Tata Technologies Limited — Q4 FY26 earnings call

Call held 4 May 2026

Management summary

Tata Technologies delivered a strong Q4 FY26, with revenues growing nearly 12% in constant currency and EBITDA margins expanding by 200 basis points to 16%. The company secured 6 significant deals, including two full-vehicle programs, enhancing geographic and customer diversification. Despite a marginal increase in attrition, the company maintains a robust balance sheet with INR 1,188 crores in net cash and guides for double-digit organic revenue growth and over 18% operating margin in FY27.

Highlights

  • Q4 revenues grew by nearly 12% quarter-on-quarter in constant currency, with Services showing a similar step-up.

  • EBITDA margin for the quarter came in at 16%, representing a roughly 200 basis points improvement from Q3.

  • Secured 4 large deals in Q4 and 2 milestone wins in April, including a multi-year PLM transformation and a Full-Vehicle Program with a Japanese OEM.

  • Net cash position stood at INR 1,188 crores, significantly up from INR 524 crores at the end of Q3.

  • FY26 Free Cash Flow of INR 742 crores, representing a healthy EBITDA-to-FCF conversion of 87%.

Concerns

  • Voluntary attrition increased marginally to 16.2% compared with 15.8% in the previous quarter.

  • BMW JV profit share saw a blip, coming down from INR 7 crores to INR 6.5 crores due to a one-quarter phenomenon of whole year expenses true-up.

Key financials

3 periods

Headline

  • Total Revenue
    ₹1,572 Cr
    QoQ +15.1%
  • Total Revenue (Constant Currency)
    —
    QoQ +12.4%
  • Total Revenue (Organic Constant Currency)
    —
    QoQ +8.8%
  • Services Revenue
    ₹1,220 Cr
    QoQ +15%
  • Services Revenue (Constant Currency)
    —
    QoQ +11.9%
  • EBITDA Margin
    16%
  • Operating Profit (EBIT)
    ₹220 Cr
    QoQ +27.8%
  • Profit Before Tax (ex-exceptional)
    ₹272 Cr
    QoQ +21.6%
  • Net Income (ex-exceptional)
    ₹163 Cr
  • Net Cash Position
    ₹1,188 Cr
  • Headcount
    12,646

FY26

  • Free Cash Flow
    ₹742 Cr
  • EBITDA-to-FCF Conversion
    87%

LTM

  • Voluntary Attrition
    16.2%

What they filed

Q1 FY27: revenue up 33.8%, net profit up 6.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,296 1,317 1,286 1,244 1,323 +2%1,366 +4%1,572 +22%1,665 +34%
EBITDA236 234 233 200 208 −12%193 −18%252 +8%267 +34%
Net profit157 169 189 170 166 +6%7 −96%204 +8%181 +6%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Technology Solutions
    ₹353 Cr Revenue12% Sequential Expansion
  • Education Business
    40% Growth
  • Automotive
    13.6% Growth (USD)
  • Aerospace and Industrial Heavy Machinery
    4.6% Growth
  • Products Business
    -10% Decline
  • BMW JV
    ₹6.6 Cr Share of Profits
  • ES-Tec
    9 Mn Contribution

Order book

high confidence

Execution

typically extending 18 to 36 months

Composition

  • North American commercial vehicle OEM (client type)
  • European automotive OEM (client type)
  • European automotive OEM (supplier quality) (client type)
  • Tier 1 automotive supplier (client type)
  • European luxury automotive OEM (PLM transformation) (client type)
  • Japanese automotive OEM (Full-Vehicle Program) (client type)

Pipeline

deal pipeline tcv

Visibility into multiple Full Vehicle Programs across pipeline, with at least 2 expected to close in next 8-12 weeks.

Our Q4 execution against guidance, the nature and scale of our full-vehicle programs we are now winning, and the visibility we see in the order book – reinforces our confidence in the outlook for FY27.

Source: Prepared remarks

Capital allocation

high confidence
  • Dividend ₹8.35/share (final) Payout ratio 62%
    Our Board has recommended a final dividend of INR 8.35 per share for FY26, representing a payout of 62%.
  • M&A ES-Tec Acquisition · Integrated

    Addressed strategic gap in Germany, broadened global footprint, reduced reliance on anchor customers.

    Contributed $9 million in Q4, $12 million in previous month (Q3) for 1 month contribution.

    This performance reflects a full 3-month contribution from ES-Tec compared with just 1-month in the prior quarter. On an organic basis, the total revenue from operations grew 8.8% in constant currency.
  • M&A BMW Joint Venture Joint venture · Integrated

    Addressed strategic gap in Germany, broadened global footprint, reduced reliance on anchor customers.

