Motilal Oswal Financial Services

Technology | Auto ER&D – Thematic: An incomplete revolution

Technology | Auto ER&D

An incomplete revolution

Three structural forces are reshaping the global mobility landscape: 1) The shift

toward CASE (connected, autonomous, shared, electric) mobility is accelerating

the role of software in vehicles; 2) OEMs are moving from

decentralized

architectures to centralized domain controllers,

paving the way for software-

defined vehicles (SDVs); 3)

Regulatory mandates for greener mobility

are

compelling automakers worldwide to invest in electric powertrains and

sustainability-focused innovations.

However, we note that enthusiasm for electric vehicles (EVs) has hit a snag, and

with it, the companies’ ability to invest heavily in SDVs in recent quarters. For the

top three automotive players in the engineering research and development

(ER&D) industry, average organic YoY CC revenue growth has slowed from 17%

over FY21-FY23 to 12% over FY24-25. Despite the recent moderation in capex

cycles among Western OEMs, the long-term outlook remains robust. Asian OEMs

are pivoting toward hybrids and localized strategies, while global players are

recognizing software as the key competitive frontier. This backdrop offers

tailwinds for specialized engineering service players with domain depth, co-

development capabilities, and global delivery footprints.

We initiate coverage on

three such names:

KPIT: Financials &Valuations

(INR b)

Y/E March

FY26E FY27E FY28E

64.2 75.5 89.9

Sales

EBIT Margin(%) 17.6 18.3 19.0

8.8 10.8 13.3

PAT

31.9 39.5 48.8

EPS (INR)

9.7 23.9 23.5

EPS Gr. (%)

130.6 156.4 188.4

BV/Sh. (INR)

Ratios

27.0 27.7 28.5

RoE (%)

24.0 27.5 31.6

RoCE (%)

35.0 35.0 35.0

Payout (%)

Valuations

37.6 30.3 24.5

P/E (x)

9.2

7.6

6.4

P/BV (x)

22.0 18.0 14.4

EV/EBITDA (x)

0.9

1.2

1.4

Div Yield (%)

KPIT Technologies (KPIT): A software powerhouse

TTL: Financials &Valuations

(INR b)

Y/E March

FY26E FY27E FY28E

52.9 60.6 69.6

Sales

EBIT Margin (%) 14.8 16.0 16.3

6.6

7.9

9.2

PAT

17.4 20.7 24.1

EPS (INR)

4.9 19.2 16.0

EPS Gr. (%)

96.4 102.6 109.9

BV/Sh. (INR)

Ratios

18.9 20.9 22.7

RoE (%)

23.0 27.6 30.4

RoCE (%)

53.1 70.0 70.0

Payout (%)

Valuations

39.3 33.0 28.4

P/E (x)

7.1

6.7

6.2

P/BV (x)

29.0 24.0 20.7

EV/EBITDA (x)

1.4

2.1

2.5

Div Yield (%)

KPIT is a pure-play automotive ER&D partner focused on enabling SDV adoption

for major OEMs. The company’s core strengths lie in embedded software

development, E/E (Electrical/Electronic) architecture, and middleware consulting,

accounting for over 80% of its revenue. With strategic relationships across over 25

OEMs and tier-1 suppliers, KPIT is well-positioned to capitalize on rising software

complexity in vehicles. The company’s revenue grew from USD304m in FY20 to

USD691m in FY25 (~18% CAGR) and is projected to reach USD1b by FY28E,

clocking ~15% CAGR over FY25-28E. EBIT margins are expected to expand from

17.1% in FY25 to 19.0% in FY28E, supported by scale benefits and acquisitions like

Caresoft, which is expected to contribute ~5% to revenue. We initiate coverage

with a

BUY

rating and a

TP of INR1,600,

valuing KPIT at 40x FY27E EPS – implying a

PEG of ~2x on a ~19% EPS CAGR over FY25–28E – reflecting its strong positioning in

SDV programs, expanding architecture and middleware capabilities.

Tata Technologies (TTL): An engineering specialist facing headwinds

TTL is a global ER&D player with capabilities across mechanical design, digital

engineering, and turnkey vehicle development. The company is also expanding its

presence in transportation, construction, heavy machinery (TCHM) and aerospace.

However, TTL’s relatively higher share of mechanical engineering and on-site

delivery results in lower margins compared to peers focused on high-value

software services. Nonetheless, its JV with BMW is scaling well, reflecting the

company’s intent to deepen expertise in next-gen automotive software and SDVs,

which could gradually enhance its margin profile and revenue mix. We initiate

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

coverage with a

Sell

rating with a

TP of INR580,

valuing TTL at 28x FY27E EPS – a

30% discount to KPIT’s 40x (~2x PEG) – citing TTL’s lower margin profile due to high

mechanical exposure, client concentration risks, and modest growth visibility

despite its end-to-end engineering capabilities.

TELX: Financials &Valuations

(INR b)

Y/E March

Sales

EBIT Margin (%)

PAT

EPS (INR)

EPS Gr. (%)

BV/Sh. (INR)

Ratios

RoE (%)

RoCE (%)

Payout (%)

Valuations

P/E (x)

P/BV (x)

EV/EBITDA (x)

Div Yield (%)

FY26E FY27E FY28E

38.0 42.7 48.1

21.1 24.3 25.0

7.0

8.9 10.3

112.7 143.0 165.5

(10.6) 26.9 15.7

518.2 575.4 641.5

23.1

16.2

60.0

49.5

10.8

36.3

1.2

26.2

19.1

60.0

39.0

9.7

28.6

1.5

27.2

20.1

60.0

33.7

8.7

24.6

1.8

Tata Elxsi (TELX): A design-led leader with near-term speed bumps

Tata Elxsi (TELX) offers solutions across automotive, media & communications, and

healthcare. The company’s automotive vertical, which contributes over half of its

revenue, is anchored in high-value segments like ADAS (Advanced driver

assistance systems), digital cockpit, and connectivity, supported by proprietary

platforms. TELX’s high offshore mix supports better profitability but margins have

come under pressure in recent quarters due to muted revenue growth, elevated

GTM spends, and pricing resets in large renewals. While a sharp decline appears

unlikely from here on, structural headwinds could cap margin recovery well below

historical peaks (~27–28%). We expect EBIT margins to recover gradually to

~21.1% in FY26E. With revenue growth also expected to moderate to ~8% CAGR

over FY25–28E (vs. ~18% over FY20–24), we initiate coverage with a

Sell

rating and

TP of INR4,600,

valuing TELX at 32x FY27E EPS – an ~20% discount to KPIT’s 40x

(~2x PEG) – reflecting near-term growth headwinds in Europe and

Healthcare/Media verticals and a less favorable risk–reward profile given current

valuations.

Exhibit 1: Comparative Valuations

Companies Name

TCS

Infosys

Wipro

HCLT

TechM

LTIM

LTTS

KPIT

Tata Tech

Tata Elxsi

Mphasis

Hexaware*

Coforge

Persistent

Zensar

Cyient^

CC YoY Growth

FY25 FY26E FY27E

4.2

-0.6

4.5

4.2

-2.3

4.7

0.3

5.0

8.9

18.7

-0.7

3.7

4.4

13.8

32.0

19.0

5.1

-6.1

3.0

-1.3

3.9

1.0

5.6

10.4

9.0

-0.5

-2.6

8.7

8.2

31.8

16.4

6.0

-1.4

4.9

3.5

4.9

6.5

8.4

10.0

17.5

14.4

12.0

10.8

11.6

20.4

18.9

6.3

3.1

EBIT Margin

EPS

CAGR

FY25-27E FY25 FY26E FY27E FY25 FY26E FY27E

2.6

24.3 24.6

25.4 134.2 142.7 152.6

4.5

1.6

5.4

4.6

7.3

9.9

12.4

7.0

5.7

9.7

10.5

26.6

18.1

6.7

21.1

17.0

18.3

9.7

14.5

14.9

17.1

15.7

23.3

15.3

13.0

13.1

14.7

13.5

21.4

16.9

17.5

12.3

14.7

14.1

17.6

14.8

21.1

15.2

13.4

13.5

15.5

13.7

21.5

17.2

18.2

14.4

15.8

15.4

18.3

16.0

24.3

15.5

15.0

14.0

16.0

13.8

63.9

12.5

63.9

47.9

68.6

12.6

65.4

61.3

72.6

13.1

73.6

78.3

200.1

155.8

39.5

20.7

143.0

111.8

27.5

58.9

140.1

34.6

EPS CAGR

FY25-27E

6.6

2.4

7.3

27.8

13.5

14.4

16.6

11.8

6.5

11.9

19.5

52.9

24.6

10.4

P/E

FY25 FY26E FY27E

155.3 174.4

119.0 129.8

29.0

16.6

89.3

19.3

25.2

90.2

28.4

31.9

17.4

99.8

23.5

44.2

114.5

32.3

126.0 112.7

0.8

13.2 12.8

14.0 52.5 55.9

56.9

4.1

Note: * Hexaware figures are for CY24/CY25/CY26; ^DET Business' USD revenue growth.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Story in Charts

Investment argument of KPIT Technologies

Pure-play focus

unlocks deep

domain

expertise and

client trust

SDV and

centralized

architectures

drive complex

software needs

M&A enhances

capabilities and

geographic

reach

Valuation and

risks: Well-

positioned but

not without

challenges

Investment argument of Tata Technologies

Comprehensive

engineering

capabilities

anchored in the

mechanical domain

Margins

constrained by

mechanical

engineering and on-

site delivery model

High client

concentration tied

to Tata Group

ecosystem

Valuation and risks:

Limited upside

given structural

challenges in the

legacy business

BMW JV: A

strategic pivot

Investment argument of Tata Elxsi

Design-led

approach drives

early client

engagement and

differentiation

Automotive as a

core engine of

growth, though

near-term

headwinds

persist

Margins no longer

at peak; growth

challenges may

limit near-term

upside

Valuation and

risks: Robust

profile, though

near-term visibility

constraints persist

Non-automotive

diversification

provides optionality

for medium-term

growth

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Story in Charts

Functions in domain of AD/ADAS and infotainment are expected to grow in complexity

OS and Middleware

Powertrain and chassis

ADAS & AD

Breakdown of software developement expenses (USD b)

Body Electronics

Infotainment, connectivity, security and connected services

2025

2030

Source: McKinsey, MOFSL

2020

The global software integration and E/E market is expected to compound at ~9% by 2030; KPIT stands to benefit from this

opportunity owing to its domain expertise

Automotive and E/E Market ( USD bn)

112

2019

105

126

2025

144

142

2030E

Software( OS and

Middleware)

Integration, V&V

services

ECUs/DCUs

Sensors

Power Elecronics

Others(

Wires,displays)

Source: McKinsey

CAGR(19-30,%)

+9.2

+9.7

+4.8

Capabilities in the automotive domain

Capability

Akkodis

Capgemini

Cyient

KPIT

LTTS

Quest Global

TCS

Tata Elxsi

Tata Technologies

TECHM

Wipro

ADAS

  



Body Engineering

  

Cockpit electronics

  

Electric powertrain

  

Telematics

  

LEADERS:

  ;

CHALLENGERS:

  ;

ASPIRANTS:

  

Source: Zinnov, Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Story in Charts

Three structural forces are reshaping the global mobility landscape

The shift toward Smart Mobility,

underpinned by

CASE (connected, autonomous, shared, electric), is

accelerating the role of software in vehicles

OEMs are moving from

decentralized

electronic/electrical (E/E) architectures to

centralized domain controllers,

paving the way for

software-defined vehicles (SDVs)

Regulatory mandates for greener mobility

are

compelling automakers worldwide to intensify

investments in electric powertrains and

sustainability-focused innovations.

R&D and capex stood at peak during 2023 and early 2024

R&D and Capex trend (YoY,%)

Renualt Group

General Motors

Ferrari

Ford Motor

Mercedes Benz Group

Bayerische Motoren Werke AG

Honda

Volkswagon

Stellantis

CY18

11%

17%

16%

14%

-4%

32%

-20%

CY19

-13%

-6%

-7%

-16%

-1%

23%

CY20

-9%

-20%

-15%

-23%

-9%

-2%

-27%

-54%

CY21

-25%

34%

-1%

118%

-8%

34%

175%

CY22

-13%

24%

-11%

-19%

-6%

-7%

CY23

10%

15%

12%

13%

21%

15%

18%

CY24

-4%

-12%

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Automotive ER&D- three forces pushing long-term

growth

Three structural forces are reshaping the global mobility landscape: 1) The shift

toward CASE (connected, autonomous, shared, electric) mobility is accelerating the

role of software in vehicles; 2) OEMs are moving from decentralized architectures to

centralized domain controllers, paving the way for software-defined vehicles (SDVs);

3) Regulatory mandates for greener mobility are compelling automakers worldwide

to invest in electric powertrains and sustainability-focused innovations.

Smart Mobility: ACES unlocks growth levers for automotive ecosystem



The disruptive forces reshaping the automotive industry commonly referred to as

ACES or CASE (Autonomous driving, Connected vehicles, Electrification of

powertrain, and Shared mobility) have seen rapid acceleration in recent years.



Automotive manufacturers and their suppliers are making substantial

investments in software development and electrification, signaling a major

transformation in the future of mobility.



This shift is driven by the rise of urban-access restrictions—such as bans on

internal combustion engine (ICE) vehicles, the growing adoption of shared

mobility models, including car sharing and micro-mobility, and the emergence of

disruptive technologies like urban autonomous driving.



In this evolving landscape, the automotive industry is increasingly turning to

software and electronics as the next critical frontier for innovation and

competitive advantage.



From a functional perspective, the automotive software market can be

segmented into several distinct domains across the technology stack. At the

foundational level, operating systems and middleware serve as the core

components that facilitate hardware-software abstraction and manage low-level

system functions.



Above this layer, software functionalities executed on electronic control units

(ECUs), domain control units (DCUs), or smart sensors are typically categorized

by their functional domain. These include: Powertrain, chassis, body electronics,

advanced driver assistance systems (ADAS)/autonomous driving (AD),

infotainment, connectivity and cybersecurity and OS & middleware.

Exhibit 2: Functions in domain of AD/ADAS and infotainment are expected to grow in complexity

Breakdown of software developement expenses (USD b)

OS and Middleware

Powertrain and chassis

ADAS & AD

Body Electronics

Infotainment, connectivity, security and connected services

2025

2030

Source: McKinsey, MOFSL

2020

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

This includes ensuring

seamless communication

between various

components, resolving

compatibility issues, and

optimizing the overall

performance of the

software within the

vehicle’s E/E architecture.

From a value chain perspective, the automotive software development process

can be broadly divided into three key phases:



Implementation of core functions:

This phase involves the development of

essential software functionalities, including customization and adaptation for

specific vehicle platforms. It forms the foundation of the software stack and

ensures that each feature is tailored to meet the unique requirements of

different models and configurations.



Validation and verification:

In this stage, the implemented software undergoes

rigorous testing to confirm that it performs as intended. Both functional and

safety requirements are verified through simulations, real-world testing, and

formal validation procedures to ensure reliability and compliance with industry

standards.



System integration:

The final phase involves integrating individual software

modules into a cohesive system. This includes ensuring seamless communication

between various components, resolving compatibility issues, and optimizing the

overall performance of the software within the vehicle’s E/E

(Electrical/Electronic) architecture.



Exhibit 3: Split of Software development market across value chains (USD b)

Function Development

Validation and Verification

Integration

2020

2025

2030

Source: McKinsey, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Centralization of E/E (Electrical/Electronic) architecture:



This move toward

centralization is tightly

connected with the

separation of hardware

and software,

paving the

way for vehicle systems to

be designed as

layered

architectures.



We observe that the traditional model, where OEMs define detailed

specifications and suppliers execute on them, is rapidly evolving. Increasingly,

neither OEMs nor legacy suppliers are fully equipped to independently

determine the complete technology requirements for emerging vehicle systems.

As a result, co-development between OEMs and suppliers/service providers is

not only becoming more common but is also emerging as a necessity to keep

pace with technological complexity and innovation cycles.

As illustrated in Exhibit 4, the automotive industry is undergoing a significant

transformation in its E/E architecture. There is a shift from a

decentralized

architecture to centralized architectures.

A decentralized architecture is a

characteristic of the

third generation

of E/E systems, where individual functions

run on dedicated ECUs interconnected through a central gateway and exhibit a

high degree of software-to-hardware integration.

Within a vehicle, ECUs are tasked with managing various electrical subsystems.

These range from basic ECUs, such as those controlling power-adjustable

passenger seats, to more sophisticated ones that optimize engine performance

by processing input from multiple sensors.

DCUs represent the next stage in the evolution of ECUs. They consolidate the

functions of multiple ECUs into a single, more cost-effective system, enhancing

efficiency and reducing system complexity.

In the

fourth generation,

the architecture transitions to a more consolidated

structure with the introduction of

dedicated domain controllers.

These

controllers manage specific domains such as powertrain, ADAS, or infotainment,

thereby reducing the number of ECUs and improving system efficiency and

scalability.

This move toward centralization is tightly connected with the

separation of

hardware and software,

paving the way for vehicle systems to be designed as

layered architectures.

In such architectures, clear layers, particularly at the OS &

middleware

levels, enable greater modularity, reusability, and flexibility,

allowing OEMs and suppliers to innovate and scale more efficiently.

Co-development to take front seat as software complexities rise

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 4: Evolving E/E architecture

Distributed

Today

Central gateway

3rd



Stronger collaboration via

central gateway



Cross-functional connection



Ability to handle complex

functions, e.g., adaptive cruise

control



Collaboration of ECUs, within

one domain



Domains: body/comfort, chassis,

powertrain, and infotainment



3-4 independent networks



Limited communication between

domains



Independent ECUs



Isolated functions



Each function has its ECU (1.1

connection)

Source: McKinsey, MOFSL

Body/

Comfort

Chassis Powertrain

2nd

Infotainment

1st

The vehicle architecture is evolving from the one that relies on a large number

of separate ECUs (~100 in complex vehicles) to a more streamlined setup

featuring a limited number of central DCUs, each responsible for a specific

domain, i.e., chassis or infotainment.



For instance, in a traditional architecture without DCUs, sensors like cameras

handle data processing locally and directly control actuators based on those

results. In contrast, within a

DCU-based E/E architecture,

data from a variety of

sensors, including cameras, radars, and LiDAR is processed centrally.



Exhibit 5: E/E architecture is evolving from function-specific ECUs to centralized architecture

E/E architecture

Generation

High-level Architecture

Infotainment

Main features



Virtual domain

Limited dedicated HW

Ethernet backbone

Complex functions, high

performance computing

Vehicle Centralized

5th

Central gateway

Sensor

Actuator

Domain Centralized

4th

Central gateway

Domain

Controller



Central domain controller



Ability to handle more complex

functions



Consolidation of functions (Cost

optimization

Source: McKinsey, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution



In Asia, both India and

China have announced

aggressive EV adoption and

decarbonization goals. India

is targeting substantial EV

penetration across private,

commercial, and two- and

three-wheeler segments by

2030.



Governments worldwide are accelerating regulatory efforts to promote cleaner

mobility, primarily through electrification and stricter fuel efficiency standards. In

the US, Corporate Average Fuel Efficiency (CAFE) regulations aim to significantly

improve fuel economy and penalize non-compliant automakers, driving the shift

toward lightweight vehicle designs.

In the US, a major economic push has boosted the electric vehicle (EV)

manufacturing sector, with a target of increasing EV sales to 50% of all vehicle

sales by 2030. Significant investments have been made in EV production,

infrastructure, and battery technology, resulting in the tripling of EV sales.

The European Union introduced comprehensive legislation in Jul’21 to achieve

climate neutrality, including a strong focus on zero-emission road mobility. The

plan aims to drastically cut carbon emissions by replacing conventional vehicles

with cleaner alternatives across all member states.

In Asia, both India and China have announced aggressive EV adoption and

decarbonization goals. India is targeting substantial EV penetration across

private, commercial, and two- and three-wheeler segments by 2030. Meanwhile,

China in Sep’20 declared its intention of peaking

CO₂ emissions before 2030 and

reaching carbon neutrality before 2060.

The major trends—a)

the centralization of E/E architecture

and

b) the resulting

separation of software and hardware layers—along

with the push for clean and

green mobility solutions, will compel OEMs and Tier-1 suppliers to significantly

increase their investments in R&D. Failing to respond to these shifts could result

in stagnation and a loss of competitive edge, as more agile and innovative

players capture market share.

Regulatory push toward cleaner and greener products

Investment cycle — the past and where we stand now



As shown in Exhibit 6, the capex cycle for major automotive OEMs grew during

CY21-23 but decelerated in CY24. US and European OEMs reported declining

battery electric vehicle (BEV) sales, driven by pricing pressures and evolving

consumer preferences. In contrast, Asia-based OEMs (such as Honda) shifted

their focus toward hybrid vehicles, as BEV volumes fell short of expectations.

