Tata Elxsi’s Q1 Net Profit Falls By 2.5% Year-over-Year

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Year-over-year profits fell due to an increase in the effective tax rate and tighter operating margins. Total expenses saw a double-digit increase, largely driven by higher costs for employee benefits. Additionally, net profit declined by 6.5% from the previous quarter.

Tata Elxsi Ltd, a design and technology services firm, recorded a 2.5% decrease in its net profit for the first quarter of the 2025 fiscal year compared to the same period last year, despite a rise in revenue. The decline in profit is largely due to an increased effective tax rate following alterations in special economic zone benefits for one of its sites, coupled with tighter margins from elevated employee costs.

During the quarter, the company reported a net profit of Rs 184.1 crore, down from Rs 188.9 crore in the corresponding quarter of the previous year. Meanwhile, operational revenue grew by 9% year-over-year to Rs 926.5 crore.

Software development and services constitute 97% of Tata Elxsi’s revenue, with the remainder stemming from software integration and support. The transportation sector is the largest contributor to the software development and services segment, followed by media and communications, as well as healthcare and life sciences.

The company’s EBITDA (earnings before interest, tax, depreciation, and amortisation) slightly increased to Rs 252.3 crore from Rs 251.5 crore in the prior year’s first quarter. However, the EBITDA margin decreased to 27.2% from 29.6%. This margin contraction reflects a 13.1% year-on-year rise in total expenses, reaching Rs 706.1 crore, primarily due to elevated employee benefit expenses. The employee count grew to 13,142 this quarter from 12,286 a year earlier, while the attrition rate remained stable at 12.3%.

Sequentially, Tata Elxsi’s net profit fell by 6.5% due to subdued operational performance, modest revenue growth, and shrinking margins. Revenue from operations saw a modest increase of 2.3%, while EBITDA dropped 3.5% from the last quarter of the previous fiscal year. Operating profit margin also declined to 27.2% from 28.8%, with total expenses increasing by 4.3%.

CEO and MD Manoj Raghavan stated that the company successfully maintained operational excellence and fiscal discipline this quarter to bolster its bottom line despite encountering an exceptional one-off expense and an increased effective tax rate stemming from the SEZ benefit change at one of their facilities. He also highlighted that the company’s transportation business achieved strong growth, reporting a 5.3% sequential increase and a 20.3% year-on-year growth in constant currency.

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