187 Cr-17%QoQ

    Segment breakdown

    Services
    ₹1,060 Cr Revenue78% Share of Total Revenue4.7% QoQ Growth (INR)1% QoQ Organic CC Growth
    Aerospace & IHM Verticals
    10% QoQ Revenue Growth (USD)
    Aerospace Vertical
    19% QoQ Growth
    Technology Solutions
    ₹306 Cr Revenue
    Products Business
    30% Sequential Growth
    Education Business
    -22% Sequential Decline
    List

    Order Book

    medium confidence

    Composition

    Large Deals(deal size)

    Pipeline

    deal pipeline tcv

    Healthy pipeline

    Cancellations / Deferrals

    • deferred:Temporary disruption at one of our largest customers following a cybersecurity incident, resulting in inability to bill for nearly a full month.

    "Management is confident in the order book and its contribution to top-line and margin improvement, with signed deals and ES-Tec acquisition contributing to future growth."

    Source:
    Prepared remarks

    Capital allocation

    2
    high confidence
    CategoryHeadline
    M&A

    ES-TEC

    acquisition · closed

    Liquidity

    Cash USD 58 million

    Net cash position decreased from $123 million in Q2 to $58 million in Q3.

    Guidance & targets

    4
    CategoryTargetPriority
    Revenue
    Q4 FY26 Sequential Revenue Growth
    in excess of 10%
    		High
    Revenue
    FY27 Organic Revenue Growth
    double-digit growth
    		High
    Revenue
    Aerospace Business Revenue
    close to $40 million
    		High
    Profitability
    Q4 FY26 EBITDA Margins
    exceed our Q2 run-rate
    		High

    What to watch in Q4 FY26

    5

    Q4 FY26 Sequential Revenue Growth

    Next quarter (Q4 FY26 results)
    Current3.2% QoQ (INR) in Q3 FY26
    TargetIn excess of 10% sequential growth

    Why it matters

    Key indicator of the company's ability to re-ignite growth and overcome Q3 headwinds, validating management's confidence in momentum.

    For Q4, we expect sequential revenue growth in excess of 10%

    Risks & concerns

    5
    RiskSeverity

    Temporary disruption from cybersecurity incident at a large customer

    A cybersecurity incident at one of the largest customers resulted in inability to bill for nearly a full month in Q3, impacting revenue, though it was isolated and is now behind them. — Management acknowledged

    medium

    Decline in Education business

    The Education business experienced a 22% sequential decline due to temporary softness in demand and slower decision cycles at a few accounts, though recovery is expected. — Management acknowledged

    medium

    Margin compression due to wage hikes and temporary revenue impact

    EBITDA margin decreased to 14.1% from 16.4% in Q2 due to annual wage revisions and a temporary revenue impact at a large account, but management expects margins to exceed Q2 levels in Q4. — Management acknowledged

    medium

    Increase in Days Sales Outstanding (DSO)

    DSO increased modestly to 111 days from 109 days in Q2, primarily driven by Products and Education segments, but is expected to normalize in 1-2 quarters. — Management acknowledged

    low

    Geopolitical and regulatory uncertainty impacting automotive investments

    Uncertainty in markets, geopolitical factors, and regulatory changes led to a slowdown in product investment in the automotive industry over the last 18 months, though market conditions are becoming more predictable. — Management acknowledged

    medium

    Q&A highlights

    6

    “We expected a relatively strong demand environment this fiscal year, but it's been turned upside down by tariffs and by some of the geopolitical influences that impacted the market. But what we're seeing in the second half of calendar year 2025 is the market conditions start to be more predictable. And that's precipitating in catch-up investment that many of our customers are making.”

    Addresses the macro headwinds in the automotive sector and signals a potential recovery and catch-up investment from OEMs, indicating a more predictable market environment.

    asked by Karan Uppal

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 FY26 Performance and Headwinds

    Tata Technologies reported a sequential revenue increase of 3.2% in Indian rupees for Q3 FY26, with Services business growing 4.7% sequentially. Organically, Services revenue grew 1% QoQ in constant currency. However, the quarter was impacted by fewer billing days and a temporary disruption from a cybersecurity incident at a large customer, which prevented billing for nearly a full month. The Education business also saw a 22% sequential decline, contributing to a modest increase in Days Sales Outstanding (DSO) to 111 days.

    02

    Strategic Shifts and Growth Drivers

    The company emphasized its focus on strengthening the quality and resilience of its revenue base by reducing concentration risk and improving portfolio mix. A significant milestone was the acquisition of ES-Tec, which strengthens its position in Embedded and Software-Defined Vehicle (SDV) engineering, particularly in the European automotive ecosystem. This acquisition is already creating joint opportunities and brings a strategic relationship with Volkswagen, the largest ER&D spender in the automotive sector.

    03

    Aerospace Business Momentum

    The Aerospace business is emerging as a powerful growth pillar, having doubled revenues for four consecutive years and expected to reach close to $40 million in FY26. This vertical, along with Industrial Heavy Machinery (IHM), delivered 10% QoQ revenue growth in USD terms, with Aerospace alone growing 19% QoQ. Key achievements include the deployment of an AI-enabled Smart Helmet solution and eight engineers being certified as Design Organisation Approval Technical Approvers by Airbus, expanding the scope of safety-critical work.

    04

    Automotive Sector Outlook and SDV Focus

    Management noted a geography-specific outlook for the automotive sector, with North America seeing a swing back to internal combustion engines, Europe being mixed, and China and India continuing EV penetration. Despite these variations, a constant commitment to Software-Defined Vehicles (SDVs) remains across OEMs, driving investment in intelligence for driver and customer experience. The company's growth in embedded and software engineering is a testament to this trend, offering less volatility than program-specific engagements.

    05

    Financial Performance and Margins

    EBITDA margin for Q3 stood at 14.1%, down from the normalized 16.4% in Q2, primarily due to annual wage revisions and the temporary revenue impact from the cybersecurity incident. The company incurred exceptional one-time📎 expenses of Rs.164 crores, including Rs.140 crores for employee benefits due to new labor legislation and Rs.24 crores for ES-TEC acquisition costs. Adjusted profit before tax was Rs.187 crores, a 17% QoQ decline, with net income at Rs.135 crores. Net cash position decreased to $58 million from $123 million in Q2.

    06

    Outlook and Confidence

    Looking ahead, Tata Technologies expects momentum to strengthen significantly in Q4, projecting sequential revenue growth in excess of 10%. Despite new labor codes, EBITDA margins are expected to exceed the Q2 run-rate of 16.4%. The company is targeting double-digit organic growth in FY27, with additional contribution from ES-Tec. This outlook is supported by a healthy pipeline, improving customer decision cycles, and the structural changes made to its portfolio, positioning the business for faster, more durable growth.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.