Thank you very much. Good evening to all the participants on the call.

Good morning if you're logging in from the western side. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors.

Therefore, it must be viewed in conjunction with business risk that could cause future result performance or achievements that differ from what is expressed or implied by such statements. To take us through the results and answer your questions today, we have the senior management of Tata Elxsi represented by Mr.

Manoj Raghavan, Managing Director and CEO; Mr. Nitin Pai, Chief Marketing and Chief Strategy Officer; Mr.

Gaurav Bajaj, Chief Financial Officer; and Ms. Neha V, Company Secretary.

We will start the call with a brief overview of the past quarter by Mr. Raghavan, followed by a Q&A session.

We would appreciate your cooperation in restricting yourself to two questions to allow participants an opportunity to interact. If you have any further questions, you may join the queue, and we will be happy to respond to them if time permits.

With that, I would like to hand over the call to Mr. Manoj Raghavan.

Over to you, Manoj.

Thank you, Shashank. A very good evening to everybody who's joined us today.

Welcome to the Q4 '26 investor call. I hope that you and everybody in your family is safe and healthy.

I'm pleased to announce that we have delivered a healthy revenue of ₹993.8 crores for the quarter, growing 0.9% quarter-on-quarter in constant currency terms. In a transportation business, our revenues in Q4 '26 grew by 0.2% quarter-on-quarter in constant currency terms.

We are delighted with two strategic wins: one in APAC region from a new-age OEM, and another from a next-generation mobility services company in the US, paving the path for business growth in coming quarters. Our investment and efforts to pivot towards OEM business is delivering continued success, underscoring our strength in focused execution of chosen strategies.

OEM customers now represent 77% of the revenue in this vertical. Our healthcare and life sciences vertical de-grew by 13.1% quarter-on-quarter in constant currency terms, impacted by delays in deal awards that we were expecting and prepared for in the quarter.

However, during the quarter, we opened an offshore development center for the Japanese medtech leader Terumo Corporation. This center brings together the power of design, engineering, and digital to innovate their cardiac and vascular solutions.

I'm happy to report that our media and communication business posted a 5.6% quarter-on-quarter revenue growth in constant currency terms. This growth was led by continued deal ramp-ups, a strategic deal for adtech and tier-1 US telco.

In the quarter, we also won a multi-year large deal from a world-leading device OEM for its portfolio of video and broadband products. For the quarter, our EBITDA margin stood at 24.6%, improving by 130 basis points sequentially.

This reflects our continued focus on operational excellence and margin improvement. In FY '26, we significantly advanced our adoption of gen AI.

This was supported by partnerships with AI companies, launch of our own automotive SDLC platform, devstudio.ai, earlier in this quarter, curated tool stacks and agent inventory, investments in infrastructure, sandbox environments with IP protection and data privacy, and rigorous upskilling. With these coordinated efforts, we are progressing steadily towards being an AI-native engineering organization, strengthening our differentiation and innovation quotient.

I am pleased with our sustained and strong operational performance through segment-leading offshore delivery, a continued transition to fixed-bid project ownerships, and the systematic and enterprise-wide adoption of AI-enabled efficiencies. These levers strengthened execution discipline and productivity, driving consistent margin improvements throughout the year.

As we enter the next financial year, we remain focused on scaling our differentiated design-led and AI-enabled offerings, strengthening operational leverage, and driving sustainable growth and healthy margins. Thank you, and over to Shashank for the Q&A session.

Hi. Thanks for taking my questions.

Sir, of the deals you have won recently, how much of the value is coming from existing customers expanding their engagements or wallet share versus entirely new logos, and how has this mix evolved over the last two or three years? That's my first question.

Thank you.

I think if you look at it in any quarter, the new customers would contribute maybe 2, 2.5% of the revenue. Large portion of the revenues come from existing customers and the deals that we win with them.

However, we also see a new set of customers that are coming in. For example, this quarter, we have announced a deal with Terumo, for example.

That's a new customer that's set up an ODC with us in the healthcare and life sciences space. Similarly, the deal that we announced in the automotive segment with the APAC customer, that is also a new customer for us, and that's a deal that we have announced.

The deal that we have announced in the media and communication space with the multi-year deal, that's an existing customer of ours. It's always a mix of existing as well as new customers.