These market dynamics have contributed to a slowdown in the pace of R&D

investment by auto OEMs in the short term.

Exhibit 6: R&D and capex stood at peak during 2023 and early 2024

R&D and Capex trend (YoY,%)

CY18

CY19

Renualt Group

11%

General Motors

-13%

Ferrari

17%

Ford Motor

-6%

Mercedes Benz Group

16%

-7%

Bayerische Motoren Werke AG

14%

-16%

Honda

-4%

Volkswagon

32%

-1%

Stellantis

-20%

23%



CY20

-9%

-20%

-15%

-23%

-9%

-2%

-27%

-54%

CY21

-25%

34%

-1%

118%

-8%

34%

175%

CY22

-13%

24%

-11%

-19%

-6%

-7%

CY23

10%

15%

12%

13%

21%

15%

18%

CY24

-4%

-12%

Source: Company, MOFSL

We have captured commentaries around R&D, capex and EVs of major OEM

players for the past five years below:

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 7: The 2021-23 period saw high capex outlay for electrification and batteries platforms

2023

2024

EUR21.8b spent on R&D in 2023

and

High intensity on R&D with focus on six

Total planned investment of EUR165b

planning to invest

EUR180b over five

battery factories and around

EUR1.7b

for

2025-29, down EUR15b from the

years, of which EUR130b allocated to

spent

on battery-related M&A. Plans to

prior cycle.

Expects peak capex in

electrification

and digitalization. 2024

eventually spend

EUR120b on

2024, with a decline beginning in

to be a peak investment year, with

digitalization and electrification.

2025.

slowdown by 2027.

Consistently spending on R&D with

EUR9.1b spent on R&D,

highest ever in

major focus on electrification and

R&D spending flat YoY,

maintaining

company historywith focus on EV

development of MB.EA and MMA

the same level as 2023. For 2025,

Merc

platform development (MB.EA, MMA,

platforms, transitioning to MB.OS, and

expecting R&D to remain “flattish”,

VAN.EA), software architecture

focused improvement in battery tech

with no cuts planned.

(MB.OS).

and EV performance.

Plans to increase investments in R&D,

Reduced its planned investment in

Record-high R&D expense of

JPY980b

Honda

with plans to invest around

JPY8t in

electrification from

JPY10t (USD69b)

— the largest in its history.

R&D over the next decade.

to JPY7t (USD48b) through FY31.

2024 total capex was USD8-9b;

Total capex of USD8-9b in 2023, with

significant capex for Model E and EV

Capex increases annually from

USD7.6b

~40% of capex (USD3.2–3.6b)

infrastructure like BOSK battery

Ford

in 2021 to USD8-9b in 2022

with focus

allocated to EVs,

including next-gen EV

plants, next-gen EV platform

on batteries & EV platforms.

product development, Michigan LFP

development. Cost reduction of

battery plant

USD1.4b in in Model E (EV).

Increased investments by

EUR2b YoY,

EUR1.6b higher capex,

aimed at

Constant focus on R&D with annual with key areas being battery JVs. STLA

enabling flexible powertrains, allowing

Stellantis

expenditure of

EUR12-13b for BEV

Medium and STLA Large platforms

a wider market coverage from

development and electrification.

were launched, boasting 700km and

combustion to BEVs and hybrids.

500 miles of range, respectively.

Three- fourths of capital and

Estimated at USD10–11b,

including,

Consistent capex;

USD9-10b in initial

engineering expenditure on EV. Targets battery JVs and software development

years increased to USD11b,

with extra

to make it 100%, three Ultrium plants and manufacturing for both ICE and

expenditure on EV and its growth.

currently under development.

EV platforms.

In 2023,

BMW's R&D expenses rose to

Consistent R&D spends of about

R&D expenditure in 2024 reached a

EUR7.8b

from EUR600m YoY, with an

BMW

EUR6.3b with focus on automated

record high of

EUR9b, up 17.1%

from

R&D ratio of 5%. 2024 projected to be

driving

and NEUE Klasse EV platform.

EUR7b in 2023.

R&D and capex peak year.

Source: Company, MOFSL

OEM

2020-22

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 8: EV sales and outlook for major OEMs (2020-2024)

OEM

2020-22

2023

2024

Rapidly scaled up its global BEV presence

from 230,000 units in 2020 to over 770,000

in 2023, emerging as Europe's EV market Delivered ~770,000 BEVs globally Delivered 745,000 BEVs globally in

leader, expanding US production

in 2023.

2024, (down 3% from 2023).

(Chattanooga, Scout Motors) and targeting

50% global BEV sales by 2030.

Doubled BEV sales in 2021, delivering

118,000 BEVs in 2022, and targeting

another 100% growth in 2023 and a

focused electrification strategy across

passenger and commercial segments.

Reported 23% decline in all-EV

sales, totaling 185,000 units;

Sold a total of 240,600 units (BEV),

anticipates a slight decrease in

up 61% YoY

overall vehicle sales and a

reduction in operating margins.

Merc

Honda

Ford

Focuses on hybrids, with BEV sales of only

19,000 units globally in 2023 and under Announced plans to produce over

15,000 in 2020. Despite low current EV 2m EVs annually by 2030, aiming

Revised its global EV sales target

market share, Honda targets producing

for EVs and fuel-cell vehicles to

for 2030 from 30% to below 20%.

over 2m EVs annually by 2030, aiming for constitute 100% of its vehicle sales

40% of global sales from battery and fuel

by 2040.

cell EVs.

EV sales climbed nearly 35% YoY to

EV sales surged YoY to 61,575 units,

Produced ~120,000 EVs mid-year

97,865 units in USA and aims to

securing the #2 spot in the US behind and reached an annual production

sustain its edge through its "Power

Tesla, with plans to scale production to run rate of 600,000 units by year-

Promise" program and growing

600,000 units annually by 2023.

end

hybrid and EV portfolio

Accelerating its shift toward pure BEVs in

response to regulatory changes, growing its

BEV sales rose 21% YoY, claiming

BEV lineup from 19 models in 2021 to a

#3 position in Europe with 136,000 Sold ~314,500 BEVs globally, down

projected 47 by 2024. BEV sales rose 41%

units sold in 2023, doubling from

from 369,000 units in 2023

YoY, and Stellantis led BEV van sales in

the previous year.

Europe in 2021, signaling strong

momentum in full electrification.

Aims to scale aggressively, targeting

400,000 EVs in North America from 2022 to

mid-2024 and planning 30 global EV

models by 2025. Remains committed to

reaching over 1m annual EV sales in North

America and China by mid-decade.

Expects its EVs to constitute ~8% of

total US vehicle sales in 2024,

which is below projected forecasts

of ~10%. Expects to produce

~50,000 unit’s less than earlier

estimates.

Stellantis

Over 75,000 units sold, 93%

increase from 2022 (in US).

BMW

BEV momentum is accelerating, with over

215,000 EVs sold in 2022-23—more than

double 2021 levels. BEVs expected to make Over 375,000 units, accounting for Sold more than 590,000 EVs,

up 15% of global sales in 2023. Targets

15% of total sales

representing 24 % of total sales.

10m BEVs on the road and 50% of global

sales to be fully electric by 2030.

Source: Company, MOFSL



Despite near-term capex moderation by Western OEMs, long-term demand

remains intact.

Asian OEMs are pivoting toward hybrids, while global players

are increasingly focused on SDV/EV, creating tailwinds for ER&D firms with

domain depth, co-development capabilities, and global delivery. We initiate

coverage on three names:

August 2025

Technology | Auto ER&D –

Technology | Auto ER&D – Thematic: An incomplete

Thematic: An incomplete revolution

revolution

Pg16

Pg37

KPIT

TECHNOLOGIES

A software

powerhouse

TATA

TECHNOLOGIES

An engineering

specialist facing

headwinds

Pg60

TATA ELXSI

Design-led leader

with near-term

speed bumps

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

KPIT Technologies

BSE SENSEX

81,307

S&P CNX

24,870

CMP: INR1,197



A software powerhouse

TP: INR1,600 (+34%)

Buy

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

KPITTECH IN

274

328 / 3.7

1921 / 1021

-4/-18/-35

1756



KPIT: Financials &Valuations (INR b)

Y/E March

FY26E FY27E FY28E

64.2

75.5

89.9

Sales

17.6

18.3

19.0

EBIT Margin (%)

8.8

10.8

13.3

PAT

31.9

39.5

48.8

EPS (INR)

9.7

23.9

23.5

EPS Gr. (%)

130.6 156.4 188.4

BV/Sh. (INR)

Ratios

27.0

27.7

28.5

RoE (%)

24.0

27.5

31.6

RoCE (%)

35.0

Payout (%)

Valuations

37.6

30.3

24.5

P/E (x)

9.2

7.6

6.4

P/BV (x)

22.0

18.0

14.4

EV/EBITDA (x)

0.9

1.2

1.4

Div Yield (%)

Shareholding pattern (%)

As On

Jun-25 Mar-25

Promoter

39.5

DII

22.4

21.3

FII

16.3

18.1

Others

21.9

21.2

FII Includes depository receipts



KPIT is a pure-play automotive ER&D specialist, helping global OEMs

accelerate their shift toward SDVs. With deep expertise in embedded

software, architecture consulting, and middleware integration, KPIT has

formed strategic partnerships with notable OEMs.

Revenue grew from USD304m in FY20 to USD691m in FY25 (~18% CAGR)

and is projected to reach USD1b by FY28E, posting ~15% CAGR over FY25-

28E. This growth is driven by rising software complexity, accelerating SDV

adoption, and vendor consolidation trends among OEMs. We believe that

a turnaround in the automotive investment cycle could lead to an upside

to these numbers.

This should also help margins expand: we expect EBIT margins to expand

from 17.1% in FY25 to 19.0% in FY28E. We initiate coverage with a

BUY

rating and a TP of INR1,600, valuing KPIT at 40x FY27E EPS, which implies

a PEG of ~2x on a ~19% EPS CAGR over FY25-28E. We believe KPIT is

among the best-positioned players to benefit from the long-term

automotive software opportunity.

KPIT’s strategic pivot following its demerger enabled the company to

specialize entirely in automotive software engineering. It focuses on high-

value domains like ADAS, electrification, connected vehicles, and digital

cockpits.

The company’s focused client approach has reduced its client base from

~250 to ~60, increasing revenue per client and forging stronger

partnerships. Its T21 program now accounts for ~85% of revenue, with

the average client size more than doubling over the last four years.

As OEMs move from distributed ECUs to centralized and zonal

architectures, demand for middleware and architecture consulting is

rapidly rising. KPIT has capitalized on this trend, with architecture and

middleware revenue increasing from ~12% of sales in FY22 to ~22% in

FY25.

KPIT’s expertise in managing SDV programs, combined with alliances with

firms like AWS and QNX, positions it as a trusted advisor for OEMs re-

architecting their vehicle software stacks.

Strategic acquisitions have expanded KPIT’s capabilities and global

presence. The USD191m acquisition of Caresoft Global has strengthened

KPIT’s position in commercial vehicles and China’s automotive ecosystem.

Earlier deals, such as Technica and PathPartner, have added depth in

virtual validation, semiconductors, and digital cockpit solutions—

capabilities that are essential for SDV rollouts. These acquisitions also

enable KPIT to secure larger, integrated mandates from OEMs.

Pure-play focus unlocks deep domain expertise and client trust



Jun-24

39.5

16.6

23.3

20.6

SDV and centralized architectures drive complex software needs



M&A enhances capabilities and geographic reach



August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Valuation and risks: Well-positioned but not without challenges



We initiate coverage with a BUY rating and a TP of INR1,600, valuing KPIT at 40x

FY27E EPS which implies a PEG of ~2x on a ~19% EPS CAGR over FY25–28E.

Risks include potential cuts in OEM capex, particularly in Europe (~45-50% of

revenues), in-sourcing of critical software work, high client concentration (~85%

from top 21 clients), and integration challenges from acquisitions. However,

KPIT’s focused strategy, domain expertise, and proven execution support our

positive outlook.

Exhibit 9: KPIT’s key clientele

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Story in Charts

KPIT’s business mix: Architecture and Middleware consulting Geo mix across the years: KPIT has strategically diversified in

share has increased

Asia as Chinese OEMs emerge; US and Europe still key

Cloud Based Connected Services

Architecture & Middleware Consulting

Feature Development & Integration

18%

12%

18%

16%

19%

20%

18%

22%

17%

41%

21%

40%

Europe

18%

46%

Asia

17%

25%

52%

48%

70%

66%

62%

60%

42%

FY21

39%

FY22

36%

FY23

31%

FY24

27%

FY25

FY22

FY23

FY24

FY25

Source: Company, MOFSL

KPIT revenue grew strongly after demerger; posted 28%

CAGR in FY22-25

Gross Revenues(USD MN)

Organic YoY CC growth

KPIT has highest revenue per employee compared to other

ER&D players

Revenue per employee (USD k)

KPIT

TTL

TELX

Source: Company, MOFSL

KPIT taps growth potential in Asia (particularly Chinese markets) as part of geographical adjacency

Asia Revenue Proportion

66%

42%

YoY Growth

81%

59%

67%

73%

16%

10%

35%

41%

17%

1QFY24

2QFY24

17%

3QFY24

19%

4QFY24

20%

1QFY25

24%

2QFY25

26%

3QFY25

29%

4QFY25

26%

1QFY26

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Company overview

During 2018–2019, KPIT

underwent a significant

corporate restructuring.

The company demerged its

IT services offerings, while

KPIT continued as a pure-

play ER&D services provider

focused on the automotive

domain.

KPIT Technologies (KPIT) is a global partner to the automotive and mobility

ecosystem, providing ER&D services with a focus on software-defined vehicles

(SDVs). The company delivers solutions across domains such as middleware,

powertrain, connected vehicles, and autonomous driving. Its services include

embedded software development & integration, E/E architecture, cloud-based

solutions for digital cockpit.



During 2018-2019, KPIT underwent a significant corporate restructuring. The

company demerged its IT business, which merged with Birlasoft, while KPIT

continued as a pure-play ER&D services provider focused on the automotive

domain.



The company caters entirely to the automotive and mobility sector, with

passenger vehicles forming 81% of revenues, commercial vehicles making up

16% and others accounting for the remaining share as of FY25.



KPIT maintains a global presence with engineering centers in Europe, the US,

Japan, China, Thailand, and India. The company’s revenue geo-mix is spread

across the US, Europe and Asia, with the US and Europe making up three-

quarters of revenue.



KPIT’s business service lines:



This consulting service

focuses on designing and

optimizing the software and

system architecture of next-

generation vehicles (e.g.,

SDVs and EVs). This vertical

accounted for 22% of

revenue for KPIT as of FY25.



Feature development and integration:

This service line involves the

development of software functionalities specific to automotive and mobility

solutions. It encompasses requirements like analysis, design, coding, testing, and

verification and validation of software (V&V) features across domains such as

powertrain, infotainment, ADAS, and body control modules. This comprises 60%

of revenue for KPIT as of FY25.

Integration services ensure these features are embedded into ECUs and vehicle

platforms, maintaining compatibility with OEM-specific standards and regulatory

compliance.

Architecture and middleware consulting:

This consulting service focuses on

designing and optimizing the software and system architecture of next-

generation vehicles (e.g., SDVs and EVs). This vertical accounted for 22% of

revenue for KPIT as of FY25.

This service includes the selection, customization, and deployment of

middleware stacks that facilitate communication between hardware and

application layers. Middleware consulting addresses data routing, service

abstraction, and inter-ECU communication to support distributed computing

models and emerging E/E architectures (e.g., DCUs).

Cloud-based connected services:

This offering provides cloud-enabled solutions

that connect vehicles to external ecosystems such as OEM backend systems,

mobile applications, and third-party services. It involves development and

deployment of telematics platforms and over-the-air (OTA) update frameworks.

This forms the remaining 18% of revenue for the company.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 10: KPIT’s business mix: Architecture and Middleware consulting share has

increased as new-age E/E architectures emerge for SDVs and EVs

Feature Development & Integration

Cloud Based Connected Services

18%

12%

70%

18%

16%

66%

19%

20%

62%

FY24

18%

22%

60%

FY25

Source: Company, MOFSL

Architecture & Middleware Consulting

FY22

FY23

Exhibit 11: Passenger car segment dominates the company’s revenue verticals, though

KPIT is now focusing on off-highways and commercial segments

Passenger Cars

22%

24%

Commercial Vehicles

24%

Others

19%

16%

77%

74%

75%

77%

81%

FY21

FY22

FY23

FY24

FY25

Source: Company, MOFSL

Exhibit 12: Geo mix across the years: While US and Europe are still making a large chunk

of revenue, KPIT has strategically diversified in Asia as Chinese OEMs emerge

17%

41%

21%

40%

39%

FY22

Europe

18%

46%

Asia

17%

52%

25%

48%

27%

FY25

Source: Company, MOFSL

42%

FY21

36%

FY23

31%

FY24

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 13: KPIT’s offerings — solutions and services

Source: Company, MOFSL

Client portfolio and ecosystem partnerships



The company works with

over 25 OEMs and Tier-1

suppliers and is involved in

more than 10 collaborations

across chip-to-cloud

domains.



KPIT has over 25 years of experience in automotive and mobility software, and

its software is present in more than 20 million vehicles globally.

The company works with over 25 OEMs and Tier-1 suppliers and is involved in

more than 10 collaborations across chip-to-cloud domains. It has contributed to

over 700 production programs, reflecting its role in supporting various vehicle

platforms.

KPIT also offers a set of 80+ platforms and tools that support the transition from

prototype to production, delivered through a globally distributed delivery

model.

KPIT has established long-term partnerships with leading OEMs such as BMW

(since 2018) for autonomous driving and charging tech, PACCAR (since 2011)

with a dedicated India-based tech center, and Hyundai in the early 2010s for

AUTOSAR-based ECU development.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 14: KPIT’s key clientele

Source: Company, MOFSL

Exhibit 15: KPIT’s key partnerships offer solution across virtual engineering and diagnostics, helping clients to speed up time-

to-market

Partner

AWS

Cloud

Microsoft Azure

Google Cloud

Engineering Tools

dSPACE

Vector

Google

Blackberry QNX

Qualcomm

Infineon

Description



KPIT co-develops GTM solutions for virtual engineering and diagnostics, with 2,000+ AWS-

skilled engineers and solutions listed in the AWS Solution Library



KPIT offers diagnostics solutions using Azure OpenAI and has a connected services platform

on Azure Marketplace.



KPIT provides virtual validation solutions on Google Cloud, supported by 500+ engineers

skilled in the platform.



KPIT and dSPACE co-develop EV and smart charging test solutions with a strong GTM

partnership and 2,000+ engineers skilled in dSPACE HIL systems.



KPIT, with 1000+ engineers trained on Vector and AUTOSAR tools, is Vector’s largest

software integration partner, collaborating on major OEM SDV programs.



KPIT partners with Google on AOSP-based digital cockpit platforms, supported by 100+

engineers skilled in Google technologies.



KPIT offers joint GTM solutions for aftersales diagnostics using Microsoft Azure and QNX,

with 2,000+ engineers trained on relevant platforms.



KPIT collaborates with Qualcomm on digital chassis, smart charging, and diagnostics, with

800+ engineers supporting SDV programs across six OEMs.



KPIT partners with Infineon on next-gen radar and xEV platforms, involving 500+ engineers

in low-level driver and GTM development efforts.

Source: Company, MOFSL

Middleware

Semicon

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 16: KPIT’s recent deal wins span across all geographies and business units

Quarter

Key Deal Wins



1QFY26



4QFY25



3QFY25



2QFY25



1QFY25



4QFY24



3QFY24



Strategic engagement in the electric powertrain domain for a leading European Car

Manufacturer.

Multiple engagements in the powertrain, vehicle diagnostics and mechatronics domains

with a leading American Commercial Vehicle OEM.

