Tata Technologies, a global provider of digital services and product engineering, is one of the Indian businesses that posted impressive Q3 FY2024 results. The total operating revenue for the September–December 2023 quarter was Rs 1,289 crore, up 1.6% QoQ and 14.7% YoY. In terms of new business, Q3 FY2024 proved to be successful; the company closed five sizable deals, four of which were in the automotive industry and one in the aerospace industry.
One of the four agreements, for Tata Technologies, has a total contract value of more than $50 million. The company is developing skills and capacity in important automotive industry growth areas, such as software-defined vehicles (SDVs), embedded electronics, alternative propulsion systems, and autonomous mobility.
These four business contracts were secured in the automotive sector by Tata Technologies
- Tata Technologies has been selected by a top Asian automaker (in China) to work on the creation of an upscale crossover sedan.
- The company has been chosen by a top European luxury automotive OEM (based in the UK) to design, develop, implement, and validate AUTOSAR-based software for drive unit (DRVU) Electronic Control Unit (ECU) (Gateway Module).
- Tata Technologies has been selected as a strategic engineering partner by a major international automaker for its “FTE Engineering Services” engagement in North America. This necessitates transferring hundreds of rules from US onshore locations to offshore delivery centers in India.
- A sizable project for the deployment of SAP and PLM-managed services with a North American automotive manufacturer (new energy vehicle).
The luxury carmaker JLR and its British subsidiary, Tata Motors, continue to rely heavily on the Tata Group company as a supplier. The CEO and MD of Tata Technologies, Warren Harris, stated during a conference call on January 30, 2024, “Tata Motors and JLR represented less than 33% of the total revenue level last year in terms of percentages.” Both of those organizations have raised their capital expenditures over the past 12 months due to their increased confidence following their recent successes. Additionally, an almost exponential increase in that capex investment is anticipated.
We firmly believe that we can seize this opportunity and are optimistic about the expansion of JLR and Tata Motors. Because of this, we anticipate a slight increase in the Tata Motors group’s percentage contribution in the short term. In the medium to long run, though, I believe the current trend that has been in place for the past ten years is likely to continue. And given the growth we are seeing outside of the group, I would definitely anticipate that in three to five years, the Tata Motors Group’s contribution will decrease in percentage terms.
developing two new EVs with VinFast
For the Vietnamese EV manufacturer VinFast, which on January 6, 2024, announced plans to establish an integrated EV plant in Tamil Nadu with a manufacturing capacity of up to 150,000 EVs, Tata Technologies is presently working on two EV development programs.
Regarding these initiatives, Warren Harris stated: “VinFast is shifting its emphasis from creating new products to manufacturing and marketing automobiles. Our efforts are now shifting to launch support as we have nearly finished developing the two electric vehicles that were turned over to Tata Technologies on a turnkey basis. This change started in the second quarter, picked up speed in the third, and is expected to be mostly finished this quarter (Q4 FY2024).
As with many new energy vehicle companies, Warris responded to an analyst’s question about how VinFast’s entry into India would benefit Tata Technologies by saying, “When they develop product, they develop their first products that underpin their portfolio.” VinFast is currently in this phase, where they quickly switch to developing and selling products. Their chances of growing further and increasing their manufacturing capacity, in my opinion, will be somewhat reliant on and connected to the performance of their current portfolio. We take great pride in our partnership with VinFast. The potential impact they may have on the market as a whole excites us greatly.
However, we believe there is still some uncertainty surrounding the dates of their visit to India and the introduction of their new product investments.
increased emphasis on vehicles with software
The company presented its next-generation SDV innovations and alliances throughout the SDV value chain at ELIV 2023, the largest automotive software congress in the world, which took place in Bonn, Germany, in October.
Tata Technologies signed two significant agreements in Q3 with Arm and Intel, which will further the company’s software-defined vehicle business. The business will be developing a software platform with Intel’s latest line of SDV system-on-chip products.
In Q3, Tata Technologies also celebrated the opening of its first vehicle-software innovation center on December 14, 2023, in Coimbatore. The new building will be dedicated to developing, testing, and integrating vehicle software solutions throughout the automotive value chain in order to provide innovative solutions for customers worldwide. These consist of software projects for vehicles, such as AUTOSAR, advanced driver assistance systems (ADAS), connected cars, cybersecurity, hardware-in-the-loop validation, functional safety, and embedded software development and testing. During the first phase of operations, the company intends to hire 100 local professionals with expertise in vehicle software.
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