Sure. Just a follow-up, is there a pattern where the new logos typically take x number of years to scale up, or is there no such pattern?

It depends on customer to customer.

It depends on business to business, I would say. Usually, yeah, even if we win a deal, for it to make a significant impact, it takes anywhere between 9 months to 12 months, right, for ramp-ups to happen and start delivering.

Sure. That's helpful.

My second and last question is, you have highlighted AI-led productivity and a shift towards fixed-bid and platform-based delivery. Are these changes starting to alter pricing power and contract structures, or are they mainly improving internal efficiency so far?

It's both, right? Definitely, we are using a lot of that for internal efficiencies.

However, there are customers that are demanding better efficiencies, productivity, and so on, which automatically leads to, if you're able to deliver that performance and productivity, then a better pricing power, right? It's a combination of both.

Okay. Thank you.

I'll rejoin the queue. Thank you.

Yeah. Hi.

My first question is pertaining to the quarterly result. Healthcare, we've declined 13% QoQ on constant currency in our revenue.

Last quarter, you called out that probably Q3 was the bottom. Just wanted to get your view that do we see Q4 as now the bottom, or is there something which has changed over the past 3 months for us there?

I think we were very optimistic that the healthcare business has reached the bottom and we will turn around, and we were pretty confident because there were a few deals that we were bidding for, and we were pretty confident that we will be able to close those deals. Unfortunately for us, those deals have not closed, and that resulted in this situation that we've had.

However, we still continue to carry those items in our high-probability funnel, and in fact, a few of them actually we have closed in the couple of weeks in the new quarter, right? I think I'm pretty hopeful that last quarter, Q4 was the bottom, and we will be able to recover this.

If we had closed these deals earlier in the quarter, then we would have had a fantastic exit to Q4, all the three businesses really firing, and so on. That was what we were all aiming for, but hopefully, it is just shifted by a quarter, and we should be able to recover that position in Q1.

Got it. Say Q1 plus Q4 combined should have positive growth over Q2 plus Q3, if that's how I have to look at it.

Second, on the USA business, the media and communications industry, the consolidation seems to have happened. Are we now going to go back on the higher growth trajectory here, or is there something which needs to be recalibrated in USA?

On

the media and communication both.

No, the media and communication business has smartly grown for us in the US, right? Overall, the US business has declined a little bit.

That is primarily because of the healthcare piece, because healthcare for us is largely US-focused.

Got it. Finally, more on a structural question, right?

You'd mentioned in the past that now incrementally we're doing fixed contracts, which may or may not be a trend that we're following, but also we're doing longer-tenure contracts, which are not as profitable in year one as say the earlier shorter-term contracts that we were doing. If you were to take say a 2-year, 3-year profitability combined, do we even out on our margins, or we take the hit on the margins, but we'll get higher absolute amounts?

Is that the approach, or we have levers to get margins ramped up in year two, year three?

Obviously, see, when we look at a 3-year or a 5-year deal, right, the initial 1 year would have a lot of cost involved, right, that could be sometimes rebadging costs, that could be acquisition costs, and all of that, right? However, when you look at a 3-year or 5-year, we definitely would be looking at seeing how we can improve our margins sequentially, quarter-on-quarter and year-on-year, right?

That is the focus for us. Definitely, we would want to bring back, and especially now with using AI, gen AI, and so on, we have many many ways of really bringing out the margins in a positive way.

I think that's what we're focusing on.

All right. Finally, just a bookkeeping one: if I could get the utilization rate for the quarter.

It is about 73%.

73%. Got it.

Thank you. That's it from my end.

Thank you.

Hi. Good evening, and thank you for taking my question.

My first question was on the broader transportation segment. The last year's been turbulent for the entire segment, but looking at Q4, I think things were flattish.

What's your outlook for the transportation segment going into FY '27? For the overall business, is the aspiration still double-digit growth for the financial year?

I think the good part for us is while, as you rightly said, the overall market outlook was sort of mixed, right, throughout the last financial year, but we were still able to win some large deals, and so on. In fact, even in Q4, we won some good opportunities for us, multi-million dollar deals.