    Share of profits from the JV stood at INR 6.6 crores in the quarter, and the net benefit stood at INR 19 crores.

    Our joint venture with BMW has continued to grow at a healthy rate, our share of profits from the JV stood at INR 6.6 crores in the quarter, and the net benefit stood at INR 19 crores.
  • Liquidity Cash ₹1,188 Cr Net cash position stood at INR 1,188 crores compared to INR 524 crores at the end of Q3. Collection efficiency improved with total DSO at 95 days (vs 111 days in Q3), billed DSO at 59 days (vs 69 days), and unbilled DSO at 36 days (vs 43 days).
    At the end of the quarter, the net cash position stood at INR 1,188 crores compared to INR 524 crores at the end of Q3. Our collection efficiency improved during the quarter with total DSO, both billed and unbilled, coming in at 95 days at the end of March, an improvement from the 111 days that we reported at the end of December. Our billed DSO improved from 69 days to 59 days, while the unbilled DSO were at 36 days compared with 43 days.

Guidance & targets

Profitability

  • Operating Margin Run Rate Profitability · FY27 exit · High confidence exceeds 18%
    we expect to exit FY27 with an operating margin run rate that exceeds 18%

    — Warren Harris

  • Bottom-line Expansion Profitability · FY27 · High confidence meaningful
    alongside meaningful bottom-line expansion

    — Uttam Gujrati

Revenue

  • Total Revenue Revenue · next 2 to 3 years · Medium confidence $1 billion
    Our North Star from a revenue perspective has been $1 billion... within the next 2 to 3 years, we have the opportunity to get to where we need to get to.

    — Warren Harris

Market context

  • Organic Top-line Growth Revenue · FY27 · High confidence double-digit
    We continue to expect double-digit organic top-line growth, excluding any inorganic contribution from ES-Tec

    — Warren Harris

  • Organic Revenue Growth Revenue · FY27 · High confidence double-digit
    continue to guide for double-digit organic revenue growth in FY27

    — Uttam Gujrati

What to watch in Q1 FY27

BMW JV Profit Share

Next quarter
Current INR 6.6 crores (Q4 FY26)
Target Return to previous run-rate (above INR 7 crores)

Why it matters

Verifies the one-off nature of the Q4 blip and the JV's continued positive contribution to profitability.

This was more of a 1 quarter phenomenon... we expect to get back to the run-rate that we were previously at before that.

Risks & concerns

  • Impact of Middle East Crisis on Supply Chains

    medium

    Potential impact on commodity supply chains (aluminium, plastics) affecting customer pricing and ability to build, though not expected to impact capex or new product commitments.

    Management acknowledged

  • Competition from Chinese OEMs

    medium

    Chinese OEMs' innovation and speed are driving competitive concerns in Europe and North America, necessitating investment by other OEMs, which Tata Tech is positioned to support.

    Management acknowledged

Q&A highlights

8 direct
Q-o-Q Revenue Growth Breakdown & JLR Recovery Direct
Against the 12%, 8% was organic, about 4% was from ES-Tec... we certainly saw JLR return to the normal run rate that we had before the cyber-attack.

Clarifies the drivers of Q4 growth and confirms recovery in a key anchor client, addressing concerns about sustainability.

Asked by Chandramouli Muthiah

ES-Tec Integration & Synergies Direct
The post-merger integration plans with ES-Tec are very much on track... We're seeing the business plan being delivered in a way that's consistent with the plan that underpinned the acquisition in November.

Provides an update on a recent acquisition, confirming its performance is in line with expectations and integration is on track.

Asked by Chandramouli Muthiah

Impact of OEM EV Project Write-downs & Propulsion System Mix Direct
I don't think we should be too distracted by the cleaning up of balance-sheets... the portfolio of propulsion systems is much more balanced today than it was, say, 2 years ago when everybody was all in on EVs... we're relatively agnostic in terms of propulsion system.

Addresses concerns about industry-wide EV slowdowns and clarifies the company's diversified and agnostic approach to propulsion systems.

Asked by Chandramouli Muthiah

Middle East Crisis Impact on R&D Spend & Supply Chain Direct
I think one of the things that is not being talked about as far as the Middle East is concerned is the likely impact that what's going on there is going to have on commodity supply chains... I don't expect that to impact capex or indeed the commitments that are being made to new products.

