Tata Elxsi Q1 Profit Falls 2.5% As Revenue Climbs 9%

Tata Elxsi reported a 2.5 per cent year-on-year (YoY) decline in net profit for the first quarter ending June 2024. The company posted a net profit of Rs 184.1 crore compared to Rs 188.9 crore in the same quarter last year. 

Sequentially, net profit decreased by 6.5 per cent from Rs 196.9 crore recorded in the fourth quarter ending March 2024. The decline in profitability was mainly attributed to weaker performance in its healthcare and life sciences segment, which saw a 4.3 per cent drop from the previous quarter and a 0.5 per cent decrease year-on-year. 

Additionally, the media and communications vertical saw a 3.8 per cent YoY decline, although it edged up marginally by 0.5 per cent quarter-on-quarter (QoQ).

Despite the dip in net profit, Tata Elxsi achieved decent revenue growth. Revenue for Q1FY25 rose by 9 per cent YoY to Rs 926.5 crore, up from Rs 850.3 crore in Q1FY24. Sequentially, revenue increased by 2.3 per cent from Rs 905.9 crore. 

In constant currency terms, revenue grew by 8.4 per cent YoY and 2.4 per cent QoQ. The transportation business, a significant contributor to the company's growth, reported a 5.3 per cent increase QoQ and a 20.3 per cent rise YoY in constant currency. This segment now accounts for more than half of Tata Elxsi's software development and services business.

Geographically, Tata Elxsi saw a notable increase in revenue share from Europe, which rose to 42.2 per cent, up from 40.3 per cent in the previous quarter and 37.4 per cent in the year-ago quarter. Revenue contributions from India and the rest of the world also increased to 17.6 per cent and 6.5 per cent, respectively. In contrast, the Americas’ revenue share dipped to 33.7 per cent, down from 36 per cent in Q4 and 40.2 per cent last year.

The company’s operating margins declined to 24.3 per cent from 27.1 per cent YoY and 25.8 per cent sequentially, reflecting the challenges in maintaining profitability amid fluctuating segment performances. 

On the workforce front, Tata Elxsi reduced its headcount by 257 employees during the quarter, bringing the total to 13,142 as of the end of June. Nevertheless, the company added 856 employees compared to the same period last year. Employee attrition improved slightly, reducing to 12.3 per cent from 12.4 per cent in the previous quarter and 15.6 per cent a year ago.