A leading European Commercial Vehicle manufacturer selected KPIT for multiple

engagements in the connected and diagnostics domains

Asian Car Manufacturer selected KPIT for strategic engagements in the electric

powertrain, middleware and connected domains

Strategic engagements in the electric powertrain, body electronics and autonomous

domains for a leading European car manufacturer

Multiple engagements in the powertrain, vehicle diagnostics and mechatronics domains

with a leading American commercial vehicle OEM

Strategic engagements in the connected, autonomous and electric powertrain domains

with a leading American car OEM

Key engagements in autonomous and connected domains for a leading American car

OEM

Strategic engagement in autonomous driving domain

Strategic engagement in electric powertrain and architecture domains

Engagements in vehicle diagnostics and mechatronics domains

Engagements in the connected, autonomous and body electronics domains

Engagements in autonomous and connected domains along with joint GTM with a

semiconductor company

Multiple strategic engagements in the autonomous, middleware and diagnostics

domains with European OEM

Engagements in the electric powertrain and connected domains for a leading American

car manufacturer

Engagements in the body electronics connected and electric powertrain domains

Engagements in the connected, middleware and powertrain domains

Engagements in autonomous and powertrain domains

A significant engagement in the connected vehicle domain

Engagements in the autonomous, connected and powertrain domains

Engagements in the middleware and architecture domains

Engagements in the connected, middleware and architecture domains

Engagements in powertrain and connected domains

Significant engagements in the electric powertrain and connected domains

Engagements in the connected, autonomous and middleware domains

Engagements in the connected, electric and conventional powertrain domains

Engagements in the autonomous, electric and conventional powertrain domains

Engagements in powertrain and vehicle diagnostics domain

Multiple engagements in the autonomous driving and vehicle engineering domains

System engineering for body electronics domains

Strategic engagements in the e-powertrain domain for leading European OEMs in

partnership with a leading Tier-1

Engagement in the autonomous driving domain

Several engagements in vehicle engineering domain

Geography

Europe

America

Europe

Asia

Europe

America

Europe

America

Asia

America

Europe

America

European

America

Asia

Europe

America

Asian

America

European

Asia

America

Asia

Europe

America

Passenger

Commercial

Passenger

Commercial

Passenger

Commercial

Segment

Passenger

Commercial

Passenger

Commercial

Passenger

Commercial

Passenger

Commercial

Passenger

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Investment thesis

A) Specialist over generalist: Focused play in automotive ER&D



KPIT’s strategic transformation from a general IT services provider to a

specialized automotive engineering and mobility solutions partner marks a

significant pivot in its business model. This shift, initiated in Jan’18 through the

demerger of its IT services business and subsequent merger with Birlasoft,

allowed KPIT to concentrate exclusively on the automotive sector, embracing a

“specialist over generalist” approach.



After the demerger, KPIT strategized its vision for auto and mobility solutions,

particularly in embedded software development and integration services. It has

streamlined its operations, reducing its client base from ~250 to about 60, and

its workforce from 13,500 to around 6,600 to focus on deep, strategic

partnerships with key automotive players.



This ‘inch-wide, mile-deep’ strategy played well for KPIT. Revenue grew from

USD304m in FY20 to USD691m in FY25 at a CAGR of ~18%. Its headcount

expanded from ~7,000 in FY20 to ~13,000 in FY25 to support growth. The

company has managed to maintain industry-leading revenue per employee

compared to other ER&D peers (exhibit 18).

Exhibit 17: KPIT revenue grew strongly after demerger; posted 5.0% CQGR in FY22-25

Gross Revenues(USD MN)

Organic YoY CC growth

This ‘inch-wide, mile-deep’

strategy played well for

KPIT. Revenue grew from

USD304m in FY20 to

USD587m in FY24 at CAGR

of 17.9%.

178

111 124 134 145 149 159 165 173 176 177

Source: Company, MOFSL

Exhibit 18: KPIT has highest revenue per employee compared to other ER&D players

Revenue per employee (USD k)

KPIT

TTL

TELX

Note: Revenue is annualized, Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution



KPIT is among the top ER&D service providers for the automotive segment

among its Indian peers. Its concentrated exposure to the automotive vertical,

particularly in the US and Europe, along with high client concentration (strategic

clients accounting for over 80% of revenue), has benefited KPIT.

Exhibit 19: KPIT has highest share of automotive revenue compared to its peers

Its concentrated exposure

to the automotive vertical,

particularly in the US and

Europe, along with high

client concentration

(strategic clients accounting

for over 80% of revenue),

has benefited the company.

Revenue share from Automotive (%)

96%

84%

54%

33%

KPIT

TTL

TELX

LTTS

Source: Company, MOFSL



However, increased competitive intensity through Chinese OEMs, regulatory

changes (faster transition to EVs from ICEs), and changing consumer preferences

for more features have dented the underlying demand environment in the

automotive sector in European regions.

European companies now face the challenge of competing with Chinese OEMs

on the cost front in the Chinese market. Additionally, they are preparing to face

increased competition from Chinese players in their own domestic markets.

This, in turn, has caused deceleration in growth for Indian ER&D players, KPIT

being no exception. However, the slowdown comes on the back of a previously

experienced high-growth phase; ER&D companies’ growth still continues to

outpace Indian IT service players.

Exhibit 20: KPIT’s growth in Europe has continued its downward trend

Europe region ( YoY Growth)

79%

90%

86%

38%

34%

62%

18%

28%

25%

11%

-6%

-7%



We believe European OEMs are now gradually responding to the need for

upgrade and feature-led software integration to stay competitive. Many are

likely to pursue vendor consolidation, breeding an opportunity for KPIT to

emerge as a natural partner by leveraging its deep-rooted relationships and

established presence among European OEMs.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

b) Decoupling of Hardware and software – step to SDV transition



KPIT’s niche offerings include software development and integration services

across autonomous driving and ADAS and body electronics, along with cloud-

based services for connected vehicles and digital cockpits.



Key trends shaping the mobility industry include a shift from hardware to

software-defined vehicle architecture, the rising focus on software services (like

CASE – Connected, Autonomous, Shared and Electric), mobile connectivity and

cloud. These trends provide avenues for mobility OEMs not only to gain

competitive advantage but also to germinate new pools of revenue through

software monetization.

Exhibit 21: The global software integration and E/E market is expected to compound at ~9% by 2030; KPIT stands to benefit

from this opportunity owing to its domain expertise

Automotive and E/E Market ( USD bn)

112

2019

105

126

2025

144

142

2030E

Software( OS and

Middleware)

Integration, V&V

services

ECUs/DCUs

Sensors

Power Elecronics

Others(

Wires,displays)

Source: McKinsey



CAGR(19-30,%)

+9.2

+9.7

+4.8

KPIT’s depth and breadth of

services help OEMs

accelerate their SDV

transition programs

through advanced E/E

architectures.



The realization of SDV and CASE is complex. An enabler of these capabilities is

E/E and software architectures. The vehicle’s E/E architecture is shifting from

decentralized to centralized architecture. A large number of ECUs can cause

software update bottlenecks, leading to challenges in safety and reliability.

The most recent architecture replaces these ECUs with zonal controllers and

central compute units controlling them. However, they bring a trail of complex

software integrations.

Software complexities can cause a higher cost of development and

maintenance, increased SOP (start of production) timelines and time-to-market.

Thus, decoupling of hardware and software development becomes the

preferred roadmap.

A separate software-focused organization can help OEMs to reduce SOP

timelines (~30%), expedite time-to-market, and lower the cost of software

development.

KPIT’s structuring across three clusters, i.e., – 1) architecture consulting and

middleware (helping OEM with platform development, integration and virtual

engineering), 2) domain development, migration and integration for

autonomous driving, electrification and body electronics, 3) cloud-based

connected services in digital cockpit offers OEMs breadth and depth for SDV

transition.

Further, KPIT’s acquisition of Technica strengthens its position in central and

zonal compute architectures. Technica solutions align with KPIT’s middleware

and software integration expertise.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution



KPIT’s strategic T21 client

initiatives focus on scaling

and improving revenue per

client by cross-selling to the

top 21 accounts. These

clients contribute ~85% of

revenue.

Together, KPIT and Technica can play an integral role in the OEM journey from

pre-SOP to post-SOP, helping OEMs in accelerating development by providing an

E/E architecture blueprint during the pre-SOP stage, which lays the foundation

to advance SOP timelines by at least a year.

c) KPIT’s client-focused strategy yielding results



KPIT boasts strategic partnerships and collaborations with 25+ OEMs and Tier-1

companies, 10+ ecosystem partners (given its two decades of experience in the

mobility industry), 80+ platforms, tools and accelerators across domains, and

700+ production programs.



KPIT also remains a preferred partner for six global OEMs for their SDV

programs. This bodes well for KPIT, as OEMs will continue to adopt and

transition to SDVs as argued in the previous point.

Exhibit 22: KPIT’s partner ecosystem

Source: Company, MOFSL



KPIT’s strategic T21 client initiatives focus on scaling and improving revenue per

client by cross-selling to the top 21 accounts. These clients contribute ~85% of

KPIT’s total revenue.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 23: KPIT has been able to expand its wallet share gains through focused approach on Top 21 clients

Strategic Client Revenue(T21)

Average revenue per client (USD,mn)

9.8

6.0

7.0

10.6

4.7

85%

FY21

84%

FY22

83%

FY23

85%

FY24

87%

FY25

Source: Company, MOFSL



KPIT’s endeavors have worked well. It was able to capitalize on client-mining

efforts, as revenue per client increased from USD4.7m in FY21 to USD10.6m in

FY25 (Exhibit 23). On the flip side, we see a significant dependence on a few key

clients, and restricted client-mining opportunities may weigh on the momentum

of new deals. Any delays in ramp-ups or projects by big clients can slow down

the pace of revenue growth.

KPIT is also actively

pursuing vertical adjacency

initiatives by expanding its

focus to commercial

vehicles and off-highway

segments, in addition to

passenger vehicles.

KPIT is pursuing a multi-

pronged strategy to expand

in China, aiming to leverage

local insights to help global

OEMs enhance their

features, reduce costs, and

accelerate time-to-market.

d) Investments in China and CV/off-highways fortify its future



As the western OEM makers pay heed to the emergence of Chinese OEMs and

the resultant increase in competitive intensity, KPIT is also taking strategic

actions of exploring Chinese markets.



KPIT has outlined a comprehensive and multi-pronged strategy to expand its

presence in China, recognizing it as a critical market for automotive innovation.

The company aims to leverage its insights from the Chinese ecosystem to help

global OEM clients enhance their product features, reduce costs, and accelerate

time-to-market.



KPIT is actively assisting its existing global clients to stay competitive in China,

particularly through its expertise in automotive architecture.



It is also exploring opportunities to support Chinese OEMs in expanding globally

by offering compliance, integration, and platform-based solutions. The company

sees this move as a strategic priority, and investments shall fructify in the long

term.



KPIT is also actively pursuing vertical adjacency initiatives by expanding its focus

to commercial vehicles and off-highway segments, in addition to passenger

vehicles.



The company has begun engagements with multiple new clients in these areas,

with active projects already underway for two truck OEMs and one off-highway

equipment manufacturer.



It also plans to accelerate in the above-mentioned directions through any

inorganic opportunities and is in active discussions for the same.



KPIT has announced the acquisition of Caresoft Global's

engineering solutions

business for up to USD191m, marking a significant strategic move to enhance its

capabilities in the commercial vehicle and off-highway segments.

This

acquisition facilitates KPIT's expansion into the Chinese market, where

Caresoft has established strong relationships with OEMs, particularly in the

new-energy vehicle segment.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution



We believe these strategic priorities position KPIT well, as the company

sharpens its niche in automotive software by expanding into China and

diversifying into the CV and off-highway segments, backed by strong domain

expertise and targeted inorganic initiatives. Execution risks in new and evolving

markets remain a key monitorable.

Exhibit 24: KPIT taps growth potential in Asia (particularly Chinese markets) as part of geographical adjacency

Asia Revenue Proportion

66%

16%

10%

1QFY24

35%

42%

YoY Growth

81%

59%

67%

73%

41%

17%

2QFY24

17%

3QFY24

19%

4QFY24

20%

1QFY25

24%

2QFY25

26%

3QFY25

29%

4QFY25

26%

1QFY26

Source: Company, MOFSL

e) Pointed acquisitions to unlock new markets and capabilities



KPIT has continued to strengthen its offerings through M&A, thus unlocking new

synergies and adding value to its offerings to clients. Largely, all acquisitions

have been EPS-accretive to KPIT, thus improving its profitability at a much faster

pace. The company has also been able to tap unexplored markets and win

clients through acquisitions.



KPIT recently announced its biggest acquisition in the past five years by

acquiring the carved-out engineering solutions business of Caresoft. The

acquisition emphasizes the company’s pivot on strategic directions as discussed

in the previous point. KPIT expects business synergies through 1) reducing costs

and engineering services for the commercial vehicle and off-highway segments;

2) expanding service offerings to T25 clients; 3) entering into software

benchmarking; and 4) accelerating its entry into the China market.

Exhibit 25: KPIT acquisitions in past five years

Date

May-25

Sep-22

May-22

Sep-21

Jun-21

Acquire

Caresoft Engineering

Technica

SOMIT Solutions

Future Mobility Solutions

PathPartner

Acquisition

price

(USD m)

191

108

Revenue

Objects and benefits

(USD m)



Strengthens KPIT's VED, off-highway offerings as it will integrate

engineering and benchmarking services. This will lead to faster

GTM for products, resulting in cost savings for OEMs.

Helps to create across-the-stack expertise, offering a one-stop

shop for the industry to transform toward SDV

Offers aftersales service through cloud-based platform and expert

consulting services

Strengthens market presence in Germany and improves access to

strategic clients.

Early access to semicon technologies through PathPartner CoE,

performance engineering of DCU in Autonomous, Infotainment,

Connected domains

Source: Company, MOFSL



August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Valuation and view: Initiate coverage with BUY rating



KPIT is at a strategic

inflection point, as an

accelerated adoption of

SDVs and EVs by Chinese

OEMs compels western

peers to fast-track

software-led feature

integration. KPIT leverages

its positioning as a pure-

play automotive software

engineering partner to

capitalize on this shift.



KPIT is at a strategic inflection point, as an accelerated adoption of SDVs and EVs

by Chinese OEMs compels western peers to fast-track software-led feature

integration. KPIT leverages its positioning as a pure-play automotive software

engineering partner to capitalize on this shift.

Its robust capabilities in architecture and middleware consulting - which now

account for ~22% of revenue in FY25 (up from ~12% in FY22, growing at a CAGR

of 58%) – makes KPIT a preferred vendor for OEMs pacing up their SDV and EV

investment cycles, as E/E architecture evolves and software complexities

increase.

KPIT continues to strengthen its capabilities through targeted inorganic

initiatives as well. The company has executed multiple strategic acquisitions in

recent years, all of which have been EPS-accretive and additive to its domain

expertise.

Its latest acquisition, Caresoft Engineering, is expected to contribute to revenue

(~5%) and margins starting in FY26 while providing a strategic foothold in the

Chinese automotive ecosystem.

Operationally, KPIT remains in the top quartile of its peer group, with FY25 EBIT

margins at 17% — second only to Tata Elxsi. We estimate a CAGR of ~15% in

USD revenue for KPIT over FY25-28E. Its EBIT margin is set to improve steadily

from 17.1% in FY25 to 19.0% in FY28E, supported by growth leverage and

employee productivity.

With an EPS CAGR of 19% over FY25-28, outpacing most peers in the ER&D

space, and continued leadership in the automotive software vertical, we initiate

coverage with a BUY rating and a TP of INR1,600 (34% upside), valuing at 40x

FY27E EPS (implying a PEG of ~2x).

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Key risks to our thesis



KPIT derives over 80% of its

revenue from its T25

clients. While this focus has

enabled strong mining, it

also raises the risk of

revenue volatility if there

are delays, pauses, or ramp-

downs in large programs.



KPIT's business is heavily concentrated in the automotive and mobility domains,

particularly in electric and autonomous vehicle technologies. Any slowdown in

global automotive R&D budgets, regulatory shifts, or delays in EV/SDV adoption

could directly impact growth visibility.

A fair share of KPIT’s revenue comes from European OEMs. Given recent macro

uncertainty, tighter budgets, and increased competition from Chinese OEMs,

any pullback in ER&D spends by these clients can weigh on KPIT’s revenue

trajectory.

Chinese OEMs are rapidly scaling in the EV and autonomous space, with strong

local ecosystems and a preference for domestic partners. This may limit KPIT’s

expansion potential in Asia unless it successfully adapts its go-to-market and

delivery model to the region’s dynamics.

KPIT derives over 80% of its revenue from its T25 clients. While this focus has

enabled strong mining, it also raises the risk of revenue volatility if there are

delays, pauses, or ramp-downs in large programs.

Inorganic growth has been a key lever for KPIT (Caresoft, Technica, FMS, etc.).

While most deals have been synergistic and EPS-accretive, risks around cultural

integration, delivery alignment, and synergy realization remain important

execution monitorable.

Some global OEMs are increasingly investing in in-house software capabilities

(e.g., Mercedes’ MB.OS). While this trend does not eliminate external vendors,

it can slow wallet share growth and increase pricing pressure for vendors like

KPIT, especially for commoditized service areas.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Bull and Bear cases

Bull Case



Revenue is projected to grow at a ~16% CAGR in USD over FY25-28E,

led by

KPIT’s continued leadership in the automotive ER&D space, increased software

content per vehicle, deepening wallet share within the top 21 strategic clients,

and accelerated SDV adoption.



EBITDA margin is estimated to expand by 200bp to 23.0%

by FY28E, driven by

operating leverage, rising contribution from high-value segments like

middleware, and synergies from Caresoft and Technica.



EPS is expected to clock a 21% CAGR over FY25-28E, driven by margin

expansion and steady revenue growth.



TP of INR1,900 is based on 46x FY27E EPS, implying an upside of 59% from the

current levels.

Bear Case



Revenue is projected to grow at a 13% CAGR in USD over FY25-28E,

impacted

by macro pressures in Europe, slower-than-expected adoption of EVs, ramp-up

in large deals, and cautious spending by top clients.



EBITDA margin is estimated to expand modestly to 22.0%,

with limited benefits

from operating leverage and potential delays in acquisition synergies.



EPS is forecast to grow at a 14% CAGR over FY25-28E, reflecting tepid revenue

growth and flat margin performance.



TP of INR1,100 is based on 32x FY27E EPS, implying a modest downside of 7%

from the current levels.

Exhibit 26: Scenario Analysis: Base | Bull | Bear

INR m, except mentioned

Revenue ( USD m)

Growth YoY CC (%)

USD/INR

Revenue

EBITDA

EBITDA Margin (%)

EBIT

EBIT Margin

EBT

Tax Rate (%)

PAT

EPS(INR)

Growth (%)

P/E Multiple

Upside /Downside

FY25

691

84.52

58,423

12,251

21.00%

10,002

17.10%

10,875

26.90%

7,945

29.05

FY26E

733

7.5%

84.73

Bear

Base

FY27E

873

17.5%

86.45

75,463

16,583

22.0%

13,794

18.3%

14,548

25.7%

10,808

24%

Bull

FY27E

901

19.0%

86.00

77,470

17,431

22.5%

14,487

18.7%

15,242

26.0%

11,279

27%

FY27E

843

15.0%

84.00

FY28E

986

17.0%

84.00

82,821

18,221

22.0%

14,742

17.8%

15,641

26.0%

11,575

20%

1,100

-7%

FY26E

743

9.0%

86.47

64,250

13,834

21.5%

11,299

17.6%

11,663

25.2%

8,720

10%

FY28E

1040

19.1%

86.45

89,913

20,392

22.7%

17,066

19.0%

17,965

25.7%

13,346

23%

1,600

34%

FY26E

757

11.0%

84.73

64,137

14,110

22.0%

11,545

18.0%

11,908

25.5%

8,872

12%

FY28E

1090

21.0%

86.00

93,739

21,560

23.0%

18,092

19.3%

18,991

26.0%

14,053

25%

1,900

59%

62,087

13,038

21.0%

10,617

17.1%

10,980

25.9%

8,136

70,788

15,078

21.3%

12,246

17.3%

13,001

26.0%

9,621

18%

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

SWOT analysis - KPIT



Proven expertise

and strong client

relationships enable

KPIT to navigate and

perform well even in

turbulent times

Preferred SDV

partner by major

auto OEMs

Strong presence in

US and European

markets



Heavy reliance on the

automotive industry

makes it vulnerable

to sector-specific

downturns or

disruptions

Excessive reliance on

Europe OEMs and

decline in tech

spending pose a

concentration risk



Vendor consolidation

by European OEMs

positions KPIT as

preferred partner

Leveraging market

insights and

operational learnings

from China to offer

competitively priced

solutions to global

OEMs

Expansion into

commercial vehicles

and off-highway

segments



Increased uncertainty

and tariff wars can

delay conversion and

execution timelines

High competitive

intensity in service

providers for SDVs

and electrification

programs

Changes in data

protection laws or

policies could

increase compliance

costs



August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Management team - KPIT

Mr. Kishor Patil

Co-Founder, CEO and MD

Mr. Patil co-founded KPIT in 1990. He

played a pivotal role in orchestrating a

comprehensive merger-demerger scheme

in 2018, leading to the creation of new

KPIT. His vision and leadership have

established KPIT as a trusted partner for

software integration in the mobility

industry.