What we are confident is that, look, some of the new deals that we have won, we will be able to scale in the next 6 to 12 months time period, right? That is what will help us really deliver growth in the automotive space.

Of course, on top of it, as we have been updating all the investors that we have been gradually moving to more and more of our business from OEM side, right? I think today, we are looking at about 77% of our revenues 77% of the automotive revenues coming from OEM.

I think shift to OEM business is also helping us. I would say, I'm still pretty optimistic about the overall automotive market.

However, given the current geopolitical and all the war and all that, right, while we have the deals in hand and we will definitely look at ramping up, and so on, that could be some amount of uncertainty. We are still talking to customers on that.

Having said that, I think maybe we would look at a high single-digit exit, right, may not get into a double digit for automotive.

Understood. My second question is on margins.

Again, margins saw a very sharp improvement this quarter. What seems to be driving that, especially since utilization is still at about 70%, 73% like you said?

Then in terms of sustainability for this margin improvement going forward, what would your comments be?

Hi, this is Gaurav. Let me answer that question.

I think we have been talking about the margin for the past few quarters, and I think we have been mentioning that I think we are making constant effort to, go back to our original margin, band, which is about 27 to 28%. I think the work has been happening towards that in terms of the operating model, operating efficiencies, and the leverage.

It's not only about the utilization. Of course, utilize utilization was, below 70% at one point of time.

Now we are almost inching towards mid-70. Every, 1% increase in utilization also helps, at least 25 to 30 basis point on on the margins.

That is helping one. Second, I think the some of the fixed-price contract that increase that has happened, that is also, comes sometimes with a better margins because you're able to, have a better optimize and rationalize pyramid on those, deals if you're able to lay deliver and execute on those contract, the way you have contracted for.

I think third is that pyramid, in terms of, managing the pyramid and the further hiring, so that is well calibrated in terms of the future requirements, supply-demand state. That is giving me almost 65 basis point kind of a, improvement on a quarter-to-quarter basis.

Yes, I think there has been some currency tailwind, which is also helping, margins, for the current quarter. If I have to put in terms of the margin work, probably 150-155 basis point is coming from the currency movements, against, most of the cross currencies has improved, compared to the INR.

65 paisa, 65 basis point would have come from the operating efficiencies, across different levers that is in the into play. Also we have done the, the salary increase for the rest of the staff for the, in the organization, effective 1st Jan.

That would be 90 basis point kind of a, impact on the quarter. That's, sums up to almost 130 basis point improvement in operating margin on a quarter-to-quarter basis.

Understood. Just one last question if I can squeeze in.

One of the concerns that were there last year is in terms of consolidation and again, that a lot of deals were getting cut. Do you think that phase is behind us now, or, looking at the very strong growth you've had in media, do you think that the segment is still challenged from a growth perspective for the next few quarters?

I think, in general, I would say we are still challenged. The entire media and telecom industry is challenged.

However, what has happened for us over last quarter and the financial year is, we had won some large deals, especially from some of our large customers. Those ramp-ups have really started happening, and we've seen those ramp-ups happening in Q3 and Q4 as well.

On top of it, we won a large deal in Q4, which we would be literally taking over the engineering for one of our customers, all their legacy products, and so on. That's a pretty significant deal for us, and that single deal actually also bumped up our overall growth in this segment.

Having said that, deals are still consolidation deals and cost-takeout deals that are there on the table, and we are still participating in those deals selectively. Overall, yes, I think we're still not out of the woods in this particular industry segment.

However, because we have won a few good deals for us, we are able to show this growth.

Understood. Thank you so much for taking my questions.

Hi, thank you. Just wanted to understand on generative AI, how are the client conversations evolving?

Are you seeing clients asking for productivity pass-throughs or pricing discounts if they want you to implement more of gen AI into the projects, or is it still at a very nascent stage where that's not part of the conversation in a big way so far? Different across the three different industries you cater to.

I think from a generative AI perspective, I think we are seeing a lot of conversations happening in the media and telecom space, not so much in automotive and healthcare. Yes, there are conversations happening, and so on.

Those are more in terms of, for example, in automotive space, there's a lot of interest from OEMs and customers in terms of how do you manage, for example, cyber security and confidentiality requirements, and so on and so forth, right? That's why we have built our own devstudio.ai toolchain to address some of the concerns that customers keep asking us, right?

