Tata Technologies (TATATECH) Q2 24/25 earnings summary

Executive summary

• Achieved sequential revenue growth of 2.2% in Q2 FY25, with services up 2% and tech solutions up 2.8%, and a healthy order book supporting expectations for stronger H2 performance.

• Maintained operating discipline with EBITDA margin at 18.2% and strong cash conversion (FCF to net income >100%).

• Customer NPS at 66, placing in the top 10 percentile among tech service providers.

• Board approved unaudited standalone and consolidated financial results for the quarter and half-year ended September 30, 2024.

• Notable wins include partnerships with Maharashtra and Tamil Nadu Industrial Development Corporations, Air India, and BMW.

Financial highlights

• Q2 FY25 consolidated revenue from operations was ₹1,296.45 crore, up 2.2% sequentially and 2.1% YoY; Services segment revenue at ₹1,005.09 crore, up 2% sequentially.

• Technology Solutions segment revenue was ₹291.36 crore, up 2.8% sequentially and 6.4% YoY.

• Operating EBITDA at ₹377.58 crore (margin 18.2%), net income at ₹157.41 crore, and EPS (diluted) at ₹3.87.

• Gross margin improved to 29.1% from 28.2% QoQ; Services segment gross margin at 32.3%.

• Free cash flow at ₹2,317 million, with FCF to net income conversion exceeding 100%.

Outlook and guidance

• Anticipates stronger H2 performance based on current order book and pipeline, with margin preservation for the full year and a slight dip in Q3 due to wage hikes and holidays.

• Medium to long-term margin aspiration remains above 20%.

• Confident in long-term growth in EV and SDV segments despite short-term headwinds.

• Continued focus on core business segments and digital transformation services.