Tata Elxsi, the engineering and technology services arm of the Tata Group, reported a 13% drop in its net profit for the fourth quarter of FY24, hit by tariff-related uncertainties that weighed heavily on its largest business segment — transportation.
The company’s net profit came in at ₹172 crore, falling short of market estimates pegged at ₹182 crore, according to LSEG data. Revenue from operations rose just marginally to ₹908 crore, also missing expectations of ₹924 crore.
CEO Manoj Raghavan, in a post-earnings call, attributed the dip to project delays and suspensions from major automotive clients, particularly in Europe and the US — Tata Elxsi’s core markets. “Several top customers in the auto industry have paused projects due to ongoing tariff and geopolitical concerns,” he said.
The slowdown follows recent remarks by US President Donald Trump, who indicated potential revisions to the 25% tariffs imposed on auto and auto parts imported from Mexico, Canada, and other countries. Announced in March, these tariffs are expected to raise vehicle costs significantly, prompting automakers to reassess their investment timelines.
Despite the current headwinds, Raghavan maintained a cautiously optimistic outlook, stating that the company expects a rebound in the current quarter as top clients begin to resume work.
Transportation — Tata Elxsi’s key revenue engine — contributes over 50% of the firm’s software development and services revenue, which itself accounts for more than 96% of the company’s total income. The segment saw a near 10% sequential dip in revenue and a marginal year-on-year decline, underscoring the magnitude of the impact.
In a silver lining for investors, Tata Elxsi announced a dividend of ₹75 per equity share of ₹10 face value for FY25.
Shares of Tata Elxsi closed 0.7% lower on the BSE at ₹4,895 apiece following the results. Industry peers L&T Technology Services and KPIT Technologies are expected to announce their quarterly numbers later this month, offering a broader view of the sector’s performance amid global uncertainty.
As the auto industry navigates policy shifts and supply chain complexities, Tata Elxsi’s next few quarters will be closely watched for signs of recovery and resilience.