Mr. Sachin Tikekar

Joint Managing Director

Mr. Tikekar is responsible for building and

nurturing trusted partnerships and

relationships with clients and alliances

globally. He has played a crucial role in

formulating the new vision for KPIT after

the demerger. He has led the strategy and

blueprint of KPIT’s client- and OEM-

centric approach that has delivered KPIT’s

industry-leading growth over the last few

years.

Mr. Anup Sable

Chief Technical Officer

Mr. Sable has been with KPIT since 1994

and has led global teams, which include

electrification of vehicles, digital cockpit,

autonomous driving, AUTOSAR and

diagnostics. He was instrumental in

starting the automotive business unit and

developing the Cummins relationship for

engineering services.

Mr. Pankaj Sathe

President – Strategy and Growth

Office, Member of Executive Board

Mr. Sathe is an electronics and

telecommunications engineer from the

Delhi College of Engineering and holds an

MBA from IIM Lucknow. He has over 25

years of in-depth experience in

establishing sales, marketing and

operations in new geographies,

integrating acquired companies and

partnering with customers.

Mr. Rajesh Janwadkar

President (Global Head, Delivery and

Operation)

Mr. Janwadkar is responsible for business

growth, key practices leadership and

global delivery.

He has served as a core member of the

KPIT team and contributed to both the

development and execution of the

automotive business strategy.

Ms. Priya Hardikar

CFO

Ms. Hardikar completed her graduation in

Commerce from Pune University as rank

holder and qualified as cost accountant

with a high rank at all-India level.

She has been with KPIT in leadership

position in Corporate Accounting and

Finance (CF&G) for more than 12 years.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Financials and valuations – KPIT

Consolidated - Income Statement

Y/E March

Total Income from Operations

Change (%)

Employees Cost

Total Expenditure

% of Sales

Gross Profit

SG&A

EBITDA

% of Sales

Depreciation

EBIT

% of Sales

Other Income

PBT

Total Tax

Tax Rate (%)

Reported PAT

Change (%)

Margin (%)

Minority Interest

Adjusted PAT

Tax Rate (%)

FY21

20,357

-5.6

13,415

65.9

6,943

3,897

3,045

15.0

1,332

1,714

8.4

1,725

305

17.7

1,420

-15.3

7.0

1,420

-15.3

FY22

24,324

19.5

16,106

66.2

8,218

3,832

4,385

18.0

1,196

3,189

13.1

254

3,443

683

19.8

2,760

94.5

11.3

2,760

94.5

FY23

33,650

38.3

21,957

65.3

11,693

5,457

6,236

18.5

1,464

4,772

14.2

204

4,976

1,099

22.1

3,876

40.4

11.5

3,876

40.4

FY24

48,715

44.8

31,704

65.1

17,012

7,159

9,852

20.2

1,958

7,894

16.2

116

8,010

2,019

25.2

5,991

54.5

12.3

5,991

54.5

FY25

58,423

19.9

37,550

64.3

20,873

8,622

12,251

21.0

2,250

10,002

17.1

845

10,847

2,929

27.0

7,917

32.2

13.6

7,917

32.2

FY26E

64,250

10.0

41,034

63.9

23,216

9,383

13,834

21.5

2,534

11,299

17.6

415

11,714

2,942

25.1

8,771

10.8

13.7

8,771

10.8

FY27E

75,463

17.5

47,807

63.4

27,657

11,074

16,583

22.0

2,789

13,794

18.3

755

14,548

3,740

25.7

10,808

23.2

14.3

10,808

23.2

(INR m)

FY28E

89,913

19.1

56,507

62.8

33,406

13,014

20,392

22.7

3,327

17,066

19.0

899

17,965

4,619

25.7

13,346

23.5

14.8

13,346

23.5

Consolidated - Balance Sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Minority Interest

Borrowings

Other Long term liabilities

Capital Employed

Net Fixed Assets

Goodwill

Capital WIP

Other Assets

Curr. Assets, Loans&Adv.

Account Receivables

Cash and Bank Balance

Current Investments

Other Current Assets

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Appl. of Funds

FY21

2,690

9,378

12,068

2,278

14,399

4,473

1,014

118

1,114

12,957

3,777

2,858

5,949

373

5,277

1,352

3,588

336

7,680

14,399

FY22

2,700

10,396

13,096

155

3,015

16,285

4,440

1,679

2,097

15,142

4,410

3,421

6,863

448

7,077

1,372

5,046

658

8,065

16,285

FY23

2,703

13,812

16,515

118

5,690

22,325

4,738

10,103

4,093

15,016

7,748

4,542

1,622

1,104

11,681

1,643

9,520

517

3,335

22,325

FY24

2,712

18,746

21,459

171

4,923

26,553

5,429

11,463

4,617

20,164

9,558

6,550

2,441

1,615

15,126

2,398

11,957

771

5,039

26,553

FY25

2,717

26,405

29,122

3,990

33,112

5,938

11,729

5,468

27,101

8,895

10,743

5,501

1,962

17,218

1,782

14,564

871

9,883

33,112

FY26E

2,717

32,759

35,476

3,990

39,466

5,974

11,729

5,650

33,893

10,034

16,201

5,501

2,157

17,873

2,284

14,718

871

16,020

39,465

FY27E

2,717

39,784

42,501

3,990

46,491

6,203

11,729

5,863

41,037

11,785

21,217

5,501

2,534

18,435

2,661

14,903

871

22,602

46,491

(INR m)

FY28E

2,717

48,459

51,176

3,990

55,166

6,473

11,729

6,170

49,841

14,041

27,279

5,501

3,019

19,140

3,145

15,124

871

30,700

55,166

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Financials and valuations –KPIT

Ratios

Y/E March

Basic EPS (INR)

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

Return Ratios (%)

RoE

RoCE

FY21

5.2

10.2

44.9

0.0

228.4

117.8

26.7

15.4

102.9

0.0

12.6

14.9

FY22

10.1

14.5

48.5

0.0

118.2

82.5

24.7

12.8

71.2

0.0

21.8

21.5

FY23

14.2

19.4

61.1

0.0

84.4

61.6

19.6

9.5

51.3

0.0

26.1

18.5

FY24

21.9

29.1

79.1

2.1

9.6

54.6

41.1

15.1

6.5

32.0

0.2

31.3

19.7

FY25

29.0

37.2

107.2

8.3

28.7

41.2

32.2

11.2

5.3

25.2

0.7

31.3

21.9

FY26E

31.9

41.3

130.6

11.2

35.0

37.6

29.0

9.2

4.7

22.0

0.9

27.0

24.0

FY27E

39.5

49.7

156.4

13.8

35.0

30.3

24.1

7.6

4.0

18.0

1.2

27.7

27.5

FY28E

48.8

60.9

188.4

17.1

35.0

24.5

19.6

6.4

3.3

14.4

1.4

28.5

31.6

Consolidated - Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

Others

CF from Operations

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Issue of Shares

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

Others

CF from Fin. Activity

Inc/Dec of Cash

Forex Adjustment

Opening Balance

Closing Balance

FY21

1,471

1,332

-327

3,076

656

6,276

-595

5,681

1,776

-6,190

-5,008

-1,109

-45

-1,148

120

-21

2,759

2,858

FY22

2,762

1,196

-888

875

805

4,750

-685

4,065

2,720

-5,059

-3,024

-521

-32

-741

-1,267

459

104

2,858

3,421

FY23

4,968

1,464

183

-989

-1,769

768

4,625

-1,276

3,349

6,080

-6,827

-2,024

-641

-87

-892

-228

-1,831

770

352

3,421

4,542

FY24

8,004

1,958

436

-1,371

871

119

10,018

-1,549

8,469

3,517

-7,605

-5,637

-935

-195

-1,287

-2,400

1,981

4,542

6,550

FY25

10,875

2,250

274

-2,049

2,166

379

13,895

-1,273

12,622

6,049

-11,075

-6,299

-1,308

-194

-1,928

-3,424

4,172

6,550

10,743

FY26E

11,663

2,534

-415

-2,942

-978

9,863

-2,570

7,293

378

-2,192

154

-2,366

-2,213

5,458

10,743

16,201

FY27E

14,548

2,789

-755

-3,740

-1,894

10,949

-3,019

7,930

685

-2,334

184

-3,783

-3,598

5,016

16,201

21,218

(INR m)

FY28E

17,965

3,327

-899

-4,619

-2,474

13,299

-3,597

9,703

809

-2,788

221

-4,671

-4,450

6,062

21,218

27,279

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Tata Technologies

BSE SENSEX

81,307

S&P CNX

24,870

CMP: INR684



An engineering specialist facing headwind

TP: INR580 (-15%)

Sell

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

TATATECH IN

406

277.3 / 3.2

1131 / 592

-4/-17/-32

2006



Financials &Valuations (INR b)

Y/E March

FY26E FY27E

52.9

60.6

Sales

14.8

16.0

EBIT Margin (%)

6.6

7.9

PAT

17.4

20.7

EPS (INR)

4.9

19.2

EPS Gr. (%)

96.4 102.6

BV/Sh. (INR)

Ratios

18.9

20.9

RoE (%)

23.0

27.6

RoCE (%)

53.1

70.0

Payout (%)

Valuations

39.3

33.0

P/E (x)

7.1

6.7

P/BV (x)

29.0

24.0

EV/EBITDA (x)

1.4

2.1

Div Yield (%)

Shareholding pattern (%)

As On

Jun-25 Mar-25

Promoter

55.2

DII

3.3

2.5

FII

4.9

3.1

Others

36.6

39.2

FII Includes depository receipts

FY28E

69.6

16.3

9.2

24.1

16.0

109.9

22.7

30.4

70.0

28.4

6.2

20.7

2.5



TTL offers engineering solutions across mechanical design, digital

engineering, and full vehicle development for global OEMs and their tier-1

suppliers. With capabilities in product design and manufacturing support,

TTL has historically played a critical role for anchor clients like Tata Motors

and JLR, and has successfully supported turnkey vehicle programs for

emerging OEMs such as VinFast.

TTL reported FY25 revenue of USD611m, reflecting a modest ~5% CAGR

over FY16-25. While the company’s legacy strengths remain intact, its

revenue mix continues to be skewed toward manufacturing support, which

limits margin expansion relative to software-centric peers. EBIT margins

have remained stable at ~16%, trailing those of peers focused on software-

led engineering.

We initiate coverage with a

Sell

rating, citing muted growth visibility,

margin constraints, and TTL’s relatively lower participation in high-growth

SDV-led opportunities. While the JV with BMW offers a potential upside, it

is unlikely to fully offset challenges in TTL’s legacy business.

Comprehensive engineering capabilities anchored in the mechanical

domain



Jun-24

55.4

1.9

1.6

41.1

TTL has differentiated itself through a broad range of services that support

entire vehicle programs, from styling and design to digital simulation and

manufacturing engineering. This full-stack capability has enabled TTL to

secure significant mandates, particularly from Tata Motors, JLR, and

emerging OEMs aiming to launch vehicles at speed.

However, TTL’s core business limits its exposure to high-margin software

engineering work that is driving the future of automotive ER&D. The

company’s focus on large, resource-intensive projects results in higher

costs and limits flexibility compared to software-led business models.

High client concentration tied to Tata Group ecosystem



TTL’s business remains closely tied to the Tata ecosystem, with Tata

Motors and JLR collectively contributing ~50% of revenue. While these

relationships provide stable business flows, they expose TTL to significant

concentration risk and limit pricing power.

Recent OEM commentaries from JLR and Tata Motors suggest cautious

capex growth over FY26, prioritizing platform efficiency over new program

launches. This conservative stance could impact TTL’s growth trajectory.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Margins constrained by mechanical engineering and on-site delivery model



TTL’s EBIT margins have remained in a narrow band of ~16%, lower than those

of software-focused peers. This is driven by its revenue mix, as mechanical

engineering work is both resource-heavy and lower-margin, and ~60% of TTL’s

delivery remains on-site.

TTL’s business model leaves limited room for operating leverage or margin

expansion, as mechanical projects often require large teams deployed at client

locations. While TTL has initiated a strategic push into digital engineering and

software development, the transition has been gradual, and its impact on

margins has remained modest so far.

BMW JV: A strategic pivot



TTL’s BMW JV represents a key pivot toward high-value automotive software

development. The JV contributed INR48m to PBT in 1QFY26, a significant step

up from INR5m in 3QFY25. Management is targeting a USD100m annualized

run-rate by FY26E, signaling traction in scaling the partnership.

This is notably a good start, but TTL’s challenge lies in replicating similar high-

value engagements beyond the BMW JV to transform its overall revenue mix.

Valuation and risks: Limited upside given structural challenges in the legacy

business



We initiate coverage with a

Sell

rating, reflecting muted revenue momentum,

structural margin constraints, and lower participation in SDV-led opportunities.

TTL’s valuation implies a limited upside. Key risks include potential delays in

scaling the BMW JV, overdependence on clients within the Tata ecosystem, and

a slow transition into software-heavy projects. Upside could emerge if TTL

accelerates software-led wins outside the Tata Group or if the BMW JV

significantly outperforms current expectations. We value KPIT at 40x (implying

~2x PEG) and assign TTL a 30% discount to KPIT, arriving at a

28x PE multiple on

FY27E EPS

and a

TP of INR580,

implying ~15% downside.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Story in Charts

USD revenue posted ~5% CAGR over FY16-25

Revenue (USD mn)

47%

408

418

417

420

402

322

474 16% 13%

-4%

-20%

-1%

YoY Growth

548

618

611

15.5%

16.4%

13.0%

9.8%

14.8%

TTL’s EBIT margin steady at ~16%; ongoing BMW ramp-up

likely to lift margin profile in coming years (%)

EBIT Margin

16.5%

12.3% 15.9%

16.4%

15.7%

Source: Company, MOFSL

Lowest exposure to Europe and US compared to peers

Europe

25%

27%

48%

Americas

10%

40%

20%

30%

41%

India

RoW

20%

31%

Revenue mix (%) of the services segment

Auto

19%

18%

14%

Non-auto

12%

11%

16%

82%

86%

88%

89%

84%

Source: Company, MOFSL; Note: * TTL FY25 number is guesstimate.

Source: Company, MOFSL

TTL’s onshore and offshore mix

Offshore

Onshore

TTL in the bottom quadrant of the margin profile in the ER&D

space

Tata Tech

TELX

KPIT

LTTS

Source: Company, MOFSL; Note: * TTL FY25 number is guesstimate.

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

TTL

–

Company overview

TTL is a global engineering services leader offering product development and

digital solutions, including turnkey solutions, to global OEMs and their tier-1

suppliers.



Leveraging its domain expertise in the automotive sector, the company also

serves adjacent industries such as aerospace and transportation, construction,

and heavy machinery (TCHM). Its operations are categorized into two segments:

Services (~78% of FY25 revenue) and Technology Solutions (~22%).



TTL is a pure-play, manufacturing-focused ER&D company with a concentration

on the automotive industry. It is currently engaged with seven of the top 10

automotive ER&D spenders and five of the top 10 new energy ER&D spenders.



TTL operates global delivery centers across North America, Europe, and Asia

Pacific, largely staffed by local professionals. This supports its ability to offer

region-specific services and maintain close client engagement (though impacts its

margin profile).



TTL is a pure-play,

manufacturing-focused

ER&D company with a

concentration on the

automotive industry. It is

currently engaged with

seven of the top 10

automotive ER&D spenders

and five of the top 10 new

energy ER&D spenders.

Exhibit 27: TTL’s business snapshot

TATA TECHNOLOGIES

Services Business

Technology Solutions

Product

Engineering

Digital

Engineering

Product

Sales

Education

Solutions

Mechanical

Engineering

Software &

Embedded

systems

Manufacturing

automation &

Plant

digitalization



Reselling of third-

party software for

PLM, MES and ERP.



Providing value

added services such

as consultancy,

system integration

and after sale

support.



Provide upskilling

and reskilling courses

with a focus on

Industry 4.0 through

iGetIT platform.



Transformation of

state-run ITIs into

centres of Excellence

(CoE) providing

future ready courses

to improve the

quality of workforce.

1. ER&D service to companies in automobiles, aerospace and TCHM industries.

2. Deep automotive industry expertise.

3. Strategic collaboration with global OEMs such as BMW and Airbus.

4. Propriety platforms and accelerators provide competitive advantage.

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Services:

The company’s primary business line is services, which involves offering

outsourced engineering services and digital transformation services to global

manufacturing clients, helping them conceive, design, develop, and deliver

better products.



Technology solutions:

The company complements its service offerings with

product and education businesses. Through this, it resells third-party software

applications, primarily product lifecycle management software and solutions. It

also provides value-added services such as consulting, implementation, systems

integration, and support.



The education business offers ‘phygital’ (physical and digital) education solutions

in manufacturing skills, including upskilling and reskilling in the latest engineering

and manufacturing technologies. It serves public and private institutions and

enterprises through curriculum development and competency centers, delivered

through its proprietary iGetIT platform.



Exhibit 28: Revenue posted ~5% CAGR over FY16-25

Revenue (USD mn)

YoY Growth

47%

408

418

417

420

402

548

618

611

322

474

-20%

16%

13%

-1%

FY23

FY24

FY25

The company’s primary

business line is services,

which involves offering

outsourced engineering

services and digital

transformation services to

global manufacturing

clients, helping them

conceive, design, develop,

and deliver better products.

FY18

FY19

-4%

FY20

FY21

FY16

FY17

FY22

Source: Company, MOFSL

Exhibit 29: TTL’s EBIT margin steady at ~16%; ongoing BMW ramp-up likely to lift margin

profile in coming years (%)

EBIT Margin

16.4%

15.5%

14.8%

15.9%

13.0%

12.3%

16.5%

16.4%

15.7%

9.8%

FY16

FY17

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 30: Total revenue mix (%)

Services Segment

18%

20%

25%

Technology solutions segment

20%

21%

22%

82%

80%

75%

80%

79%

78%

FY20

FY21

FY22

FY23

FY24

FY25

Source: Company, MOFSL

Exhibit 31: Revenue mix (%) of the services segment

TTL stands out among its

ER&D peers through its

relatively lower exposure to

traditional geographies—

North America (~20%) and

Europe (~29%)—and higher

tilt toward Asia.

Auto

19%

18%

14%

Non-auto

12%

11%

16%

82%

86%

88%

89%

84%

FY20

FY21

FY22

FY23

FY24

FY25

Source: Company, MOFSL

TTL has evolved from offering shared services to helping clients execute

complete vehicle programs. It now supports the entire product development

process, working with teams globally to deliver engineering solutions—from

individual components to entire vehicle projects.



TTL stands out among its ER&D peers through its relatively lower exposure to

traditional geographies—North America (~20%) and Europe (~29%)—and higher

tilt toward Asia. This skew is largely driven by strong engagements with Tata

Motors (India), VinFast (Vietnam), and the presence of its subsidiary in China.



Exhibit 32: Geographical revenue mix (%)

India

25%

32%

29%

FY21

North America

21%

20%

22%

32%

FY22

26%

20%

21%

30%

FY23

Rest of Europe

14%

24%

20%

36%

FY24

Rest of World

10%

23%

20%

40%

FY25*

Source: Company, MOFSL; Note: * FY25 is guesstimate.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution



TTL’s portfolio exhibits a strategic pivot from traditional mechanical engineering

services to fast-growth digital engineering services. The company is building

capabilities in software-defined products, autonomy, and cybersecurity—critical

areas as mobility evolves to become more intelligent and connected. It has also

formed partnerships with Arm, Intel, and Foxconn.

Exhibit 33:

TTL’s service offerings

Power of 8 –CRM, Sales, Dealers, Relations, Track,

Workshop, Commerce, Intelligence

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Investment thesis

A) TTL’s full-stack, end-to-end capabilities come with a margin caveat



TTL’s playbook remains anchored in legacy automotive engineering, with a

balanced mix of mechanical and software capabilities.



Having started as Tata Motors’ in-house engineering team, TTL has built

expertise across the entire vehicle development process—from early-stage

design and mechanical systems to digital modeling and embedded software.



TTL adopts a vertically integrated approach, combining design, software, and

manufacturing to offer end-to-end capabilities that are less common among

peers.



Its collaboration with clients like Renault, VinFast, and Volvo typically involves

complete vehicle programs rather than standalone projects.



While companies like KPIT and LTTS have focused on embedded software, we

believe TTL is steadily developing a more balanced capability set across both

mechanical and software domains. Around half of its workforce now operates in

embedded software, reflecting this shift.



That said, contributions from emerging areas such as SDV, connected

platforms, and embedded architectures remain modest. In our view, TTL’s

relatively higher share of cost-intensive mechanical work may weigh on its

margins, compared to peers with more software-centric portfolios.