I think in both automotive and healthcare, there are those initial conversations happening. There is an interest to see how we can use some of these technologies for better efficiencies and so on.

Not so much conversations around cost and cost takeout, and so on at this point in time. Media and telecom, we see a lot more customers asking if can we use gen AI to overall help in efficiencies, at the same time, also manage their budget situation.

Okay. Got it.

Any sense on what could drive this different customer behavior between let's say tech and media? Is it because media is under more pressure right now and hence the clients are more desperate for cost efficiencies versus the other two sectors?

I think automotive is still In some sense, it's still very regulated, and automotive software development follows certain processes, and using a generic AI tool, it will be very difficult for automotive companies to pass various regulatory requirements, and so on, right? That is why you need to build custom tools for automotive.

Healthcare is also same, right? It's very regulated industry.

Whereas media and telecom, that sort of very very strong regulatory requirement is not there in terms of that if you do something, it's not going to cause an accident or kill somebody, and so on.

Maybe I can just add to that. I think, in general, the telecom industry, especially telcos, are actually at the forefront of deploying data centers, building infrastructure, and the connectivity that you need to deliver AI and gen AI.

To that extent, in many ways, I would say they are ahead of the curve, at least between industries, in terms of being ready and in terms of being comfortable and already having sorted out some of the key questions around how do you deliver.

Got it. Just lastly, Gaurav, how should we think about the trajectory of margins from here on because it's been increasing since the last three quarters, which is good to see.

Should we continue to expect similar kind of expansion even next year, or do you think it will slow down a bit given that most of the lever have been utilized in FY '26?

Bhavik, I think we will have a sustained effort in terms of improvising our margins from here. Probably it will not have a huge uptick on a quarter-to-quarter basis.

Probably it would be more gradual increase or the improvement that will happen on a quarter-to-quarter basis. Also it needs to be tightly aligned with the top-line growth.

Focus would be on the top line as well as the bottom line. Some of the margin will come back as we see some of the growth coming back, and most of our vertical start to deliver on the top line.

Having said that, of course, there could be quarter where the margin can have a left or right shift depending upon some of the one-timers and other events. For example, whenever in the quarter we have to do a salary hikes, there could be an impact in those quarters for the margins.

Overall, if you have to see on a mid to long term, probably I think the idea is that if we can exit the next financial year, somewhere near to 27% kind of a margin, not for the full year, but maybe for a exit of this financial year quarter four.

Just a clarification, this 27% is at EBITDA level or the PBT level?

At the PBT level.

Got it. Thank you.

Mhm.

Hi, sir. Thanks for the opportunity, and congrats on a good quarter.

Sorry, this could be a repeat. I joined a little late, but just wanted to understand the healthcare life sciences traction.

The anticipation was that the deals won earlier could help traction in terms of growth for the current quarter. Did healthcare perform as anticipated at the start of the quarter, or was there any mid-quarter or late-quarter challenges in terms of delays, decision-makings, on and so forth?

I think I discussed that earlier in the question that came up earlier. We were hoping on a couple of deals because we were very close to signing those deals, and those are large deals that could have really helped us with improving the numbers.

Unfortunately, both those deals did not come through in the quarter, and they've been pushed to Q1. I think it is more a shift of some deals.

At the same time, there have been a few projects that have also closed, right? A combination of that has created this situation for us.

I think I'm very confident or hopeful that we will be able to recover in Q1.

Understood. Sir, just a clarification.

This happened more in March, or was it a phenomenon starting January itself? Just trying to understand the behavior of the clients in this context.

In fact, these deals started in October itself. We were hoping that it'll definitely close, but it took 6 months, and that was the delay, right?

We're not expecting that it would take so much of time to close these deals.

Understood, sir. That's very helpful.

The second question again, maybe a repetition, and just wanted to get clarification. When there was a question about margins, our answer suggested that we are okay to let go margins in the interim to win larger deals.

Is the understanding right, because what I'm trying to understand is we are also talking of a 27% PBT number for next year, and at the same time, we also made a comment about leaving margins on the table for growth. I'm just trying to put a context to both these number commentary.

