The company had a revenue of $611 million in FY25, with a net profit margin of 13.1%.
If successful, the move could help the company reverse investor disappointment amid a more than 40% decline in stock price since listing in December 2023. But to do so, it will have to pull off a near miracle by information technology (IT) services industry standards —bid aggressively for projects to win more business while also somehow cutting costs to improve margins.
The company's chief executive officer Warren Harris, who assumed office 11 years ago this week, has placed his bets on what many see as corporate world's panacea—artificial intelligence (AI).
“We'll continue to be as aggressive as we can as far as pricing is concerned," he said in an interview on Sunday. “But we think that increasingly the role of technology and specifically the role of AI will allow us to harvest improvement that will manifest itself in terms of not just revenue growth, but also margin growth."
Does that mean AI will take away some of the 12,407 jobs at Tata Technologies?
No, says Harris. The use of AI will keep a check on the growth in the company’s headcount, but not lead to any job cuts.
At just over $49,000 in revenue per employee in FY25, Tata Technologies lags peers like L&T Technology Services, which has twice the workforce. Harris attributed this to the company getting most of its business from India, where billings are not as high as in developed markets.
Revival of automotive business
The company is seeing light at the end of the tunnel for its biggest present concern—a slowdown in investments by automobile companies, which account for over 80% of Tata Technologies’ business. The clients were now coming to terms with the turbulent geopolitical scenario, including tariffs, he said.
This bodes well for Tata Technologies, which saw two consecutive quarters of revenue decline.
“Product plans are being revisited, decisions on supply chain are precipitating, and we're starting to see the decisions that we anticipated to come through early in the fiscal year, come through now," Harris said.
“So we think that Tata Technologies is going to get back to organic growth."
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The company will need to grow at a compounded annual growth rate (CAGR) of 18% starting FY26 to reach its billion-dollar target by FY28.
The ambitious target in the backdrop of declining revenues is prompting scepticism. Analysts at Kotak Securities led by Kawaljeet Saluja have forecast a 5% year-on-year decline in revenues in FY26. “We believe a revenue decline is the most likely outcome in FY2026E, despite management’s optimism for the rest of the year," the analysts said in a note on 14 July.
The company expects to get some inorganic growth boost through its €75 million acquisition of Germany’s ES-Tec Group. While a relatively small company, with revenues of just over $42 million in 2024, the company’s access to German automakers like BMW and Mercedes could help Tata Technologies diversify its customer base, as per Harris.
“This is a diversification play," he said.
Currently, Tata Technologies gets nearly half of its services revenue from group firms Tata Motors and Jaguar Land Rover. The company is working on bringing this figure to under 40% even as it increases its business with the two automakers.
Aviation bet
Tata Technologies is also betting on its aviation business scaling up from contributing just 5% to its earnings currently. It counts Airbus as a client and is now exploring the aircraft maker's vendors. It is also exploring business opportunities with American jet engine makers GE Aerospace and Pratt & Whitney, he said.
The acquisition of ES-Tec will help in expanding business with Airbus as well as French automakers Renault and Stellantis, Harris said, given that the firm has an office in Casablanca, Morocco.
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