In our view, TTL’s relatively

higher share of cost-

intensive mechanical work

may weigh on its margins,

compared to peers with

more software-centric

portfolios.

Exhibit 34: TTL’s proprietary platforms and accelerators across the value chain

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 35: End-to-end presence from engineering to after-sales services

Engineering

Turnkey full vehicle development

solutions

Embedded solutions

Product Benchmarking solutions

Connected cars

HIL Testing & validation solutions

Software-defined vehicles

Manufacturing

Process engineering

Process simulation/digital

Process validation

Tooling & automation

Robotics simulation

Ergonomics simulation

Factory design & validation

Plant simulation

After Sales

e-commerce

CRM

Sales

Dealer mgmt.

Workshop mgmt.

Vehicle tracking

Data analytics

Source: Company, MOFSL



As shown in Exhibit 34, TTL’s portfolio of digital services and accelerators is

designed to support OEMs and tier-1 suppliers across the digital product

lifecycle, with a focus on enhancing customer engagement throughout the

journey.

We believe these proprietary platforms offer advantages such as efficiency,

faster deployment, and enhanced program execution.

These solutions

accelerate new product introductions across the automotive, industrial

machinery, and aerospace sectors.

In the ER&D space, high

client concentration is often

a double-edged sword.

While this reflects deep

vendor trust, greater

visibility into future work

streams, and a strong

foothold to expand wallet

share, it also concentrates

risk around a few key

accounts

B) Marquee set of anchor clients: Strength with high concentration risk



TTL’s growth has been closely tied to a core group of long-term clients. Its top

five customers—including Tata Motors, Jaguar Land Rover (JLR), and VinFast—

are engaged with the company through multi-year projects, significantly

contributing to TTL’s revenue over the years.



In the ER&D space, high client concentration is often a double-edged sword.

While this reflects deep vendor trust, greater visibility into future work streams,

and a strong foothold to expand wallet share, it also concentrates risk around a

few key accounts—making the business more vulnerable to macro or client-

specific disruptions.



TTL is witnessing an uptick in scope of work from existing anchor clients. For

instance, its growing role in programs for Tata Motors, JLR, and now Air India

(post-acquisition by Tata Group) reflects a virtuous cycle of deeper engagement

and expanding TAM within the group ecosystem.



That said, dependency on Tata Motors and JLR remains material, together

contributing ~50% of total revenue in FY24. While this marks an improvement

from 75% in FY14,

the risk persists: a slowdown at either OEM or across the

broader auto cycle could materially impact TTL’s earnings visibility.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 36: Anchor clients TAMO and JLR contribute almost 50% to revenue

Anchor Clients

Non-anchor clients

46%

49%

60%

54%

51%

FY21

40%

FY22

40%

FY23

46%

1HFY24

FY20

Source: Company, MOFSL; Post-FY24, TTL stopped disclosing numbers.



TTL’s growing client base helps offset concentration risk. It now works with 35

OEMs and 11 new-energy vehicle (NEV) companies, including traditional players

like Airbus, McLaren, Honda, Ford, and Cooper Standard, as well as newer EV

firms such as VinFast, NIO, and Rivian. Its digital engineering support for a US-

based autonomous EV company further underscores its ability to build strategic

engagements beyond Tata Group.

Exhibit 37: TTL’s diversified revenue mix compared to peers

Source: Company, MOFSL

Exhibit 38: TTL’s customer pyramid

Particulars

>50m

10-50m

5-10m

1-5m

1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 2QFY25 3QFY25 4QFY25 1QFY26

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 39: Overview of anchor client engagements

Client

Engagement Focus

Key Contributions



Smart Manufacturing at

Tata Motors



Integrated ERP, PLM, MES, IoT; Deployed end-to-end digital solution

Sanand Plant



Digital Transformation (part



Cloud ERP (SAP S/4HANA, SAP BTP); Integration across manufacturing &

Jaguar Land Rover (JLR)

of the ‘Reimagine’ strategy)

logistics



Vehicle architecture & CAE; Virtual validation (durability, fatigue, crash,



End-to-end EV Design &

visual simulations); Electrical system design: schematics, diagnostics, 3D

VinFast

Launch Support

wiring harness routing; E/E integration and supplier management;

Supported design & production of two EV models now in the launch phase

Source: Company, MOFSL



That said, it is important to track how anchor clients themselves are evolving.

JLR increased its five-year investment plan from GBP15b to GBP18b, with a

focus on product development, particularly in battery electric vehicles (BEVs).

Under its 'Reimagine' strategy, JLR is reinforcing its commitment to the luxury

EV segment, including a phased overhaul of its vehicle platforms—transitioning

to: 1) modular longitudinal architecture; 2) electric modular architecture; and 3)

Jaguar electrified architecture.

However, near-term headwinds persist due to

US tariffs impacting JLR, ongoing uncertainty around the EV transition, and

weak demand in China.

Tata Motors is also ramping up its EV ambitions, with plans to expand its electric

vehicle portfolio. These developments are likely to support steady demand for

TTL’s engineering and digital services.

Exhibit 40: Tata Motors’ steady investments to continue in new technologies and powertrains

(INR, m)

FY25

FY24

FY23

FY22

FY21

Total R&D YoY Growth

51,370

48,640

32%

36,940

68%

22,020

38%

16,010

Capital & Other Investment

32,860

34,270

27,250

14,620

9,850

YoY Growth

-4%

26%

86%

48%

Total Investment Spending

YoY Growth

84,230

82,910

29%

64,190

75%

36,640

42%

25,860

Source: Company, MOFSL

Exhibit 41: JLR’s EUR3.8b FY25 investment reinforces commitment to EV transition

(EURO, m) Total Engineering Investment YoY Growth

FY25

FY24

FY23

FY22

FY21

2,661

2,333

1,693

1,294

1,790

14%

38%

31%

-28%

Capital Investment

1,129

930

660

742

223

YoY Growth Total Investment Spending YoY Growth

21%

41%

-11%

233%

3,790

3,263

2,353

2,036

2,013

Source: Company, MOFSL

16%

39%

16%

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 42: TAMO and JLR’s commentary on investment budget & EV strategy

1QFY26

4QFY25

3QFY25

2QFY25

1QFY25

4QFY24

3QFY24

JLR

TATA

MOTORS

JLR

investment

came in at

JLR invested

GBP850m,

An investment of

JLR reported a

GBP850m in Q1, lower end of Investment around GBP1.9b JLR has invested

Investment was

capital

with wholesales guidance, as peaked at over

in Q2 was

GBP678m in

ramped up to investment of

at 87k units and

focus

GBP1b in Q3

focused on

engineering and

GBP3.3b in

GBP862m,

revenues of

remained on

for prototype electrification

aims to reach

FY24—an

marking a 34%

GBP6.6b;

US Range Rover,

builds of EMA,

efforts and

close to GBP3.5b

increase from increase from

tariffs impacted Defender and

MLA, and JEA maintaining the by the end of

GBP2.2b in FY23. the previous

profitability and Jaguar EV

architectures.

existing ICE

FY25.

quarter.

FCF.

launches;

lineup.

capex for

FY25 stood at

GBP3.8b.

77% of sales

The company

from Range

Continued

78% of 4QFY24

aims to

Rover, Range

JLR is working to

dual

The scale of

sales came from transition to a

Rover Sport and

bring BEV

investment in

Parallel

investment in

BEVs, PHEVs, and 100% BEV

Defender;

BEV

solutions to

ICE and BEVs;

investment in

both the ICE

MHEVs,

portfolio by

demand below

market, such as

BEV demand ICE, PHEV, and

portfolio and

highlighting an

2030 and is

projections,

but

off-road mastery

softer than

BEV

BEVs exceeded

accelerating shift targeting zero

flex from MLA

and luxury drive

earlier

expectations.

toward

tailpipe

architecture

credentials.

projections.

electrification.

emissions by

provides

2036.

cushion.

China remains

China volumes

EVs face limited EV penetration in

challenging as

under pressure

competition in China remains

luxury tax

The company It is developing

with luxury tax

China as local

limited, with

threshold

Cautious

continues to

a strategic mix

impact and

makers focus on

customers

lowered,

about China,

invest in next-gen of PHEVs &

weak finance

lower-priced

continuing to

further

where BEV

EVs, including its BEVs, including

availability;

segments,

prefer ICE

pressuring competition is

BEV Range Rover models like the

Defender retail

allowing JLR to

variants for

demand; US

fierce.

and other models Range Rover

growth offset

maintain a strong models like Range

tariffs

built.

Electric.

Jaguar

position in the

Rover and

continue to

weakness.

high-end market.

Defender.

weigh on P&L.

Tata Motors

Wholesales capex for FY25

By the end of

The company

down 9.1% YoY

stood at

Q3, INR60b has

remains confident

at 300k units; INR80b, with

Spent INR60b

The standalone already been

Total investment in achieving its

EBIT margins investments

on capex

and

capex for FY24 spent, including

spending for the investment plan

resilient in CV at across CV, PV is

on track to

stood at INR88b, investments in

quarter stood at of INR80b for the

9.7%, PV

and EV

spend

primarily for the Sanand 2 plant,

around

fiscal year, staying

margins

segments;

~INR80b

for

EV and CNG which has a

INR18.43b.

in line with its

impacted by

strong FCF the full FY25.

segments.

production

earlier

weak sub-10

generation

capacity of

commitment.

lakh demand.

supported

300,000 units.

deleveraging.

Introduction of

EV portfolio PLI payouts It held a strong

The fleet

The company

lifetime EV

expansion

are part of a

market

segment, which plans to expand

aims to

battery

continued

broader

leadership in the

typically

the charging establish 17,000

warranty

with launch of

USD2b EV

personal EV

contributes to

ecosystem,

public charging

boosted

Tiago and

investment

segment with a 10% of EV sales, advance battery stations and is

Nexon.ev and

Curvv

plan,

with

67% market declined to 5-6% technology, and

offering a

Curvv.ev

variants;

~USD800m

share.

in 1Q, mainly due offer competitive seven-year

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

1QFY26

4QFY25

3QFY25

2QFY25

1QFY25

4QFY24

3QFY24

bookings;

charging infra expected via

to pre-buying in

pricing to

battery

Harrier.ev

build-out PLI and USD1b

4Q of last year

accelerate EV

warranty,

launch saw

progressing.

already

and delays, as

adoption.

improving TCO

blockbuster

received from

fleet owners

and making EV

response

with

TPG.

awaited clarity on

adoption more

10k bookings on

FAME III

attractive.

day one.

incentives.

EV bookings

Tata EVs

EV registrations

jumped 25%

EV sales

covered 5

and wholesales

The EV fleet

EV sales stood at

MoM in July momentum billion km,

declined due to a

segment

73,833 units in

2025; Tata moderated in

with

over

slowdown in PVs,

experienced

FY24, marking a EV sales posted

Motors EV

Q4,

impacted

10,000

the end of

moderation in

48.4% YoY

69% YoY

market share

by weak fleet

customers

FAME2 subsidies

demand following increase and

growth in

rebounded to

demand; FY25 crossing the 1 affecting fleets,

the expiry of securing a market

Jan’24

40% in July,

on ended with

lakh mark,

and the

FAME II in March share of over

track to

>55% EV

highlighting temporary expiry

2024.

70%.

approach 50% in market share. the vehicles’

of state tax

coming quarters.

reliability.

benefits.

Source: Company, MOFSL

We believe that the recent

JV with BMW reflects a shift

in management’s focus

toward building capabilities

in next-generation

automotive technologies,

while gradually moving

away from legacy-heavy

work.

C) The BMW JV: Scaling up steadily



One of the most notable developments in TTL’s growth journey is its US500m

joint venture with BMW, structured as a global capability center (GCC). This

long-term engagement is a good step up in TTL’s positioning within the

embedded software ecosystem.



The JV focuses on developing automotive software, including autonomous

driving systems and infotainment platforms,

leveraging TTL’s generative AI

capabilities.



The JV is scaling faster than initially anticipated. In 1QFY26, it contributed

INR48m to PBT, up from INR5m in 3QFY25. Management expects the headcount

to cross 1,000 by 1QFY26—two quarters ahead of plan. Revenue could

potentially reach an annualized run rate of USD100m by 4QFY26E, highlighting

the growing relevance of this relationship in TTL’s portfolio.



We believe that the recent JV with BMW reflects a shift in management’s

focus

toward building capabilities in next-generation automotive technologies,

while gradually moving away from legacy-heavy work.



The JV aims to establish a robust software development footprint across Indian

cities like Chennai, Bengaluru, and Pune.

In our view, this venture also helps

balance out the impact of VinFast’s recent ramp-down.

D) Ownership structure – A strategic anchor with trade-offs



TTL benefits from a close relationship with Tata Motors, which is both its largest

client and majority shareholder (owning 53.4%). This gives TTL a stable pipeline

of work and access to long-term development programs with both Tata Motors

and Jaguar Land Rover (JLR).



This connection helps TTL to remain engaged in key innovation areas, including

electric vehicles and digital transformation, while also supporting long-term

revenue visibility.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 43: TTL’s direct association with Tata Motors

TATA Sons

TATA Motors

TATA Elxsi

TCS

TATA Tech

Source: Company, MOFSL



However, this close tie can

also pose challenges—

particularly when

negotiating with Tata

Motors—as it may limit

TTL’s ability to push for

higher pricing or more

favorable terms.



That said, there is a fine line for TTL when it comes to exercising pricing power in

negotiations, primarily due to its ownership structure.

While the strategic

relationship with Tata Motors offers stability and access to key development

programs, it also creates a dependency that may limit TTL’s ability to

command premium pricing.

With Tata Motors holding a 53.4% stake in TTL and contributing around 50% of

its revenues (considering JLR as well),

there is a strong alignment of interests.

However, this also implies that TTL’s negotiation leverage is somewhat

constrained, in our view.

In many ways, TTL acts as a partner in innovation and digital transformation for

both Tata Motors and JLR, enabling long-term contracts and a reliable revenue

stream. However, this close tie can also pose challenges—particularly when

negotiating with Tata Motors—as it may limit TTL’s ability to push for higher

pricing or more favorable terms. The ownership link can blur the lines between

a commercial client and a controlling stakeholder, making it challenging for TTL

to assert pricing power.

On the other hand, TTL's involvement in the development of new automotive

technologies, especially in the EV space, gives it some leverage, particularly as

Tata Motors accelerates its shift toward electrification and innovation.

TTL’s concentration in Asia

has emerged as a strength

in the near term.

Automotive clients in

Europe have temporarily

paused large R&D ramp-ups

amid softening demand and

macro uncertainty.

E) Asia-weighted presence offers both insulation and opportunity



TTL stands out among ER&D peers for its relatively lower exposure to traditional

geographies—North America (~20%) and Europe (~29%)—and a higher tilt

toward Asia. This skew is largely driven by strong engagements with Tata

Motors (India), VinFast (Vietnam), and the presence of a subsidiary in China.



While TTL’s China revenues are currently small, its legal and operational

foothold in the region provides strategic access to one of the world’s most

innovative and fast-moving EV ecosystems.



China accounted for 80% of global EV sales in 2024, and TTL’s presence in the

region positions it advantageously to tap into developments in software-defined

vehicles, battery platforms, and autonomous driving technologies.



TTL’s concentration in Asia has emerged as a strength in the near term.

Automotive clients in Europe have temporarily paused large R&D ramp-ups

amid softening demand and macro uncertainty. While this will likely lead to

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

increased outsourcing over time, the pace has been slower than expected. TTL’s

lower exposure to Europe has helped insulate it from this volatility.

Exhibit 44: TTL’s geographical exposure to offer some respite compared to peers due to its

lower exposure in Europe

India

25%

32%

29%

FY21

North America

21%

20%

22%

32%

FY22

26%

20%

21%

30%

FY23

Rest of Europe

14%

24%

20%

36%

FY24

Rest of World

10%

23%

20%

40%

FY25*

Source: Company, MOFSL; Note: * FY25 is guesstimate.



TTL’s limited presence in

the US and Europe—

traditionally the largest

ER&D spenders—could

restrict access to premium

clients and large digital

transformation programs

over the long term.



That said, TTL’s limited presence in the US and Europe—traditionally the largest

ER&D spenders—could restrict access to premium clients and large digital

transformation programs over the long term. A deeper penetration into these

markets would diversify the revenue base and reduce geopolitical risk.

Overall, we believe TTL’s Asia-centric strategy is yielding benefits; however,

sustaining growth over the medium term will require stronger market

development in Europe and North America as ER&D budgets in these regions

begin to normalize.

Exhibit 45: Lowest exposure to Europe and US compared to peers

Europe

25%

27%

48%

KPIT

Americas

10%

40%

20%

30%

TTL

41%

TELX

India

RoW

20%

31%

Source: Company, MOFSL; Note: * TTL FY25 number is guesstimate.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

While TTL is actively

building its embedded

software capabilities—now

accounting for ~50% of its

workforce—we believe it is

still in the process of

catching up with software-

focused ER&D players in

terms of margin profile.

F) Higher on-site mix and mechanical focus limit margins



We believe TTL’s lower margin profile compared to peers like KPIT and TELX is a

function of its business mix, client concentration, and delivery model.



While KPIT and TELX focus on high-margin software areas such as ADAS,

infotainment, and powertrain systems, TTL still draws a significant share of

revenue from mechanical engineering and full-vehicle development programs—

domains that are more resource-intensive and lower-margin.



In our view, the company’s close relationship with Tata Motors and JLR ensures

steady business but also restricts pricing flexibility, as these anchor clients

contribute nearly half of its revenues.



Moreover, as shown in Exhibit 46, TTL operates with a higher share of on-site

delivery, though offshore contribution has been gradually increasing—from 32%

in 3QFY23 to 40% in 1QFY26.



This higher on-site intensity results in elevated cost structures compared to

peers with greater offshore leverage. While TTL is actively building its embedded

software capabilities—now accounting for ~50% of its workforce—we believe it

is still in the process of catching up with software-focused ER&D players in terms

of margin profile.

Exhibit 46: TTL’s onshore and offshore mix

Offshore

Onshore

68%

64%

63%

61%

62%

61%

58%

57%

60%

32%

36%

37%

40%

38%

39%

44%

42%

43%

40%

3QFY23 4QFY23 1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 2QFY25 3QFY25 4QFY25 1QFY26

Source: Company, MOFSL

Exhibit 47: TTL in the bottom quadrant of the margin profile in the ER&D space

Tata Tech

TELX

KPIT

LTTS

FY21

FY22

FY23

FY24

FY25

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Valuation and view: Initiate coverage with a Sell rating



TTL’s Asia-heavy revenue

profile (~50%+) has shielded

it from near-term weakness

in Europe and the US;

however, we think its

under-indexed exposure to

developed markets

may

limit its ability to tap large

digital transformation

programs that are

increasingly becoming a

growth engine for peers.



TTL provides end-to-end engineering services across mechanical design, digital

engineering, and turnkey vehicle development. Despite its strong legacy

positioning and partnerships with anchor clients like Tata Motors and JLR, we

believe growth will remain constrained in the near to medium term.

Revenue growth (~9.5% USD CAGR over FY25-28E) is expected to remain

subdued due to a lack of meaningful participation in SDV/EV-led digital

engineering spending. Combined with client concentration risk, this tempers our

outlook. While the

BMW JV

adds strategic relevance and provides an eventual

pivot to embedded software, the ramp-up remains gradual and insufficient to

offset near-term headwinds.

Margins (~16%) are structurally capped by TTL’s higher on-site mix (~60%), large

mechanical footprint, and limited pricing power with anchor clients, who

contribute nearly 50% of revenue.

We expect EBIT margins to remain range-

bound as cost levers are largely exhausted, and incremental gains are unlikely

in the absence of meaningful offshore shift or software mix expansion.

TTL’s Asia-heavy revenue profile (~50%+) has shielded it from near-term

weakness in Europe and the US; however, we think its

under-indexed exposure

to developed markets

may limit its ability to tap large digital transformation

programs that are increasingly becoming a growth engine for peers.

We expect TTL to post

USD revenue and earnings CAGR of 9.5% and 13.3%,

respectively, over FY25-28E. Currently, TTL trades at ~39x 12M FWD P/E, which

we view as expensive given the muted growth visibility, modest IP leverage, and

sub-par return ratios compared to peers like KPIT and TELX. We value KPIT at

40x (implying ~2x PEG) and assign TTL a 30% discount to KPIT, arriving at a

28x

PE multiple on FY27E EPS

and a

TP of INR580,

implying ~15% downside.

Initiate

with a Sell rating.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Key risks to our thesis



Offshore delivery has

already risen from 32% in

3QFY23 to 40% in 1QFY26.

If TTL continues this

trajectory faster than

expected (toward 50%+),

the margin profile could

structurally improve,

narrowing the gap versus

KPIT/TELX.



