Tata Technologies Targets Double-Digit Growth for FY27

Tata Technologies Signals Strong Growth for FY27

Tata Technologies Ltd is anticipating a robust financial year in FY27, with its leadership expressing strong confidence in achieving double-digit topline growth. CEO and Managing Director Warren Harris stated that despite global geopolitical and economic uncertainties, the company is well-positioned for significant expansion. This optimism is primarily fueled by a resurgence in investment decisions from international automakers, who are now moving forward with key projects after a prolonged period of hesitation.

Automakers Resume Spending After Period of Hesitation

According to Harris, the automotive industry, a core business for Tata Technologies, faced a slowdown over the last 18 to 24 months. Customers in major markets like North America and Europe delayed critical investment decisions due to a lack of clarity surrounding propulsion systems, manufacturing locations, and supply chain strategies. This uncertainty led many to adopt a wait-and-see approach. However, the environment has now shifted towards greater certainty. This newfound clarity is prompting automakers to commit to full vehicle projects, creating a strong demand pipeline that Tata Technologies is prepared to meet. This shift is a key factor inspiring the company's positive outlook for the fourth quarter of FY26 and the entirety of FY27.

Financial Outlook and Key Projections

Tata Technologies is targeting sequential double-digit growth from Q3 to Q4 of the current fiscal year, setting the stage for sustained momentum. For the upcoming fiscal year (FY27), the company expects to achieve double-digit growth organically. This forecast is supported by its recent performance, where consolidated revenue from operations for the third quarter ended December 31, 2025, stood at ₹1,365.73 crore, an increase from ₹1,317.38 crore in the same period of the previous year. The company anticipates that rising volumes will translate into significant improvements in both top-line revenue and bottom-line profitability.

Navigating Q3 Headwinds

The third quarter presented some challenges that impacted financial results. A major client suffered a cyber-attack, which resulted in a revenue loss of approximately $1 million for Tata Technologies as billing for certain engagements was paused in October. Additionally, the company booked costs associated with the ES-Tech transaction and made adjustments related to new labor laws in India. However, management views these as one-off events that are not expected to recur, reinforcing their confidence in a strong finish to the fiscal year and a positive start to the next.

Strategic Acquisition to Bolster European Presence

A significant contributor to the company's future growth is the acquisition of the Germany-based ES-Tech group. This strategic move is expected to add approximately $10 million in additional business. The acquisition not only strengthens Tata Technologies' foothold in Europe but also enhances its capabilities in the automotive sector, providing direct access to key clients like the Volkswagen group. The integration of ES-Tech is expected to complement the company's organic growth and contribute to its overall expansion trajectory.

Margin Improvement on the Horizon

While one-off costs impacted margins in the third quarter, the company views this as a temporary trough. Management expects margins to recover in the fourth quarter, moving closer to the adjusted level of 16.5% seen in the second quarter. Looking ahead to FY27, the goal is to restore margins to around the 18% mark, which is in line with the levels achieved in FY25. This improvement will be driven by higher volumes, operational efficiencies, and the absence of the non-recurring costs seen in Q3.

Workforce Strategy: AI Integration and Skill Enhancement

To support its growth ambitions, Tata Technologies is focused on optimizing its workforce and investing in future-ready skills. Harris confirmed that while there is no immediate need for additional resources, the company will add headcount as growth continues through the next year. Despite making heavy investments in Artificial Intelligence (AI) and digital technologies, the company does not anticipate any material retrenchments. Instead, the focus is on reskilling and upskilling its teams to ensure their capabilities align with market demand, complementing the investments made in AI.

Key Financial Metrics and Projections

Conclusion

Tata Technologies is poised for a strong performance in the coming fiscal year, backed by a clear strategy and favorable market trends. The combination of renewed investment from the automotive sector, contributions from the strategic acquisition of ES-Tech, and a focus on margin improvement provides a solid foundation for achieving its double-digit growth targets. With a lean operational structure and a commitment to investing in high-demand capabilities like AI and digital engineering, the company is well-equipped to capitalize on the emerging opportunities.