No, the 27% we talked about was exit margin at end Q4 this financial year. It is not the margin for the year, okay?

That is where we were aiming for, right? I think today upwards of 20 Gaurav Bajaj (Chief Financial Officer):

25.6%. Manoj Raghavan (Managing Director and CEO):

25.6 in Q4 last financial year. We want to take it to 27 in Q4 of FY '27, right?

That's the indication that Gaurav talked about. I don't think we made a statement that we are leaving money on the table.

It's not a generic strategy that look, from now on, we will drop rates and go out. That could be certain specific deals which are from existing customers, which are large deals, and we feel that we would not want to let competition in or we want to vacate that space.

Sure, for those cases, we'll definitely look at seeing how we can be competitive. As a generic strategy, we still definitely want to improve our margins, and we've not given any guideline to our sales team or to our finance team that we can drop our margins.

Super helpful, sir.

Abhishek,

just to add a line, also note that even in those deals, there's a path to improving margins. It's not that you win it and it would stay where it is, right?

Understanding is there are some deals, they constitute a small percentage of your incremental revenues every quarter. Some of those deals may need that investment period ranging from a quarter to more, but the expectation is over the longer term, especially because you're going for longer-term foundational revenue baselines, you would start to recover some of that margin back, and hopefully, you would improve well beyond, too.

Perfectly understood, Nitin sir. Thank you for taking my question, and best wishes for the next year.

Thank you so much, Abhishek.

Hi, am I audible?

Can you please share the margin breakdown for this quarter once again in terms of what led to the 130 bps QoQ increase?

Sure, Prateek. I think I mentioned earlier also, but quickly just to summarize, what we are saying that 155 basis point from the currency, 65 basis point from the operating leverage, and then we have 90 basis point impact due to the salary hikes that has been done during the quarter.

That adds up to 130 basis point.

Understood. That's it from my side.

Thank you.

Thank you.

Hi, can you hear me?

Hi. Manoj, one fundamental question on how the market is behaving, how is competition behaving in terms of pricing aggressiveness, especially with AI benefits being priced into say contracts?

Are you seeing rationality or irrationality in the market currently, and how are we tackling this?

No, I I don't think we have seen irrationality in general, right? Because see, ER&D is still a very very specialized It is not that, we can use AI or gen AI across the board, right?

Having said that, yes, we have seen a few contracts where there have been there have been competition that has, priced very very aggressively, and we are also a little bit surprised. We don't know whether it is because that they have used gen AI and, or they have assumed that, gen AI will lead to certain productivity.

See, gen AI, I I don't think we can use see gen AI as, you can cut and paste in all situations, right? That is a very wrong way of looking at, gen AI, and and there are I know that there is there are a few competition who are who are pretty aggressive in using some of this.

Even customers are very very careful before they accept, a complete, gen AI-based, solution, and so on, right? Largely, I would say we're not seeing irrationalities that you that you indicated.

There are a few cases here and there, but we're not sure whether it is it is gen AI or some other factor that are playing.

Got it. Are we being conservative, moderate, or aggressive in pricing and efficiencies from AI in our bids?

No, we are definitely looking at AI, and in all the projects that we are bidding for, there is a component of it which we attribute to AI, and we track it, and we want to see how we can use that to really improve our efficiency, productivity, and ultimately, margins, right? Those are things that we are definitely tracking internally.

I wouldn't say that we are aggressively going overboard. At the same time, we're not conservative at all.

Got it.

Got

it. Sorry.

Go ahead.

No. I think much more than cost, I think we are double-clicking on value.

I think what gen AI does coupled with domain expertise is that I think it allows you to move up the time to market and quality factors as much as cost. I think, in the ER&D space, that is invaluable.

At times, it's much more valuable than simply cost, cuz engineering cost is a fraction of your overall product and product development cost. I think the opportunity is actually in enhancing value rather than reducing cost.

Understood. At least execution speed for existing contracts is more likely to be the outcome for us rather than say cost efficiencies, which might be for other traditional IT services.

Is that understanding correct?

Yes, though I don't want to generalize that again. All I'm saying is that the simple factor of only cost is not the only consideration.

Got it. Thank you.

Thank you. This was helpful.

That's it from my end. We can move on to the next one.

