Tata Elxsi reported a second-quarter net profit of ₹1.7 billion, remaining flat year-on-year and falling short of the market estimate of ₹1.8 billion. The company also released the audio recording of its earnings conference call on October 13, 2026.

The IT services major’s revenue clocked ₹10,557 crore in Q2FY27, marking an increase from the previous quarter. This sequential growth was accompanied by improved operational efficiency, as reflected in the earnings before interest and tax (EBIT).

Financial performance

The IT services major saw its EBIT rise to ₹2.08 billion from ₹1.94 billion in the preceding quarter. Consequently, the EBIT margin expanded to 19.68% from 18.97% on a quarter-on-quarter basis. The company reported operating revenue growing 3.4% QoQ and 15.0% YoY.

Vertical performance and strategic wins

Growth was broad-based across all three key verticals. The Transportation vertical, which accounts for more than 55% of the SDS segment, posted growth of 2.0% QoQ in constant currency. Among new deal wins, Tata Elxsi secured a strategic multi-year deal from a leading automotive OEM for a next-generation cloud-based telematics and connected vehicle ecosystem. The company also announced a collaboration with Sarla Aviation to support the development of Shunya, India's first indigenous electric vertical take-off and landing (eVTOL) aircraft.

The Media & Communications vertical, accounting for 33.6% of the SDS segment, registered continued growth at 3.4% QoQ in constant currency. This was led by deal ramp-ups and new wins, including a strategic AI deal from a global technology leader for a Gen AI based virtual assistant focused on multilingual intelligence.

The Healthcare & Life Sciences vertical recorded healthy growth of 3.5% QoQ in constant currency. The company won a comprehensive product engineering mandate from a global leader in renal care to redesign a next-generation home dialysis system, covering full-stack product development across UX, mechanical engineering, electronics, embedded systems, and regulatory compliance.

Outlook and sector concerns

Management expects improved performance in the Healthcare and Life Sciences segment in H2FY27, supported by a strong deal pipeline. The company anticipates that overall performance in H2FY27 will be better than H1FY27. However, it noted concerns regarding the slow automotive sector in Europe, which could impact growth trajectories given the significant weightage of the Transportation vertical.

Operational updates and investments

Operational efficiencies resulted in improved EBITDA margins, with EBITDA expanding 70 bps QoQ, despite salary revisions implemented across the entire employee base in the quarter. The company reported EBITDA at ₹2,314 crore, growing 7.1% QoQ, with an EBITDA margin of 21.9%.

Tata Elxsi continues to invest in applying Gen AI and AI to innovation and product engineering contexts. In September, the company made a strategic early-stage investment in Silicon Valley-based KAVIA AI, expanding a partnership that began in July 2025. This collaboration enables enterprises to manage, modernise, and transform complex software environments at scale across the AI-Driven Development Lifecycle (AIDLC).

What the numbers show

While top-line revenue expanded sequentially by 3.4%, the bottom line remained static compared to the previous year. The divergence between rising revenue and flat net profit suggests that despite margin expansion at the operating level (EBIT), other factors likely absorbed the gains, preventing a corresponding increase in net income. Additionally, the miss against the ₹1.8 billion consensus estimate indicates that profitability did not meet analyst expectations despite the improvement in EBIT margins. The broad-based growth across verticals contrasts with the flat bottom line, highlighting potential cost pressures or non-operational headwinds not fully detailed in the headline metrics.

Tata Elxsi Limited has approved the appointment of M/s Deloitte Haskins & Sells Chartered Accountants LLP as its new statutory auditors. The decision, taken by the Board on October 13, 2026, marks a significant governance shift for the IT services firm.

The appointment is subject to shareholder approval and will commence from the conclusion of the 38th Annual General Meeting (AGM) in 2027. The new tenure extends for five consecutive years, lasting until the conclusion of the 43rd AGM in 2032. This move follows the recommendation of the Audit Committee and complies with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Transition from BSR & Co.

The current statutory auditors, M/s BSR & Co. LLP, will continue to audit the company until the 38th AGM in 2027. This completion coincides with the end of their second consecutive five-year term. The transition ensures a seamless handover of audit responsibilities without disrupting ongoing financial reporting cycles.

Profile of New Auditor

Deloitte Haskins & Sells Chartered Accountants LLP was constituted in 1997 and converted to an LLP in June 2021. The firm is registered with the Institute of Chartered Accountants of India (ICAI) under registration number 117364W/W100739. It operates as part of the global Deloitte network and maintains offices across major Indian cities including Mumbai, Gurugram, Kolkata, Chennai, Bengaluru, Ahmedabad, Hyderabad, and Pune.

The board meeting that approved this appointment commenced at 2:30 pm and concluded at 4:00 pm IST. Details regarding the auditor’s profile and relationship disclosures were submitted to BSE and NSE in accordance with regulatory norms.