{"id":160832,"date":"2024-05-06T07:14:34","date_gmt":"2024-05-06T11:14:34","guid":{"rendered":"https:\/\/44.250.171.167\/?p=160832"},"modified":"2024-05-06T07:14:36","modified_gmt":"2024-05-06T11:14:36","slug":"tata-technologies-ltd-q4-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/tata-technologies-ltd-q4-fy24-earnings-conference-call-insights\/","title":{"rendered":"Tata Technologies Ltd Q4 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Tata Technologies Ltd (TATATECH) Q4 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Revenue Growth and Deal Wins<\/strong>\n<ul>\n<li>Achieved 15.9% revenue growth in INR and 15% operating EBITDA growth for fiscal year &#8217;24.<\/li>\n<li>Revenue from operations grew at 29% CAGR and operating EBITDA grew at 35% CAGR over the last 3 years.<\/li>\n<li>Signed 12 large deals in FY24, including a $150 million deal and 5 deals in $15-25 million range.<\/li>\n<li>Services business, which is 77% of revenue, grew 10.4% sequentially and 30% YoY, excluding VinFast runoff.<\/li>\n<\/ul>\n<\/li>\n<li><strong>BMW JV<\/strong>\n<ul>\n<li>Signed strategic agreement with BMW to establish JV in India for automotive software and digital technologies.<\/li>\n<li>BMW selected Tata Technologies after 12-month evaluation of Indian engineering firms.<\/li>\n<li>JV will focus on automated driving, infotainment, digital services, and enterprise IT solutions.<\/li>\n<li>Regulatory approvals expected in next couple of months, operations to commence in H2 FY25.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Customer Updates<\/strong>\n<ul>\n<li>Grew collaboration with Tata Motors and JLR on smart manufacturing and new EV development.<\/li>\n<li>VinFast business ramped down as per guidance, mitigated by new customer acquisitions.<\/li>\n<li>Customer pyramid improved with more $1M+ annualized revenue customers.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Generative AI\/Partnerships<\/strong>\n<ul>\n<li>Deploying Gen AI solutions for engineering, manufacturing, and customer experience.<\/li>\n<li>Training over 10,000 engineers in basic Gen AI skills and 2,000 in advanced skills.<\/li>\n<li>Partnership with Siemens for Pave360 software-defined vehicle platform.<\/li>\n<li>Partnership with Databricks for data analytics, AI, and smart manufacturing solutions.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Financial Performance<\/strong>\n<ul>\n<li>Technology Solutions revenue grew 6.1% QoQ and 28.5% YoY driven by education business.<\/li>\n<li>Operating EBITDA margin improved 10bps QoQ to 18.4% in Q4.<\/li>\n<li>Net income grew 8.9% YoY to \u20b96,794 million (13.3% of revenue) in FY24.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Operational Metrics<\/strong>\n<ul>\n<li>Headcount grew 0.5% QoQ to 12,688 employees aligned with revenue growth.<\/li>\n<li>Utilization improved 180bps QoQ to 86% due to higher working days.<\/li>\n<li>Added 1,017 net new employees in FY24, up 9.2% YoY, including campus hires.<\/li>\n<li>Attrition declined to 14.5% in Q4 from 15.4% in Q3.<\/li>\n<li>Customers in $10-50 million category increased to 5 from 3 in Q3.<\/li>\n<li>Offshore revenue mix improved to 38% in FY24 from 36% in FY23.<\/li>\n<\/ul>\n<\/li>\n<li><strong>VinFast Transition<\/strong>\n<ul>\n<li>VinFast relationship enabled development of full vehicle capabilities including EVs and connected architectures.<\/li>\n<li>Anticipated VinFast ramp-down 12 months ago and aligned pipeline\/resources accordingly.<\/li>\n<li>Able to navigate material headcount transition from VinFast to other customers.<\/li>\n<li>Expect growth to pick up after completely decoupling from VinFast projects in current quarter.<\/li>\n<\/ul>\n<\/li>\n<li><strong>EV Demand Outlook<\/strong>\n<ul>\n<li>Not seeing any drop in demand despite global EV sales slowdown.<\/li>\n<li>Automakers doubling down on building EV portfolios to counter Chinese OEM threat.