Thanks, Rishi.

Sir. Thanks for the opportunity.

My question is on the transportation vertical. Obviously, we have seen kind of good recovery there, and now it's stabilized also.

You mentioned in the PPT that 77% is from the OEMs. If you can share some more light in terms of how the tier-1 portfolio has been doing, and most of the recovery is from the OEM portfolio, and how the tier-1 portfolio has stabilized, and also in terms of the overall spending or the recovery that we have seen from transportation, it is only from the top client recovery and the ramp-up of deals that we have won, or is it higher spending across the OEMs like both in the US and the European geography?

How is the mix, and what is the confidence that we move to a double-digit growth there in the transportation vertical?

Definitely recovery is broad-based, I would say. As you said OEMs contribute more than 77 I mean 77% today, and these OEMs are primarily, of course, spread across, right?

It's not just US and Europe they talking of. We are also talking about India.

We're talking about Japan, and we are also talking to some Chinese OEMs, and so on. It's still early days, but I think essentially, for us, it's a global market, and we are not really constrained to only one geography.

Tier-1 portfolio, I would say continues to shrink. Tier-1s, if you look at it, are having a tough time given that OEMs are taking more and more responsibilities, and so on.

However, we are deeply entrenched with a few tier-1s, and that business definitely continues. Deal sizes also with tier-1s are smaller and so on, right?

For us, growth will continue to come from the OEMs. Okay.

Sir,

you mentioned from the AI side that the adoption of AI in terms of, especially in transportation, OEMs is less versus the other verticals. Are we also, in terms of the impact of renewals, when the kind of contracts come for renewals, are we also seeing AI-led deflationary impact or higher discounts that the OEM clients are asking in terms of the AI benefits, or obviously in terms of the higher spend related to AI it's not seen, but are we seeing the impact on the cost side or in terms of higher discounts in terms of renewals?

I think it's very very early days, right? It's not as if that we have contract renewals coming every now and then, and so on.

At least those contracts that have come up for renewal, we have not seen impact of AI. Having said that, it's very difficult to predict 6 months to 12 months down the line what will be the change in the buying behavior of OEMs.

Today, I think, AI or gen AI is not the most important thing that OEMs focus on. It's more on value and how are we able to support them with the various projects that they have, and it's about the people that you have and how you are able to deliver value to them, right?

That's the more focus, not so much on AI and gen AI at this point in time. As I said, 6 months, 9 months, 12 months later, it's very difficult to predict what sort of demands will come in.

Okay. Sir, on the margins part, obviously, we have not been adding headcount, and we have enough capacity.

Till what growth rate or till what kind of growth you think that the existing capacity is sufficient, or we need to add capacity maybe in the next one or two quarters?

We are at 73% utilization. I think we can go all the way up to 80 or slightly more than 80%, right?

It's not that we're not adding people. We're adding people wherever we need them, but we're not aggressively adding headcount, right?

We are really metering the headcount additions, and so on. Only when there is a real requirement do we go out and hire, right?

I think once the utilization touches 80 or 82%, that is when I think we will be looking at adding more in a larger numbers, right?

Okay. Sir.

Thank you, and all the best.

Thank you.

Hi, thank you for taking my questions. My question is around the fact that last quarter we were for FY '27, we were aspiring for a double-digit growth for the business overall for FY '27 and led by transportation, healthcare verticals.

Now this quarter, healthcare has been a bit of a disappointment, and last quarter, if I remember correctly, we were expecting growth in transportation in 4Q. We've come out at flattish.

Just comparing your expectations for FY '27, how was it last quarter, and what would be the aspiration as we start FY '27?

I think a lot of things have happened in the quarter, right? Geopolitical situation has changed.

Last quarter when we talked about it, we had high hopes that, of course, transportation would continue the growth momentum, as well as healthcare and life sciences, we will be able to get back to growth. I've explained the reasons why healthcare life sciences.

I think automotive, given the circumstances, given the challenges, and so on, I think we have done reasonably well to exit flat, or a small growth, right? Sitting today, looking at what is happening around the world and the conversations we are having with customers, and so on, I think for us, overall, we might be looking at a higher single-digit growth for the financial year.

We may not look at a double-digit growth.