Acknowledges a potential macro risk but provides management's view on its limited impact on their core business and customer investment plans.

Asked by Bhavik Mehta

BMW JV Profit Share Blip Direct
This was more of a 1 quarter phenomenon, whereas in quarter 4, there was certain true-up of the whole year expenses. So, it's an anomaly. I would not guide to any degrowth that we see in the margins or the share of profit from there.

Explains a specific financial anomaly in the BMW JV's profit share and reassures investors about its ongoing positive contribution.

Asked by Bhavik Mehta

Bridge to 18% EBITDA Margin Direct
Largely, the operating-margin improvement in the year will be driven first by the robust growth that we expect in our Services business... volumes are something that we will continue to drive. Over and above that, our standard levers around offshore, the mix improvement, the pyramid will continue to support the efficiency that volumes will bring to us.

Details the strategic levers for achieving the stated margin target, including volume growth, offshoring, and portfolio mix improvement.

Asked by Bhavik Mehta

Geographic Trend of Deal Wins & European Offshoring Direct
The good news for us is that, again, it's broad-based... One of the PLM deals was in the United States, the other was in Europe. We've celebrated the Full-Vehicle deal in Japan... German OEMs have traditionally surrounded themselves with local engineering... we're certainly seeing that change.

Highlights successful geographic diversification in deal wins and a positive shift in European OEM behavior towards Indian IT services.

Asked by Karan Uppal

$1 Billion Revenue Timeline Direct
Our North Star from a revenue perspective has been $1 billion... If we can do that and we can sustain that next year, we can complement that with 1 or 2 inorganic transactions. I think within the next 2 to 3 years, we have the opportunity to get to where we need to get to.

Reaffirms a key long-term financial aspiration and outlines the strategy to achieve it, including organic growth and potential M&A.

Asked by Satish

2 min read 6 chapters

Detailed narrative

Q4 Performance Highlights

Tata Technologies delivered a strong Q4 FY26, with total revenues growing 12.4% in constant currency to INR 1,572 crores, exceeding guidance. Services revenue grew 11.9% CC to INR 1,220 crores, with organic growth contributing 8.8% CC. The EBITDA margin expanded by 200 basis points sequentially to 16%, reflecting operating discipline. Automotive segment grew 13.6% in USD terms, Technology Solutions expanded 12% sequentially, and the Education business grew 40% Q-o-Q.

Strategic Deal Wins & Diversification

The company secured 4 large deals in Q4 and 2 additional milestone wins in April, including a multi-year PLM service transformation for a European luxury automotive OEM and a Full-Vehicle Program with a Japanese automotive OEM. These multi-year, multi-domain programs typically extend 18-36 months with deal values in the tens of millions of dollars. These wins enhance geographic and customer diversification, reducing reliance on anchor clients and strengthening the Asia footprint.

Margin Expansion & Cost Discipline

EBITDA margin improved to 16% in Q4, a 200 bps sequential increase, driven by operating discipline and early benefits of operating leverage. Management highlighted a deliberate choice to protect delivery capacity and invest through the downturn, which is now translating into healthier economics. The company expects to achieve an operating margin run rate exceeding 18% by the exit of FY27, supported by robust services growth, offshoring, mix improvement, and AI deployment.

Talent & AI Integration

Total headcount stood at 12,646 associates, with a net addition of 66 sequentially. Voluntary attrition marginally increased to 16.2% but is considered manageable. The company continues to invest in talent development, with 85% of the workforce covered by TechVarsity and over 50% of the engineering workforce now AI-ready. Proprietary Chromosome AI is being deployed across delivery LOBs to improve engineering efficiency, reduce costs, and compress product-development timelines.

Outlook & Long-term Vision

Tata Technologies guides for double-digit organic revenue growth in FY27, excluding inorganic contributions. They also expect to exit FY27 with an operating margin run rate exceeding 18%. The long-term 'North Star' revenue target remains $1 billion, which management believes is achievable within the next 2-3 years through sustained organic growth and potential inorganic transactions, leveraging strong deal visibility and customer engagement.

Capital Allocation & Balance Sheet Health

The company reported a strong net cash position of INR 1,188 crores at quarter-end, a significant increase from INR 524 crores in Q3. Collection efficiency improved, with total DSO at 95 days. For FY26, the business generated INR 742 crores in free cash flow, representing an 87% EBITDA-to-FCF conversion. The Board recommended a final dividend of INR 8.35 per share and a special dividend of INR 3.35 per share for FY26, totaling INR 11.70 per share, representing a 62% payout.

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