BMW JV is already ahead of schedule on hiring and profitability front. If revenue

run-rate ramps up faster, it could materially accelerate TTL’s software mix, lift

margins, and enhance positioning in high-value SDV/autonomous programs.

Offshore delivery has already risen from 32% in 3QFY23 to 40% in 1QFY26. If TTL

continues this trajectory faster than expected (toward 50%+), the margin profile

could structurally improve, narrowing the gap versus KPIT/TELX.

TTL’s higher Asia exposure (~50%+ revenues) insulated it from Europe/US

weakness. If Asian EV/SDV ecosystems (China, India, Vietnam) continue to

outpace Western peers in innovation spend, TTL could benefit.

Tata Motors and JLR together are committing R&D outlays (~INR80-84b and

EUR3.5-3.8b, respectively, for FY26). A sustained ramp up in their EV/SDV

programs could drive higher wallet share for TTL, outweighing concentration risk

in the near term.

TTL’s engagement with VinFast, Rivian, NIO, and a US autonomous EV OEM

suggests it can scale relationships outside Tata Group. A couple of large program

wins with NEV or Tier-1 players could accelerate revenue growth and diversify

risk faster than modeled.

A sharper tilt toward SDV, HIL testing, and connected solutions especially via the

BMW JV and non-Tata EV clients could gradually expand margins, offsetting the

legacy mechanical drag.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Bull and Bear cases

Bull Case



USD Revenue is expected to grow at ~10.3% CAGR over FY25-28, driven by

improving wallet share from anchor clients, better macro conditions and budget

flush among UK/US clients, and expansion in Asia-led EV programs.



EBITDA margin is projected to expand 90bp to 19.0% by FY28, supported by a

higher offshore mix, better software contribution, and fixed-cost leverage from

large client ramp-ups.



EPS is estimated to post at 13.9% CAGR over FY25-28, led by a healthy revenue

growth, margin uptick, and operating efficiencies from maturing delivery

centers.



We value TTL at 35x FY27E EPS, arriving at a TP of INR 730, implying a 7% upside

from CMP.

Bear Case



Revenue is projected to grow at a slower ~8.5% CAGR over FY25-28, factoring in

delayed recovery in developed markets, limited traction in non-auto verticals,

and continued high client concentration.



EBITDA margin is expected to contract to 17.9% by FY28, dragged by a high on-

site mix, a slower shift to embedded/software work, and pricing constraints with

anchor clients.



EPS is expected to grow at 8.7% CAGR over FY25-28, weighed down by the weak

topline momentum, margin stagnation, and lack of diversification.



We assign a 24x multiple to FY27E EPS, translating to a TP of INR 450, implying a

35% downside from CMP.

Scenario Analysis: Base | Bull | Bear

INRm, except mentioned

Revenue ( USD m)

Growth YoY CC(%)

USD/INR

Revenue

EBITDA

EBITDA Margin (%)

EBIT

EBIT Margin

EBT

Tax Rate (%)

PAT

EPS(INR)

Growth (%)

P/E Multiple

Upside /Downside

FY25

611

84.61

51,685

9,341

18.1%

8,128

15.7%

9,173

26.6%

6,729

16.58

FY26E

606

-1.5%

84.73

51,305

8,978

17.5%

7,901

15.4%

9,299

25.0%

6,974

17.16

Bear

FY27E

686

13.4%

84.00

57,642

10,145

17.6%

8,935

15.5%

10,147

25.5%

7,560

18.60

FY28E

781

13.8%

84.00

65,599

11,742

17.9%

10,233

15.6%

11,626

25.5%

8,661

21.31

15%

450

-35%

FY26E

612

-0.5%

86.46

52,885

9,142

17.3%

7,810

14.8%

9,633

26.6%

7,068

17.39

Base

FY27E

699

14.4%

86.72

60,641

11,036

18.2%

9,732

16.0%

11,479

26.6%

8,425

20.73

19%

FY28E

803

14.8%

86.72

69,618

12,802

18.4%

11,340

16.3%

13,266

26.3%

9,776

24.05

16%

580

-15%

FY26E

615

0.0%

86.50

53,183

9,839

18.5%

8,509

16.0%

9,907

25.5%

7,381

18.16

10%

Bull

FY27E

707

15.0%

86.00

60,781

11,305

18.6%

10,029

16.5%

11,242

25.0%

8,431

20.75

14%

FY28E

818

15.8%

86.00

70,387

13,374

19.0%

11,895

16.9%

13,288

25.0%

9,966

24.52

18%

730

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

SWOT analysis – TTL



Domain depth in

automotive ER&D with

end-to-end capabilities

Deep client ties with

Tata Motors, JLR,

VinFast; expanding

global footprint

Growing

embedded/software

focus via BMW JV and

digital partnerships

Asia-led presence

offers insulation from

developed market

volatility



High client

concentration (~50%

from Tata Motors/JLR)

Mechanical-heavy and

high on-site mix

restricts margins

Under-penetration in

US/Europe limits access

to large ER&D programs

Limited SDV/ADAS

exposure vs peers



BMW JV and digital

pivots open high-

growth software

opportunities

Expansion in

aerospace, industrials,

and NEVs supports

diversification

Strong tailwinds from

EV/SDV adoption in

Asia

Potential for IP-led

monetization and

platform scaling



Auto sector weakness

and client-specific risks

(Tata/JLR)

Slow recovery in Europe;

macro and tariff

headwinds

Delay in software scale-

up may cap re-rating

Talent availability and

cost inflation in

embedded/software roles

may pressure margins

and delay execution in

next-gen programs



August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Management team – TTL

Mr. Warren Kevin Harris

CEO & Managing Director

He holds a bachelor’s degree in

Engineering (Technology) from the

University of Wales Institute of Science

and Technology. He has completed the

Advanced Management Program from

Harvard Business School. He is also a

chartered mechanical engineer,

registered with and a member of the

Institution of Mechanical Engineers.

Ms. Sukanya Sadasivan

Chief Operating Officer

She is responsible for managing delivery

and practice operations, along with

internal digital & IT systems at TTL. She

holds a bachelor’s degree in Computer

Science and Informatics from Bharathiar

University. Before joining the company,

she worked as the Senior Vice President

and Chief Information Officer at Tata

Consultancy Services (TCS).

Ms. Savitha Balachandran

Chief Financial Officer

She is responsible for global finance and

procurement. She holds a bachelor’s

degree from Mount Carmel College and a

postgraduate diploma in management

with a specialization in finance from the

Symbiosis Centre for Management and

HRD, Pune. Ms. Balachandran is also a

Fulbright-CII Fellow, having pursued

advanced studies at the Tepper School of

Business, Carnegie Mellon University.

Mr. Shailesh Pramod Saraph

EVP and Global Head – ER&D

Delivery

He is responsible for the global delivery of

engineering services across the company.

He holds a bachelor’s degree in

mechanical engineering, a master’s

degree in management science, a

master’s degree in business

administration.

Mr. Santosh Singh

Non-Executive Director

Mr. Singh is the President and Global Head

of Marketing and Business Excellence at

TTL, responsible for developing TTL’s

business excellence plan. He joined TTL in

2016 as Sr. Vice President – Business

Excellence and Innovation.

Mr. Sriram Lakshminarayanan

President & CTO

He is responsible for leading the practice

organization, strategic monetization of

intellectual property and assets, as well as

the products business. He holds a

Bachelor’s degree in Engineering in

Electronics and Communication from the

Madurai Kamaraj University.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Financials and valuations – TTL

Consolidated - Income Statement

Y/E March

Total Income from Operations

Change (%)

Employees Cost

Total Expenditure

% of Sales

Gross Profit

SG&A

EBITDA

% of Sales

Depreciation

EBIT

% of Sales

Other Income

PBT

Total Tax

Tax Rate (%)

Reported PAT

YoY Change (%)

Margin (%)

Minority Interest

Adjusted PAT

FY21

23,809

17,538

73.7

6,271

2,414

3,857

16.2

922

2,935

12.3

272

3,207

761

23.7

2,446

10.3

2,446

FY22

35,296

48.2

24,841

70.4

10,455

3,998

6,457

18.3

857

5,600

15.9

269

5,869

1,499

25.5

4,370

78.7

12.4

4,370

FY23

44,142

25.1

30,236

68.5

13,906

5,697

8,209

18.6

946

7,264

16.5

698

7,962

1,721

21.6

6,240

42.8

14.1

6,240

FY24

51,172

15.9

36,676

71.7

14,496

5,084

9,413

18.4

1,059

8,354

16.3

966

9,321

2,527

27.1

6,794

8.9

13.3

6,794

FY25

51,685

1.0

38,440

74.4

13,245

3,904

9,341

18.1

1,212

8,128

15.7

1,045

9,173

2,445

26.6

6,729

-1.0

13.0

6,729

FY26E

52,885

2.3

39,828

75.3

13,056

3,914

9,142

17.3

1,332

7,810

14.8

1,398

9,209

2,566

27.9

6,643

-1.3

12.6

6,643

FY27E

60,641

14.7

44,995

74.2

15,646

4,610

11,036

18.2

1,304

9,732

16.0

1,213

10,945

3,055

27.9

7,890

18.8

13.0

7,890

(INR m)

FY28E

69,618

14.8

51,629

74.2

17,990

5,188

12,802

18.4

1,462

11,340

16.3

1,392

12,732

3,491

27.4

9,241

17.1

13.3

9,241

Consolidated - Balance Sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Minority Interest

Borrowings

Other Long term liabilities

Capital Employed

Net Fixed Assets

Goodwill

Capital WIP

Other Assets

Curr. Assets, Loans&Adv.

Account Receivables

Cash and Bank Balance

Current Investments

Other Current Assets

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Appl. of Funds

FY21

418

21,003

21,422

2,479

23,906

3,200

7,699

950

23,875

5,958

7,813

2,806

7,298

11,822

2,237

9,466

119

12,053

23,902

FY22

418

22,384

22,802

2,418

25,223

3,024

7,655

1,696

29,802

7,682

7,683

1,802

12,636

16,957

3,366

13,284

307

12,845

25,223

FY23

811

29,083

29,895

2,381

32,281

3,005

7,949

3,060

37,975

11,062

3,828

11,810

11,274

19,734

6,578

12,817

339

18,241

32,281

FY24

811

31,397

32,208

2,339

34,555

3,103

8,403

4,548

39,730

11,479

5,199

7,093

15,960

21,228

4,814

16,122

293

18,502

34,555

FY25

811

34,983

35,794

4,013

39,812

2,609

8,735

8,571

46,728

10,056

6,675

3,324

26,674

26,830

4,767

21,795

267

19,898

39,812

FY26E

811

38,295

39,107

4,021

43,132

2,335

8,735

8,650

50,873

10,867

9,390

3,335

27,281

27,459

4,964

22,228

267

23,413

43,132

FY27E

811

40,823

41,634

4,070

45,709

2,244

8,735

9,158

56,594

12,460

9,520

3,405

31,208

31,021

5,607

25,146

267

25,573

45,709

(INR m)

FY28E

811

43,755

44,567

4,127

48,698

2,174

8,735

9,746

63,255

14,305

9,710

3,487

35,752

35,211

6,434

28,509

267

28,044

48,698

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Financials and valuations – TTL

Ratios

Y/E March

Basic EPS (INR)

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

Return Ratios (%)

RoE

RoCE

FY21

5.9

8.3

102.5

48.0

814.9

116.1

82.4

6.7

11.2

69.2

7.0

12.0

9.9

FY22

10.8

12.9

109.1

42.5

394.6

63.5

53.1

6.3

7.6

41.5

6.2

19.8

17.0

FY23

15.4

17.7

73.7

60.6

393.8

44.4

38.6

9.3

5.9

31.9

8.9

23.7

34.3

FY24

16.8

19.4

79.4

70.0

417.9

40.8

35.3

8.6

5.2

28.2

10.2

21.9

26.5

FY25

16.6

19.6

88.2

11.7

70.6

41.2

34.9

7.7

5.2

28.6

1.7

19.8

24.5

FY26E

17.4

19.6

96.4

9.2

53.1

39.3

34.8

7.1

5.0

29.0

1.4

18.9

23.0

FY27E

20.7

22.6

102.6

14.5

70.0

33.0

30.2

6.7

4.4

24.0

2.1

20.9

27.6

FY28E

24.1

26.3

109.9

16.8

70.0

28.4

26.0

6.2

3.8

20.7

2.5

22.7

30.4

Consolidated - Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

Others

CF from Operations

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

Others

CF from Fin. Activity

Inc/Dec of Cash

Forex Adjustment

Opening Balance

Closing Balance

FY21

2,392

922

-1,102

8,057

828

11,129

-137

10,992

-6,633

135

-6,636

-419

-25

-443

4,050

3,760

7,810

FY22

4,370

857

-178

-1,278

-5,802

1,645

-387

-629

-1,016

949

380

700

-439

-4

-1

-444

-130

7,810

7,680

FY23

6,240

946

-235

-2,429

-2,191

1,684

4,014

-652

3,362

-4,078

331

-4,400

-509

-1

-2,959

-3,469

-3,854

7,680

3,825

FY24

6,794

1,059

-382

-3,026

-4,071

2,570

2,943

-908

2,036

4,394

508

3,995

-578

-1

-4,990

-5,568

1,370

3,825

5,196

FY25

6,770

1,212

-481

-3,140

382

2,251

6,993

-307

6,686

-3,011

2,433

-885

-694

-5

-4,165

-4,864

1,243

233

5,196

6,672

FY26E

7,068

1,332

-1,398

-2,579

-641

2,566

6,347

-1,058

5,289

-208

1,398

133

-17

-3,755

-3,765

2,715

6,672

9,387

FY27E

8,425

1,304

-1,213

-3,137

-1,119

3,055

7,313

-1,213

6,100

-1,343

1,213

-1,343

-5,897

-5,839

130

9,387

9,517

(INR m)

FY28E

9,776

1,462

-1,392

-3,587

-1,214

3,491

8,535

-1,392

7,143

-1,555

1,392

-1,555

-4

-6,843

-6,790

190

9,517

9,707

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Tata Elxsi

BSE SENSEX

81,307

S&P CNX

24,870

CMP: INR5,580



Design-led leader with near-term speed bumps

TP: INR4,600 (-18%)

Sell

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

TELX IN

347.6 / 4

9083 / 4601

-9/-15/-20

1872



Financials & Valuations (INR b)

Y/E March

FY26E FY27E FY28E

38.0

42.7

48.1

Sales

21.1

24.3

25.0

EBIT Margin (%)

7.0

8.9

10.3

PAT

112.7 143.0 165.5

EPS (INR)

(10.6)

26.9

15.7

EPS Gr. (%)

518.2 575.4 641.5

BV/Sh. (INR)

Ratios

23.1

26.2

27.2

RoE (%)

16.2

19.1

20.1

RoCE (%)

60.0

Payout (%)

Valuations

49.5

39.0

33.7

P/E (x)

10.8

9.7

8.7

P/BV (x)

36.3

28.6

24.6

EV/EBITDA (x)

1.2

1.5

1.8

Div Yield (%)

Shareholding pattern (%)

As On

Jun-25 Mar-25

Promoter

43.9

DII

9.8

8.6

FII

12.7

Others

33.6

34.8

FII Includes depository receipts



Jun-24

43.9

6.3

13.7

36.2

TELX has established itself as a differentiated ER&D player, combining

design-led thinking with engineering capabilities to serve automotive,

media & communications, and healthcare verticals. Its proprietary IP

platforms like AUTONOMAI (ADAS), TETHER (connected vehicles), and

QoEtient (video analytics) enable early client engagement in product

development, positioning it as a preferred partner for innovation

programs.

TELX reported FY25 revenue of USD441m from USD226m in FY20. CAGR is

expected to moderate to ~8% through FY28E, compared to ~18% over

FY20-24, due to softness in the European automotive market, soft

Media/Healthcare spending, and client concentration risk.

TELX’s profitability has taken a hit in recent quarters, with EBIT margins

down 610bp/190bp YoY/QoQ in 1QFY26. This was driven by a weak

topline, increased go-to-market spends, and pricing pressure in large deal

renewals. While TELX continues to run a lean cost structure with a high

offshore mix, structural pricing resets in renewal deals could limit full

margin recovery. We expect margins to gradually recover to ~21.1% in

FY26E and settle around 24–25% by FY27–28E—still below the ~27–28%

highs.

We initiate coverage with a

Sell

rating and a target price of INR4,600.

Despite its efficient off-shore delivery model, TELX faces both cyclical and

structural challenges including softness in key verticals, sub-scale client

relationships beyond the top accounts, and pricing resets. Margin recovery

is likely to be gradual and capped below historical peaks, making the risk–

reward less attractive at this point.

Design-led approach drives early client engagement and

differentiation



TELX’s integration of design thinking into engineering services sets it apart

in the ER&D industry. Its offerings help clients define product experiences

and innovate across user interfaces and system design.

This approach allows TELX to engage early in product lifecycles, securing

higher-value work and long-term relationships. Platforms like AUTONOMAI

and TETHER have strengthened TELX’s presence in high-growth automotive

areas such as ADAS and connected vehicles.

Automotive as a core engine of growth, though near-term headwinds

persist



Automotive ER&D remains TELX’s largest segment, contributing ~53% of

FY25 revenue. The company excels in software areas critical for SDVs,

including infotainment, connectivity, and autonomous systems.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution



However, European OEMs are delaying new program launches amid macro

uncertainty, and JLR’s cautious FY26 investment outlook may weigh on TELX’s

automotive momentum in the near term. Despite these pressures, TELX’s

strategic platforms keep it well-positioned for eventual recovery as OEM

budgets normalize.

Margins no longer at peak; growth challenges may limit near-term upside



TELX was long regarded for its industry-leading margins (~27–28%), supported

by a high offshore mix and IP-led solutions. However, profitability has come

under pressure in recent quarters driven by muted growth, higher GTM spends,

and pricing resets in large renewals.

While a sharp margin decline seems unlikely from here, meaningful expansion

will likely hinge on a pickup in revenue growth. We expect margins to improve

gradually to ~21.1% in FY26E and stabilize around 24–25% by FY27–28E—still

healthy, but well below historical highs.

Non-automotive diversification provides optionality for medium-term

growth



TELX derives ~32% of revenue from Media & Communications and ~13% from

Healthcare. While these segments have provided diversification, media

spending has softened due to cautious tech budgets, and healthcare growth

faces regulatory delays.

TELX’s ongoing investment in platforms like QoEtient (video analytics) and

TEngage (digital health) positions it to capture medium-term opportunities as

client budgets recover. However, visibility on the timing and scale of

monetization remains limited in the near term.

Valuation and risks: Robust profile, though near-term visibility constraints

persist



We initiate coverage on TELX with a

Sell

rating and a target price of INR4,600,

valuing it at 32x FY27E EPS – an ~20% discount to KPIT’s 40x (~2x PEG). While

the company’s offshore-led model and design-led positioning remain key

strengths, near-term risks are hard to ignore. Weak demand in key verticals,

limited scale beyond top clients, and pricing resets renewals are likely to keep

margins below historical levels. With recovery expected to be gradual, we see

limited upside at current valuations.

Risks include high client concentration (~46% from the top five clients), potential

delays in large automotive programs, and ongoing weakness in media and

healthcare spending. Upside could emerge from faster SDV adoption or the

successful monetization of TELX’s proprietary platforms.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Story in Charts

Increased dependency on the transportation vertical

Others

Media and Communications

100.0%

75.0%

50.0%

25.0%

0.0%

Healthcare and Life Sciences

Transportation

14.0%

7.0%

0.0%

-7.0%

-14.0%

Soft growth across verticals in the last few quarters

Transportation

Media and Communications

Healthcare and Life Sciences

Source: Company, MOFSL

Top 5/10 accounts revenue concentration

Top 5

51%

48%

Top 10

48%

53%

56%

Top 5/10 accounts revenue growth (YoY, %)

Top 5

42%

Top 10

39%

36%

38%

40%

44%

46%

33%

22%

19%

23%

21%

FY20

FY21

FY22

FY23

FY24

FY25

FY21

FY22

FY23

FY24

FY25

Source: Company, MOFSL

TELX margin to remain industry-leading due to its offshore-

heavy delivery model

KPIT

26.2%

12.3%

28.7%

15.9%

13.1%

FY22

TTL

28.0%

15.8%

14.2%

FY23

TELX

26.7%

16.3%

16.2%

Margins to expand 150bp over FY25-28

EBITDA Margins

28.6%

31.0% 30.6% 29.5%

26.8% 27.5%

23.8%

17.1%

15.7%

26.1%

23.8%

8.4%

FY21

FY24

FY25

FY21

FY22

FY23

FY24

FY25 FY26E FY27E FY28E

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Company overview – TELX



Transportation remains

TELX’s largest vertical,

contributing ~53-55% of

revenue in FY25, while

Media & Communications

accounted for ~32%. Over

the medium term, the

company is targeting a

more balanced 40:40:20

revenue split across

Transportation, Media &

Communications, and

Healthcare & Medical

Devices.