The verticals that would lead it would again be transportation now?

Transportation, yes. We ideally would want all the three businesses to grow, right?

We've had a very difficult, I would say, 12 months where multiple businesses went into a downswing at different quarters, and so on. From now on, we are really hoping that all the three businesses will start showing growth.

The other question is now given the tough geopolitical issues that we have had in this quarter, did we see clients now pushing back on the signing of deals or decision-making cycles getting slightly elongated, which may again mean that the recovery that we were expecting may also get pushed back by a quarter or two? Are you seeing signs of that as well this quarter?

We are seeing both sides, right? We have also announced deals that we have won in the quarter.

We also know that there are cases where the deals have been pushed off. There is no one answer to your question, right?

Both are happening.

Sure. The expectation of recovery that you had, are you still hopeful of the same trajectory, or does that get pushed off a little bit seeing what is happening around?

Which is where

when we came in the last quarter, we were hoping for a double-digit, sort of growth aspirations for the quarter. Looking at the situation today, maybe I would be a little more conservative and say maybe a higher single-digit is what we should look at.

This could change in the next 3 to 6 months, right, when we look at the deal momentum, and so on. Sitting today, the visibilities that we have, conversations that we're having, and the deals we have closed, and the deals that we are pursuing, this is what we feel.

Sure. Perfect.

Thank you so much, and all the best for the next year.

Good evening, sir. Congratulations on a good set of numbers.

My question is pertaining to the fixed-price contracts that we have. Over a period of time, we have seen that our fixed-price contracts have now increased quite a lot, and I believe that fixed-price contracts have a better margin trajectory.

With regards to signing more OEM deals, how do you see that trajectory going forward on a sustainable basis? Is there a further scope to increase the fixed-price contracts?

No, yes, large deals that we have closed are on fixed-price contracts. The challenge is that if you don't execute on those fixed-price contracts correctly and then it could also lead to revenue leakages and profitability dip, right?

It's not that it's not advisable that we continue to shift more and more of our business to fixed price. I think that is a careful decision that we need to take because the entire processes in the organization, the SMEs that we have, the architects that we have, any deal that we pick, we also need to be able to execute it, deliver on time with the margins, right?

Only then we can show the margins. It's in some sense a double-edged sword, we'll be a little careful in terms of how this goes, right?

It's not our objective suddenly to move to a 70 or an 80% fixed price, right? That will be putting too much of risk on us.

Right. Thank you.

With regards to your transportation verticals, we have been talking that whenever there is a slowdown, that structurally, you see that some of the orders or some of the new projects, might get offshored. Are you seeing that traction, or there is indecisiveness from the customers' side currently?

No, we are seeing a lot of that, right? Especially when there's a need in the customer space, right, that they have to continue their engineering activities, and as a slowdown, the only option for such customers is to see, hey, can they do more with less, right?

With less of a budget, can they do more, right? That is where best-cost countries like us and companies like us come into play.

Yes, I think we continue to see such customers who are looking at which is the right organization that can deliver outcomes without too much of oversight because if you're doing offshore, it means a lot of the work the OEM has to hand over, right,

and

they should have the confidence that Tata Elxsi is a company that can take up this complex work and deliver outcome remotely. That is the track record that we have, and that is why customers trust us with a lot more offshore delivery.

Right. We have been speaking about it quite a lot, but over the past 1 or 2 years, I think that has not reflected in the overall revenue.

When do you think that change might happen, or is it due to that the profitability of the legacy players are impacted, that is why we are not getting that kind of business?

If you look at it, industry went through massive situation over the last, I would say, 12 to 18 months, right? It is not as if that such deals have not happened.

Such deals are happening. Some of them are ramping up as per plan.

Some of those ramp-ups are still slow, it's a work in progress. We are seeing that shift happening.

Okay. Last question with regards to the Yeah, sorry, please continue.

If I may just add, just adding a little perspective. I think you'll remember all our revenues and growth or lack of it is organic.

A large part of the growth that we've seen across many of the peers that we've seen in the industry has been actually coming from inorganic.

Purely

organic growth has been lacking, if you ask me, not very different. I think what's different for us is the fact that you'll see that consistent offshore track delivery.