<\/li>\n<li>Market dynamics driving tailwinds for engineering and new product development services.<\/li>\n<li>Research intensity is similar for EVs and hybrid vehicle programs.<\/li>\n<li>Some automakers renewing interest in balanced EV-hybrid approach as transition hedge.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Education Performance and Outlook<\/strong>\n<ul>\n<li>Education business saw growth, products business was relatively flat (seasonal pattern).<\/li>\n<li>Worked to smooth out education revenue across quarters compared to previous years.<\/li>\n<li>Incremental Q4 education growth was in line with plans.<\/li>\n<li>Expect to build on Telangana win by executing well, driving order book growth.<\/li>\n<li>Visibility for year-on-year improvement in FY25 and beyond.<\/li>\n<li>Relationships generally extend over 10 years with services component.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Deal Pipeline<\/strong>\n<ul>\n<li>Deal conversions were robust and in line with expectations.<\/li>\n<li>Seeing no drop-off in demand, targeting new logos leveraging BMW deal.<\/li>\n<li>Sales team productivity remains at a high level.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Growth Drivers ex-VinFast<\/strong>\n<ul>\n<li>Growth ex-VinFast fairly diversified across anchor and non-anchor clients.<\/li>\n<li>Both segments grew 25-35% YoY, no single large client replacing VinFast.<\/li>\n<li>Seen traction in aerospace (Airbus), Tata Group (JLR, TML), and EV value chain (Agratas partnership).<\/li>\n<\/ul>\n<\/li>\n<li><strong>Aerospace Business Performance<\/strong>\n<ul>\n<li>Doubled aerospace revenues at Airbus in Q4 from small base in Q3.<\/li>\n<li>Expect momentum at Airbus to sustain in FY25.<\/li>\n<li>Bullish on overall aerospace market opportunity given doubling of aircraft fleet expected.<\/li>\n<li>Tata Group influence providing opportunities in commercial and defense aerospace.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Agratas Partnership Progress<\/strong>\n<ul>\n<li>Involved since inception, providing pack design support as Agratas confirms OEM anchors.<\/li>\n<li>Working on enterprise IT\/digital backbone deployment in India.<\/li>\n<li>In planning stages for industrializing two gigafactories in Gujarat and UK.<\/li>\n<li>Partnership already at scale, expected to build further in coming quarters\/years.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Growth in New Areas<\/strong>\n<ul>\n<li>Accelerating tech change requiring lifelong learning and reskilling for engineers.<\/li>\n<li>Leveraging TechVarsity capabilities to drive education offerings for public\/private sector.<\/li>\n<li>Expect customers to outsource more non-differentiating areas as new tech needs grow.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Tata Technologies Ltd (TATATECH) Q4 FY24 Earnings Concall Revenue Growth and Deal Wins Achieved 15.9% revenue growth in INR and 15% operating EBITDA growth for fiscal year &#8217;24. Revenue from operations grew at 29% CAGR and operating EBITDA grew at 35% CAGR over the last 3 years. Signed 12 large deals in [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,8],"tags":[10169,13255,9802,12399],"class_list":["post-160832","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-technology-stocks","tag-earnings","tag-it-consulting","tag-outsourcing","tag-product-engineering"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":160322,"url":"https:\/\/alphastreet.com\/india\/tata-consultancy-services-ltd-q4-fy24-earnings-conference-call-insights\/","url_meta":{"origin":160832,"position":0},"title":"Tata Consultancy Services Ltd Q4 FY24 Earnings Conference Call Insights","author":"Praveen","date":"April 12, 2024","format":false,"excerpt":"Key highlights from Tata Consultancy Services Ltd (TCS) Q4 FY24 Earnings Concall Revenue Growth Q4 revenue grew 2.2% YoY in constant currency, 3.5% in rupee terms. 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