TELX is one of the key players in the ER&D space, offering solutions across key

industries, including Automotive, Healthcare & Lifesciences, and Media &

Communications.

The company helps clients reimagine their products and services through design

thinking and digital technologies such as IoT, Cloud, Mobility, and Artificial

Intelligence.

Its service offerings include software development, system integration, and

industrial design, with a strong emphasis on digital transformation and

innovation. We view its embedded design offerings as a gateway to early-stage

OEM investments.

Transportation remains TELX’s largest vertical, contributing ~53-55% of revenue

in FY25, while Media & Communications accounted for ~32%. Over the medium

term, the company is targeting a more balanced 40:40:20 revenue split across

Transportation, Media & Communications, and Healthcare & Medical Devices.

We believe the company’s targeted vertical mix will support better growth

diversification.

Exhibit 48: Vertical revenue mix (%)

Transportation

15%

40%

15%

38%

Media and Communications

16%

38%

14%

34%

13%

33%

Healthcare and Life Sciences

12%

32%

12%

32%

13%

32%

Others

12%

31%

45%

1QFY24

46%

2QFY24

47%

3QFY24

51%

4QFY24

53%

1QFY25

56%

55%

53%

4QFY25

56%

2QFY25

3QFY25

1QFY26

Source: Company, MOFSL

Exhibit 49: Geographical revenue mix (%)

17%

40%

16%

40%

Europe

Americas

16%

17%

18%

37%

36%

34%

India

19%

30%

Row

19%

31%

22%

31%

38%

4QFY25

11%

20%

30%

40%

1QFY26

37%

1QFY24

40%

2QFY24

41%

3QFY24

40%

4QFY24

42%

1QFY25

43%

2QFY25

40%

3QFY25

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution



Transportation remains TELX’s core growth engine, driven by its expertise in

software-defined and electric vehicle technologies. Platforms such as

AUTONOMAI (for autonomous driving), TETHER (connected vehicles), and e-

Cockpit (digital cockpit integration) highlight TTL’s ability to blend domain

knowledge with software engineering know-how.

Exhibit 50: TELX’s transportation vertical offerings and clients (~56% of the revenue)

CLIENTS: Auto OEMs, Tier- 1 & 2

Auto Ancillary, (JLR, Toyota, Nissan,

Isuzu, Hyundai Mobis, Panasonic,

Denso, Magna, Visteon, Delphi,

Schaeffler)

TRANSPORTATION

(56% of SDS revenue)

Passenger Experience



UX - Design



Infotainment



Telematics & V2X



AD/ADAS

Design & Development



HMI Design



AUTOSAR



Functional Safety



System Engineering

Verification & Validation



Telematics Testing



AD/ADAS Testing



HILS



eMobility HILS

Source: Company, MOFSL

Exhibit 51: Key deal wins in the transportation vertical

Timeline

Q1FY26

Customer

Leading Agri Machinery

Manufacturer

Q4FY25

Q3FY25

Q2FY25

Q1FY25

4QFY24

3QFY24

Description



Connected Vehicle Platform selected to power next gen connected tractor for a Global

agrimachinery manufacturer, with initial deployments planned for Europe



a deal for a Next Gen Off Road Vehicle platform with Advanced ADAS features including

US-based specialized vehicle leader

auto parking, active collision prevention and platooning



Multi-million USD design digital deal to develop a transformative fleet management

World Leader in Green Energy

software for EVs powered by next-generation analytics and AI



Strategic EUR50m+ multi-year deal from a leading European headquartered automotive

Global Automotive OEM

OEM for platform and application development across SDV, electrification, body, and

chassis domains



Delivered ADAS Level 3 function development over a multi-year program for a new-age

New-age OEM

OEM



Developed a next-generation connectivity platform for off-highway operations for a

Off-highway Vehicle OEM

global leader in off-highway vehicles



Launched an ODC in Pune for Suzuki Motor to accelerate software and virtual

Suzuki Motor Corporation

development for next-generation connected and EVs



USD50m multi-year strategic deal from a global OEM headquartered in Europe, which

Global Automotive OEM

encompassed SDV and multiple domains of automotive engineering



Won multiple multi-million USD deals to support software development, advanced

Global Automotive OEM

simulation, and digital twin program



Strategic innovation and development partner for a Japanese supplier's upcoming

Leading Tier 1 Automotive Supplier

production programs across multiple domains



Supported software development across multiple domains, including e-cockpit, base

Global Automotive OEM

software, connectivity, and ADAS



Developed a next-gen collision detection and warning system that fuses data from

American Rail Network Operator

multiple sensors and systems, and advanced AI/ML algorithms



A multi-year product engineering program for connected infotainment and digital

Japanese Automotive Supplier

cockpit from a leading automotive supplier

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution



Media and telecom companies, which ramped up tech spending during the

pandemic, have since scaled back as they adjust to a more cautious macro

environment. FY24-25 saw a noticeable reset in budgets across the sector,

reflecting this shift.

That said, TELX continues to expand its presence in the vertical by focusing on

high-impact offerings. Solutions like QoEtient (for video quality monitoring),

AIVA (intelligent video analytics), TEPlay (a white-label OTT platform), and iCX

(for device lifecycle management) are gaining steady traction.

These platforms address critical client needs, such as cost-efficiency, customer

experience, and automation, positioning the company well for recovery once

discretionary spending picks up.

Exhibit 52: TELX’s media & communication vertical offerings and clients (~31% of the revenue)

Multi System Operator



Android TV



RDK



OTT



Network Transformation



- UI & CX

MEDIA &

COMMUNICATION

(31% of SDS revenue)

CLIENTS: MSO, OEMs, Broadcasters

(Comcast, Sky, Liberty, Google)

Network Transformation



Workflow automation



OSS/BSS maintenance



Plugins for OSS-BSS



Engineering support

Operations

Transformation



Business Process

Automation



Roll out of

automated change

management, service

monitoring, release

management

STB



Integration of Android

release



deploy open source

and proprietary

software stacks

5G & Wireless



5G device certification



Product engineering



SI & Validation

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 53: Key deal wins in the media and communications vertical

Timeline

Q4FY25

Q3FY25

Customer

Media & Communications

Company

Global US-based MSO

Leading MEA Operator

Q2FY25

US Technology Company

Q1FY25

Q4FY24

Q3FY24

Telecom Operator - US

MEA Operator

North American Telecom

Description



USD 100m+ multi-year consolidation deal win from a leading Media & Communications

company for next-generation product engineering across its portfolio of video and

broadband products.



A multi-million dollar long-term deal from a leading US-headquartered MSO to manage a

portfolio of applications, with ramp-up expected over the next two quarters.



Strategic AI CoE to support company-wide transformation initiatives, including re-

imagining products, customer experience, operations, customer support, and software

development.



A multi-million USD Design Digital deal by a world-leading technology company

headquartered in the US to deliver consumer research and insights for next-generation

consumer devices and applications.



NEURON was selected by a leading telecom operator in North America to power its

network transformation and automate operations for its next-generation 5G network.



A design-digital multi-million, multi-year transformation program for the video and OTT

streaming service of a leading MEA operator with a scaled presence in over 25 countries.



A product engineering consolidation deal for a leading MSO.



The healthcare industry is undergoing a significant digital shift as providers

increasingly adopt connected medical devices, digital-first workflows, data-

driven diagnostics, and stronger compliance frameworks. In our view, this

transformation is unlocking new avenues in digital health, remote diagnostics,

and personalized care—areas where TELX is actively building capabilities.

The company is leveraging this tailwind through a suite of platforms that

address key pain points across the healthcare value chain. These include

TEngage (a unified omnichannel care platform enhancing patient experience),

TEDREG (a real-time global regulatory intelligence tool), the Digital Health

Platform (a front door to telehealth services), and TEcare (a modular solution for

digital therapeutics).

These platforms not only strengthen TELX’s positioning in the digital healthcare

space but also create a base for scalable, recurring revenue models.

Exhibit 54: TELX’s healthcare and life sciences vertical offerings and clients (~12% of the revenue)

HEALTHCARE & LIFESCIENCES

(12% of SDS revenue)

CLIENTS: Aesculap,

Hitachi, Becton Dickinson,

Philips

Integrated Design & Engineering



Product engineering



Value engineering



V&V

Application Engineering



Modernisation



Testing



ALM

Regulatory Compliance



EU MDR/IVDR



CER



PMS

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 55: Key deal wins in the healthcare vertical

Timeline

Customer

Global Pharma and Biotech Leader

Q1FY26

Japan based Medtech major

Q4FY25

Q3FY25

Description



A strategic deal with a global Pharma and Biotech leader for a sophisticated and

connected device portfolio for radioactive pharmaceutical infusion for molecular

imaging towards cancer detection



A strategic partner for Medical Device Testing & Certification and Regulatory

Compliance for a Cardiovascular portfolio of products

A large deal by a leading European renal care Medtech company to enhance

software functionality, cybersecurity, interoperability, and support life-cycle

management

A global medical device OEM for a multi-year program to manage regulatory

workflows and complaints operations by leveraging AI and Gen AI

Clinical AI-powered solutions for diagnostics and healthcare providers, starting

with regulatory and data engineering services

Design and develop its next-gen digital platform for renal care devices,

leveraging data and AI to transform patient care and therapies

Selected by a global medical device manufacturer to design and deploy a GenAI-

based solution for sustainability and toxic material identification and impact

assessment

A multi-year large deal by a top-five global medical devices manufacturer to

develop a next-generation cloud-based connected care system

Offshore development center (ODC) to focus on developing innovative critical

care medical devices

Implement a multi-year regulatory transformation program that leverages

automation and AI to significantly enhance the quality of outcomes and

efficiency of workflows

Services to enhance efficiencies by leveraging the latest AI technology and

algorithms to identify trends, potential risks, and anomalies, thereby improving

compliance and reducing overall spend

European Medtech Company

Global Medical Device OEM

Healthtech AI Leader



Q2FY25

Global Renal Care Leader

Global Healthcare Major

Q1FY25

Global Medical Devices OEM

Dräger

Q4FY24

European Medical Device OEM

Multinational Medical Device Leader



Q3FY24



Products and platforms



TELX’s product and platform strategy plays a key role in opening doors to large

client relationships.

The company has developed a suite of IP-led offerings

across its core verticals—some highly tailored to industry-specific needs (like

automated testing and validation), while others more horizontal in nature—

aimed at enhancing scalability and client stickiness.

These IPs are often used as differentiators in early-stage client conversations,

helping establish credibility and accelerate deal wins. That said, the strategic

value of these platforms is evident in

higher profitability and deeper client

engagement,

even if they don’t yet drive large non-linear revenue streams.

While sustained investment and client adoption may unlock broader

monetization potential over time, we view these platforms more as strategic

enablers than revenue engines in the near to medium term.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 56: TELX’s key product and platform offerings

Platform

Comments



TETHER



Healthcare Vertical

Phygital Neurodiversity Platform

TEngage

TEDREG

Digital Health Platform

TEmpower

Tecare

Media/Telecom Vertical

FalconEye

ICX

QoEient

AIVA

TEPlay

Transportation Vertical

AUTONOMAI

eMobility HILS

Platform for driverless cars that leverages sophisticated AI and deep learning-based algorithms to

deliver complex use-case scenarios for driverless cars

Lab-based framework for the validation of EV systems

An IoT-based connected vehicle platform, Tether is a vendor-agnostic, cloud-based IoT platform

that enables automotive customers to offer a range of customer-centric and digitally enhanced

features

Coalesce

XR-based immersive collaboration solution that brings together digital twins, spatial computing, and

simulations

Source: Company, MOFSL

Agentless test-automation multimedia platform

A SaaS-based solution for monitoring and managing CPE

Cloud-based video DevOps platform as a packaged automation-as-a-service

Intelligent video analytics platform for content curation and object action event meta-tagging

Off-the-shelf OTT platform for regional service providers

Designed to support neurodivergent individuals with autism, ADHD, or learning disabilities—

through personalized digital therapies, assessments, and assistive tools

A digital health platform for omnichannel care that offers a unified patient experience

A global regulatory intelligence platform that monitors and captures real-time updates to global

healthcare standards

Digital front door to all telehealth services

Patient assistance program solution

Configurable platform for digital therapeutic solutions

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Investment thesis

A) Design-led ER&D DNA is a differentiator



TELX has built a position in the ER&D space by focusing on design-led product

innovation. Over the past decade, it has shifted from a multi-vertical structure

to a specialized ER&D player, with embedded systems, design, and software

integration as key areas.



Currently, most of TELX’s revenue comes from software development services

(SDS), which include technology consulting, new product development, and

testing across

three main verticals: Transportation, Media & Communications,

and Healthcare & Life Sciences.



TELX’s strength in design and embedded engineering has developed through

long-term partnerships with key accounts such as Tata Motors and Jaguar Land

Rover.



These relationships have provided steady revenue and helped better the

company’s technical capabilities. In design-led projects, TELX often gains early

insights into clients’ product plans.



This focus has become more relevant as ER&D priorities change. With shorter

product lifecycles and increasing emphasis on electrification and software-

defined vehicles,

clients require vendors that align design and engineering

closely with cost, features, and user experience.



While design work has traditionally been project-based and lumpy, the pace of

product upgrades and iterative development is lending more predictability to

revenue.

TELX has adjusted well to this evolution, positioning its ‘Design +

Domain’ stack as a scalable edge, especially as clients seek faster time-to-market

without compromising on differentiation.

While design work has

traditionally been project-

based and lumpy, the pace

of product upgrades and

iterative development is

lending more predictability

to revenue.

Exhibit 57: Capabilities in the automotive domain

Capability

ADAS

Body Engineering

  

Akkodis

  

Capgemini

Cyient

  

KPIT

  

LTTS

  

Quest Global

  

TCS

  

Tata Elxsi

  

Tata Technologies

  

TECHM

  

Wipro

LEADERS:

  ;

CHALLENGERS:

  ;

ASPIRANTS:

  

Cockpit electronics

  



Electric powertrain

  



Telematics

  



Source: Zinnov, Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution



Overall, TELX’s DNA—rooted in design precision and domain capabilities—

remains its most defensible advantage. In an environment where discretionary

spends are under pressure, its ability to support clients in both core and

strategic programs could prove resilient.

TELX derives a significant

portion of its business from

European OEMs, while it

works predominantly with

Tier-1 suppliers in the US.

B) Growth in transportation and communications/healthcare tempered by

demand weakness and policy uncertainty



TELX’s multi-vertical strategy is steadily maturing, evolving from a

transportation-heavy profile to a more balanced portfolio. Transportation

remains the largest contributor, accounting for 54% of SDS revenues, supported

by domain expertise in EV systems, ADAS, and infotainment.



TELX derives a significant portion of its business from European OEMs, while it

works predominantly with Tier-1 suppliers in the US. It has a limited presence

among US OEMs, driven by stringent terms set and significant liability to be

taken up by service providers even in cases of marginal deviations from master

services agreement (MSA).



That said, we believe near-term growth remains tempered due to macro

softness in Europe and China-linked demand compression, both of which could

persist through 1HFY26.

Exhibit 58: Increased dependency on the transportation vertical

Transportation

15%

40%

15%

38%

Media and Communications

16%

38%

14%

34%

13%

33%

Healthcare and Life Sciences

12%

32%

12%

32%

13%

32%

Others

12%

31%

45%

1QFY24

46%

2QFY24

47%

3QFY24

51%

4QFY24

53%

1QFY25

56%

55%

53%

4QFY25

56%

2QFY25

3QFY25

1QFY26

Source: Company, MOFSL

Exhibit 59: Soft growth across verticals in the last few quarters

Transportation

14.0%

7.0%

0.0%

-7.0%

-14.0%

1QFY24 2QFY24 3QFY24 4QFY24 1QFY25 2QFY25 3QFY25 4QFY25 1QFY26

Source: Company, MOFSL



Media and Communications

Healthcare and Life Sciences

Media & Communications

faces mixed conditions. While the vertical remains

aligned with long-term digital trends such as OTT adoption, CTV expansion, and

5G rollouts—providing a strong foundation for growth. However, the US

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution



Deal activity and client

engagement within Media

show some momentum,

with a pipeline that could

support recovery over time.

A recent USD100m product

engineering contract with a

global broadcaster is

expected to contribute to

revenues from 2HFY26.



communications sector is still recovering from a sharp decline in FY24 and FY25,

impacted by sectoral challenges and market consolidation within media. These

factors continue to limit near-term growth, in our view.

The revenue profile and capex cycle for communications in the US are gradually

improving, supported by lower borrowing costs that have eased telco debt

burdens (telco operators account for around 70% of this vertical’s revenue).

Nonetheless, deal activity remains muted amid these headwinds.

TELX’s investments in IP-led, annuity-based platforms help mitigate fluctuations

in its project-driven business but do not fully offset near-term pressure.

Deal activity and client engagement within Media show some momentum, with

a pipeline that could support recovery over time. A recent USD100m product

engineering contract with a global broadcaster is expected to contribute to

revenues from 2HFY26.

Both broadcast/media and telecom segments are undergoing significant

technology shifts: OTT is gradually replacing linear TV, while the expansion of 5G

networks by telecom operators is creating long-term growth opportunities.

Nonetheless, we believe budget rationalization in developed markets may

lead to uneven growth in the near term, especially after strong growth seen

over FY21-23.

Exhibit 60: Media & communications growth likely to face near-term volatility

Media and Communications (USD mn)

1QFY24

2QFY24

3QFY24

4QFY24

1QFY25

2QFY25

3QFY25

4QFY25

1QFY26

Source: Company, MOFSL

However, we believe near-

term momentum is

somewhat tempered by

ongoing policy

uncertainties, including the

EU MDR deferral and

regulatory uncertainty in

the US.



Healthcare & Life Sciences

has emerged as a credible third growth engine,

scaling from under 5% of revenues in FY19 to over 15% in FY23. The company’s

investments in bio-medical engineering talent, platform IP (like TEnage and

TEDREG), and adjacencies such as digital diagnostics and smart wearables

position this vertical for medium-term growth.

However, we believe near-term momentum is somewhat tempered by ongoing

policy uncertainties, including the EU MDR deferral and regulatory uncertainty

in the US.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 61: Media & communications and Healthcare vertical CC growth over FY21-25

Communication & Media YoY cc growth (%)

71%

42%

28%

21%

31%

15%

-3%

FY21

FY22

FY23

FY24

-9%

-6%

FY25

Source: Company, MOFSL



Healthcare & lifesciences YoY cc growth (%)

Geographically, India has emerged as a primary growth engine, with revenue

CAGR of 26% over FY20-25 and contribution rising from 17% to over 23%.

Europe’s share has declined due to the JLR concentration issue, but the

company aspires for a 40:40:20 revenue split across the US, Europe, and RoW

over the long term.

Exhibit 62: TELX’s geography split

Europe

17%

40%

16%

40%

16%

37%

17%

36%

Americas

18%

34%

India

19%

30%

Row

19%

31%

40%

3QFY25

22%

31%

38%

4QFY25

11%

20%

30%

40%

1QFY26

37%

1QFY24

40%

2QFY24

41%

3QFY24

40%

4QFY24

42%

1QFY25

43%

2QFY25

Source: Company, MOFSL

Exhibit 63: TELX’s growth across geography over FY20-25(USDm)

Europe

200.0

Americas

India

Row

180.3

138.5

92.7

78.4

27.0

28.2

FY20

FY21

FY22

FY23

FY24

FY25

86.1

36.6

Revenue growth CAGR:

Europe

– 14%

Americas

– 12%

India

– 26%

RoW

– 5%

150.0

100.0

50.0

0.0

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

We believe this

concentrated effort on key

accounts positions TELX to

participate in larger, more

durable annuity-led

engagements and move

clients to higher-value tiers

over time.

C) Focused scaling of strategic accounts, though client concentration and top-

account softness remain key monitorables



In our view, TELX is strategically doubling down on clients with scalable, long-

term potential across its three core verticals. With marquee clients like JLR,

Nissan, Alps Alpine, Comcast, Panasonic, and Siemens already on board, the

company is taking a focused approach—deepening wallet share where

opportunities are big while rationalizing tail accounts with limited growth

prospects.



We believe this concentrated effort on key accounts positions TELX to

participate in larger, more durable annuity-led engagements and move clients to

higher-value tiers over time.



Since FY22, there has been a clear divergence in growth between the top 10

clients and the broader base, suggesting that the strategy to scale within anchor

accounts is working. For instance, revenue per top-five clients has more than

doubled since FY20.