Nobody else carries that kind of an offshoring capability. Two is you're seeing that gradual, but consistent shift to fixed price.

Rightly like Manoj said, the intent is not to simply improve margins, it is to make sure that we can continue to deliver greater and greater value. The most important point I think everybody has to remember is ER&D is not very large deals locked in for 5 years, and so on.

It is a set of projects that continue to run off, every quarter, you will lose 10, 15% revenues, you got to make it up with new deals and new contracts. That is the challenge.

It is not the proposition or the value that we carry. It is the ability for you to continuously refill that funnel,

right? Right, right.

Thanks a lot. Thanks a lot.

Last question is with regards to the media vertical. We have been telling that media is still not out of the woods, do you think that in the media vertical if we are able to manage the revenues over a 3- to 5-year horizon, do you see that trajectory changing, or what circumstances may bring the revenue in the media and telecom vertical back?

If I may, again, I think two, three things, right? One is that we've seen a plus minus, plus minus.

There are some quarters of growth, there's some quarters of de-growth, the media and telecom vertical for us has been very volatile. Overall, it has not delivered growth, right?

That's fundamentally reflecting the state of industry, which is whether it's the telecom operators or whether it's the large media streaming companies and content studios, they've all been under tremendous pressure for top-line growth. Therefore, a lot of the focus has been bottom line.

Bottom line means then it's more of an efficiency and cost-takeout game rather than an innovation game.

Right.

To that extent, I think what we have really done very very well, if you ask me, over the last six quarters is the building of confidence both in ourselves as in customers that we can execute, we can win, execute, and execute very very well on large consolidation deals. Remember that we have typically not played that game too much.

We've always been about do the new and less about consolidate, we will take over what you're doing, we'll make sure that efficiencies are delivered. It's been always less of that, more of do the new.

I think that muscle that we have built, whether it's in automotive, whether it's in media and communications, I think is the biggest single factor that you are able to go there and win $100 million deals, that you're able to go there and win $50 million deals. I think that creates that muscle and discipline to say, look, can we build a foundation of revenues that even if there is some volatility, you can stay protected, and hopefully, there is growth in certain quarters, there is growth in certain areas.

The real big answer will be that innovation has to come back to the industry for true big upticks. That is when you see moderate growth in our view.

Also the industry is also going through a lot of mergers and acquisitions, M&As happening. That is also, sort of what happens when two media companies come together is, there is duplication of engineering and so there is a lot of resources available and there's no need to really depend on an external supplier to come in and support them, and so on, right?

Those things are also happening, as you see. Right.

Right. Thanks a lot.

One last question if I may. We were looking at some new verticals, if you can share something on it.

Thank you.

I think we were focusing on for example, the aerospace and defense is one vertical that we're looking at, and we have some very exciting things happening there, but unless these result in some large revenues, and so on, it's very difficult to proactively tell you what is happening. We are doing some very very good work with the defense organizations in India, with HAL, with the Aeronautical Development Agency, there are some large deals that we are bidding for, we're also working with some global players there,

right?

I think till we reach a size, I think we continue to invest there, we continue to build capabilities, and also win those initial projects and trial projects, and so on. We'll keep you updated there.

We have also started work focusing on the battery energy storage, right? That is a big opportunity because of all the data centers that are being especially because of AI and gen AI, a lot of power is needed, right?

For that, battery energy storage is a huge demand in the market, and that is something that we have picked up. Of course, even for powering up EV in remote locations, and so on, you need that battery energy storage.

That is something we have incubated, and I think the coming financial year, we hope that that will be a reasonably sized vertical for us. We will make those announcement at the appropriate time.

We've also started a little bit on a manufacturing side. We have built certain capabilities, we have won some initial customers.

That is another area we continue to invest. All those three areas we continue to build that muscle, build that strength, do those initial projects, keep build those capabilities, and we're hoping that, look, next 4 to 6 quarters, at least one or two of this will start showing results.

Sure. Thanks a lot.

Thank you, Mayur.

Thank you. Thank you to all the investors for the call today.

I think we are still optimistic that FY '27 will be a growth year for us, and as I said, right, it's not the growth has to be led uniformly across the three verticals, and that would be the focus for us as we enter into the new financial year. Thank you so much for your time today.