While part of this outperformance reflects stronger spending trends among

some top-5 and top-10 clients, we believe it also signals TELX’s increasing

strategic relevance in its digital transformation agendas.



That said, the flip side of this high-focus strategy is increasing concentration risk.

Growth in top 5 and top 10 accounts slowed to 8%/7% in FY25 as seen in Exhibit

66, a sharp contrast to the 23%/20% median growth seen during FY21-24. This

makes future capex plans and execution at anchor accounts a key monitorable,

in our view.

Exhibit 64: Revenue from top 5 and 10 accounts over FY20-25

Revenue (USDm)

Top 5

Top 10

Ex Top 10

Revenue per client (USDm)

Top 5

Top 10

Top 6-10

FY20

115

112

FY21

119

127

FY22

126

159

172

FY23

154

189

201

FY24

189

229

200

FY25

202

247

195

Source: Company, MOFSL

Exhibit 65: Top 5/10 accounts revenue concentration

Top 5

51%

48%

Top 10

48%

53%

56%

39%

36%

38%

40%

44%

46%

FY20

FY21

FY22

FY23

FY24

FY25

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 66: Top 5/10 accounts revenue growth (YoY, %)

Top 5

42%

Top 10

33%

22%

19%

23%

21%

FY22

FY23

FY24

FY21

FY25

Source: Company, MOFSL

We think this structural

shift—combined with

vertical P&L

accountability—is an

enabler for sustainable

growth. However, in the

near term, revenue

volatility from a few large

clients and slower-than-

expected ramp-ups may

weigh on overall growth.



TELX is evolving its go-to-market structure to better support this account-mining

approach. The move from a geo-led sales structure to vertically-aligned business

units, along with the implementation of a ‘2-in-a-box’ model—pairing local sales

personnel with delivery/solutioning experts—is, in our view, sharpening account

focus and ensuring delivery alignment.

We think this structural shift—combined with vertical P&L accountability—is an

enabler for sustainable growth.

However, in the near term, revenue volatility

from a few large clients and slower-than-expected ramp-ups may weigh on

overall growth.

While TELX continues to

maintain a lean cost

structure (~90–95%

offshore mix) and high

delivery efficiency, we

expect EBIT margins to

gradually recover to ~21.1%

in FY26E and stabilize at 24–

25% by FY27–28E—well

below the historical ~27–

28% levels.

D) High-margin structure under pressure amid growth headwinds



While TELX has historically benefitted from a strong offshore-led model and

premium positioning in design-led engineering, the near-term outlook has

weakened. Revenue growth has slowed meaningfully, with FY25 revenue at

USD441m and CAGR expected to moderate to ~8% over FY25–28E (vs. ~18% in

FY20–24), driven by softness in the European automotive market, weak

media/healthcare spending, and high client concentration.



Margin pressures have increased in recent quarters, with EBIT margins down to

18.2% in 1QFY26. The decline reflects a combination of weak topline, increased

GTM investments, and pricing resets in large renewals. Structural pricing

pressures—especially in renewal business—could constrain margin

normalization.



While TELX continues to maintain a lean cost structure (~90–95% offshore mix)

and high delivery efficiency, we expect EBIT margins to gradually recover to

~21.1% in FY26E and stabilize at 24–25% by FY27–28E—well below the historical

~27–28% levels.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Exhibit 67: Revenue to clock 8% CAGR over FY25-28

Revenue (in USD mn)

34%

25%

331

247

390

FY21

FY22

FY23

FY24

FY25

10%

-3%

428

441

440

YoY CC growth

493

12%

555

13%

FY26E

FY27E

FY28E

Source: Company, MOFSL



Growth visibility also remains clouded. Management expects FY26 to be back-

ended, but recovery depends on improvement in Europe and a pickup in

discretionary tech spends. Utilization continues to lag historical averages (~60–

65% vs. peak of ~80%), limiting operating leverage in the near term.

Wage hikes expected in coming quarters could add near-term pressure,

although partially offset by utilization and deal ramp-up. However, with growth

still tepid and margins structurally lower, TELX’s high-valuation multiples appear

difficult to sustain.

Exhibit 68: TELX margin to remain industry-leading due to its offshore-heavy delivery model

KPIT

26.2%

12.3%

28.7%

15.9%

13.1%

FY22

TTL

28.0%

15.8%

14.2%

FY23

TELX

26.7%

16.3%

16.2%

23.8%

15.7%

17.1%

8.4%

FY21

FY24

FY25

Source: Company, MOFSL

Exhibit 69: Margins to expand 150bp over FY25-28

EBITDA Margins

28.6%

31.0%

30.6%

29.5%

26.1%

26.8%

27.5%

23.8%

FY21

FY22

FY23

FY24

FY25

FY26E

FY27E

FY28E

Source: Company, MOFSL

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Valuation and view: Initiate coverage with a Sell rating



While TELX continues to

deliver a good ROE profile,

regaining historical levels

will depend on both

revenue acceleration and

margin normalization.



Unlike several mid-cap peers, TELX has pursued a largely organic growth

strategy. But project delays in Europe and sluggish discretionary tech spends

across Automotive and Media are weighing on near-term momentum. Growth

also remains heavily concentrated in a few top accounts, many of which are

facing their own spending constraints. We expect USD revenue to grow modest

by 8% CAGR over FY25-28.

Margins, once a defining strength for TELX, have come under meaningful

pressure—EBIT declined 610bp/190bp YoY/QoQ in 1QFY26, impacted by weak

revenue growth, increased GTM investments, and pricing resets during deal

renewals. Although the company maintains a lean cost structure and high

offshore mix, structural pricing changes in renewal business could limit a full

recovery.

We expect margins to gradually improve to ~21.1% in FY26E and settle at 24–

25% by FY27–28E—healthy, but still below the ~27–28% levels seen previously.

With top-line growth yet to pick up, further margin upside looks capped. EPS is

likely to grow at ~9% CAGR through FY28.

While TELX continues to deliver a good ROE profile, regaining historical levels

will depend on both revenue acceleration and margin normalization.

Valuations remain steep at ~50x 12M FWD P/E, which we see as difficult to

justify given current headwinds. Accordingly, we value TELX at 32x FY27E EPS –

an ~20% discount to KPIT’s 40x (~2x PEG) to arrive at a

target price of INR4,600

and initiate with a

Sell

rating.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Key risks to our thesis



Policy/regulatory clarity in

Healthcare vertical (e.g.,

smoother MDR adoption,

faster FDA approvals) may

unlock delayed spending.

TELX’s IP-led platforms

(TEnage, TEDREG) and bio-

medical engineering

capabilities could enable it

to scale this vertical more

quickly.



OEMs increasingly view vehicles and devices as "software-defined". TELX’s

design-led + embedded expertise positions it well to capture higher-value digital

engineering deals, especially if AI-led automation accelerates demand for re-

engineering legacy platforms.

Current utilization (~60–65%) leaves scope for a sharp operating leverage

benefit if demand improves.

A favorable offshore mix, and pyramid optimization could allow EBIT margins to

normalize back toward historical ~27–28% levels faster than modeled.

If Tier-1s and OEMs front-load spending on electrification and infotainment,

TELX’s domain-heavy positioning may help it capture outsized wallet share.

Recent USD100m contract with a broadcaster highlights TELX’s credibility in

securing large annuity deals. Faster scaling of such wins, combined with 5G

rollout, streaming platform and CTV adoption, could accelerate growth in this

vertical beyond near-term expectations.

Policy/regulatory clarity in Healthcare vertical (e.g., smoother MDR adoption,

faster FDA approvals) may unlock delayed spending. TELX’s IP-led platforms

(TEnage, TEDREG) and bio-medical engineering capabilities could enable it to

scale this vertical more quickly.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Bull and Bear cases

Bull Case



Revenue is projected to expand at a 10.5% CAGR over FY25-28, led by steady

demand in Auto, Media, and Healthcare; strong positioning in design-led ER&D;

and scale-up in large strategic accounts.



EBITDA margin is expected to expand 220bp to 28.3% by FY28, driven by

operating leverage, higher utilization level, and offshore delivery.



EPS is expected to clock 12.8% CAGR over FY25-28, driven by margin expansion

and steady topline growth.



TP of INR6,000, based on 40x FY27E EPS, implies an upside of 8% from current

levels.

Bear Case



Revenue is expected to expand at an 8.0% CAGR over FY25-28, reflecting slower

deal ramp-ups, continued macro pressures in Auto, and limited wallet share

gains.



EBITDA margin is expected to marginally expand 40bp to 26.5%, constrained by

lower revenue growth and slower execution on margin levers.



EPS is projected to post a 6.6% CAGR over FY25-28, reflecting tepid revenue

growth and flattish margin performance.



TP of INR4,000, based on 30x FY27E EPS, implies a downside of 27% from

current levels.

Scenario Analysis: Base | Bull | Bear

INRm, except mentioned

Revenue ( USD m)

Growth YoY CC(%)

USD/INR

Revenue

EBITDA

EBITDA Margin (%)

EBIT

EBIT Margin

EBT

Tax Rate(%)

PAT

EPS(INR)

Growth(%)

P/E Multiple

Upside /Downside

FY25

441

84.61

37,290

9,730

26.1%

8,681

23.3%

10,284

23.7%

7,850

126

Bear

FY26E

FY27E

456

506

1.0%

11.0%

84.73

84.00

38,652 42,509

8,890

10,840

23.0%

25.5%

7,730

9,777

20.0%

23.0%

9,087

11,273

25.0%

6,815

8,455

109.42 135.74

-13%

24%

Base

FY27E

493

12.0%

86.72

42,734

11,446

26.8%

10,378

24.3%

11,874

25.0%

8,906

142.98

27%

Bull

FY27E

525

13.0%

86.00

45,163

12,420

27.5%

11,291

25.0%

12,786

25.0%

9,590

153.96

25%

FY28E

557

10.0%

84.00

46,760

12,391

26.5%

10,989

23.5%

12,673

25.0%

9,505

152.59

12%

4,000

-27%

FY26E

440

-2.6%

86.32

37,992

9,052

23.8%

8,018

21.1%

9,375

25.1%

7,018

112.68

-11%

FY28E

555

12.6%

86.72

48,121

13,254

27.5%

12,051

25.0%

13,736

25.0%

10,306

165.45

16%

4,600

-18%

FY26E

465

3.0%

84.73

39,400

9,850

25.0%

8,865

22.5%

10,222

25.0%

7,666

123.08

-2%

FY28E

596

13.5%

86.00

51,260

14,507

28.3%

13,328

26.0%

15,012

25.0%

11,259

180.76

17%

6,000

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

SWOT analysis – TELX



Industry-leading

EBIT margins backed

by 90-95% offshore

delivery model.

Strong strategic

client relationships

with OEMs like JLR,

Panasonic, Comcast,

Suzuki, and Siemens.

Scalable, IP-led

platform strategy

(AUTONOMAI,

TETHER, QoEtient,

TEngage) enhances

client stickiness and

deal velocity.

High return ratios

and consistent cash

generation without

inorganic growth

dependency.



High revenue

dependence on

Transportation

(~54%) and JLR

(~35%) raises

concentration risk.

Minimal penetration

among US-based

OEMs due to strict

commercial terms

and liability norms.

Healthcare and

Media verticals still

sub-scale and

impacted by

regulatory and macro

uncertainties.



Shift to SDVs,

connected/autonom

ous EVs, and digital

health solutions align

with TELX’s design +

domain strengths.

Strategic wins (e.g.

EUR50m auto deal,

USD100m media

contract, medtech

digitization) deepen

presence across

verticals.

Expansion of

vertical-aligned GTM

model and IP

monetization

potential in maturing

platforms.



Ongoing macro

headwinds in Europe,

softness in

Media/Healthcare may

delay recovery.

Delay in discretionary

tech spends and

prolonged auto sector

softness could drag

top-line growth.

Regulatory changes

(e.g. EU MDR, US FDA

policies) could impact

go-to-market in the

MedTech vertical.



August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Management team – TELX

Mr. N. Ganapathy Subramaniam

(NGS)

Chairman

Mr. NGS is Chairman and Non-executive

Director of the Board at TELX. He has

been part of the Indian IT industry for 40

years. Prior to TELX, he served as the

Chief Operating Officer at TCS. He has

played a strategic role in several

landmark initiatives across the banking,

telecom, and public service sectors

globally.

Mr. Manoj Raghavan

CEO & Managing Director

Mr. Raghavan has over 27 years of

industry experience. Prior to taking over

the role of CEO & MD, he served as the

Executive Vice President and Head of the

embedded product design (EPD) division,

spearheading sales, overall delivery, and

P&L for this division.

Mr. Nitin Pai

Chief Marketing and Chief Strategy

Officer

Mr. Pai has been associated with TELX for

29 years. He has led the branding and

business development portfolio for IP and

solutions, including Autonomai

—

TELX’s

proprietary platform. He holds an

engineering degree from Birla Institute of

Technology and Science, Pilani.

Mr. Gaurav Bajaj

Chief Financial Officer

Mr. Bajaj has been associated with TELX

for over three years. He is also a

Chartered Accountant and holds a

bachelor’s degree in Commerce from

Delhi University. He has played a key role

in shaping TELX’S financial strategy,

contributing to the company's financial

performance.

Mr. Rajagopalan S

Chief Human Officer

Mr. Rajagopalan S has been associated

with TELX for over 25 years. He holds a

master’s degree from IIM Bangalore.

Prior to taking on his current role, he

served as Corporate Manager, HR, at TELX

for 20 years.

Mr. RajaGopalan Rajappa

Chief Technology Officer

Mr. Rajappa has been associated with the

company for 28 years. Prior to joining

TELX, he served as a faculty member at

Vellore Institute of Technology.

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Financials and valuations – TELX

Consolidated - Income Statement

Y/E March

Total Income from Operations

Change (%)

Employees Cost

Total Expenditure

% of Sales

Gross Profit

SG&A

EBITDA

% of Sales

Depreciation

EBIT

% of Sales

Other Income

PBT

Total Tax

Tax Rate (%)

Reported PAT

Change (%)

Margin (%)

Minority Interest

Adjusted PAT

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Minority Interest

Borrowings

Other Long term liabilities

Capital Employed

Net Fixed Assets

Goodwill

Capital WIP

Other Assets

Curr. Assets, Loans&Adv.

Account Receivables

Cash and Bank Balance

Current Investments

Other Current Assets

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Appl. of Funds

FY21

18,262

13.4

13,038

71.4

5,224

28.6

444

4,780

26.2

338

5,119

1,437

28.1

3,681

43.7

20.2

3,681

FY21

623

12,899

13,522

605

396

14,522

1,511

186

1,484

13,914

4,894

1,004

7,725

291

2,645

561

1,957

126

11,269

14,522

FY22

24,708

35.3

17,050

69.0

7,658

31.0

557

7,101

28.7

351

7,452

1,958

26.3

5,494

49.2

22.2

5,494

FY22

623

15,386

16,009

1,183

398

17,590

2,512

203

221

1,799

16,957

6,728

1,511

8,294

424

4,102

843

3,133

126

12,855

17,590

FY23

31,447

27.3

21,834

69.4

9,613

30.6

814

8,799

28.0

576

9,375

1,823

19.4

7,552

37.5

24.0

7,552

FY23

623

20,235

20,858

1,537

455

22,849

3,174

162

1,094

23,135

9,764

1,339

11,051

981

4,786

1,032

3,498

256

18,349

22,849

FY24

35,521

13.0

25,057

70.5

10,464

29.5

994

9,470

26.7

1,017

10,487

2,564

24.5

7,922

4.9

22.3

7,922

FY24

623

24,434

25,057

1,812

542

27,410

3,825

134

2,521

25,367

9,716

1,332

12,806

1,513

4,459

856

3,218

385

20,908

27,410

FY25

37,290

5.0

27,561

73.9

9,730

26.1

1,049

8,681

23.3

1,603

10,284

2,435

23.7

7,850

-0.9

21.1

7,850

FY25

623

27,977

28,600

1,393

568

30,560

3,092

4,686

27,975

9,715

1,353

14,992

1,915

5,297

1,230

3,575

492

22,678

30,560

FY26E

37,992

1.9

28,941

76.2

9,052

23.8

1,034

8,018

21.1

1,357

9,375

2,356

25.1

7,018

-10.6

18.5

7,018

FY26E

623

31,651

32,273

1,393

578

34,245

3,198

4,617

31,411

9,368

5,089

14,997

1,957

5,085

1,095

3,498

492

26,325

34,245

FY27E

42,734

12.5

31,287

73.2

11,446

26.8

1,068

10,378

24.3

1,496

11,874

2,968

25.0

8,906

26.9

20.8

8,906

FY27E

623

35,213

35,836

1,393

650

37,879

3,412

5,762

33,985

10,537

6,219

15,028

2,201

5,384

1,184

3,708

492

28,601

37,880

(INR m)

FY28E

48,121

12.6

34,866

72.5

13,254

27.5

1,203

12,051

25.0

1,684

13,736

3,430

25.0

10,306

15.7

21.4

10,306

FY28E

623

39,335

39,958

1,393

732

42,083

3,652

6,477

37,526

11,865

8,119

15,063

2,479

5,676

1,320

3,865

492

31,850

42,084

Consolidated - Balance Sheet

(INR m)

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

Financials and valuations – TELX

Ratios

Y/E March

Basic EPS (INR)

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

Return Ratios (%)

RoE

RoCE

FY21

59.1

66.2

217.1

48.0

81.2

94.4

84.2

25.7

18.6

65.0

0.9

30.1

22.3

FY22

88.3

97.2

257.1

42.5

48.2

63.2

57.4

21.7

13.7

44.2

0.8

37.2

27.1

FY23

121.3

134.3

334.9

60.6

50.0

46.0

41.5

16.7

10.7

35.0

1.1

41.0

29.0

FY24

127.2

143.2

402.3

70.0

55.0

43.9

39.0

13.9

9.4

32.0

1.3

34.5

24.3

FY25

126.0

142.8

459.2

75.0

59.5

44.3

39.1

12.2

8.9

34.2

1.3

29.3

19.8

FY26E

112.7

129.3

518.2

67.6

60.0

49.5

43.2

10.8

8.7

36.3

1.2

23.1

16.2

FY27E

143.0

160.1

575.4

85.8

60.0

39.0

34.8

9.7

7.7

28.6

1.5

26.2

19.1

FY28E

165.5

184.8

641.5

99.3

60.0

33.7

30.2

8.7

6.8

24.6

1.8

27.2

20.1

Consolidated - Cash Flow Statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

Others

CF from Operations

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

CF from Fin. Activity

Inc/Dec of Cash

Forex Adjustment

Opening Balance

Closing Balance

FY21

5,119

444

-1,237

122

-132

4,374

-388

3,986

-4,244

255

-4,377

-237

-1,028

-1,265

-1,268

-12

2,284

1,007

FY22

7,452

553

-2,062

-1,002

-208

4,827

-712

4,116

-656

285

-1,083

-271

-1

-2,989

-3,261

483

1,007

1,511

FY23

9,375

814

162

-1,848

-3,097

-538

4,867

-637

4,230

-1,695

313

-2,019

-381

-4

-2,647

-3,031

-183

1,511

1,338

FY24

10,487

994

203

-2,580

-1,351

-741

7,012

-830

6,182

-2,745

874

-2,701

-498

-7

-3,774

-4,278

-39

1,338

1,331

FY25

10,284

1,049

190

-2,239

-242

-921

8,120

-162

7,959

-3,741

820

-3,083

-612

-14

-4,359

-4,986

-31

1,331

1,352

FY26E

9,375

1,034

-2,213

-1,346

6,938

-1,140

5,799

-75

1,357

142

-3,345

3,736

1,352

5,088

FY27E

11,874

1,068

-3,024

-1,145

-1,424

7,350

-1,282

6,068

-1,090

1,496

-876

-5,343

1,131

5,088

6,218

(INR m)

FY28E

13,736

1,203

-3,498

-1,349

-1,602

8,489

-1,444

7,045

-646

1,684

-406

-6,183

1,899

6,218

8,118

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

ESG initiatives

Environment

TELX



KPIT



TELX reduces waste through awareness and responsible disposal, promoting

recycling, and supporting United Nations sustainable development goals (UN

SDGs) through initiatives such as water treatment and recharge facilities.

The company’s Battery Passport platform leverages AI, ML, and blockchain to

improve battery lifecycle management, ensure data transparency, and promote

shared responsibility across the EV supply chain.

KPIT aims for net-zero emissions by 2030, focusing on minimizing operational

footprints and promoting sustainable practices across all business aspects.

The company focuses on vehicle light-weighting, digital product design, and

sustainable facilities management to minimize environmental impact across the

product lifecycle.

TTL



Social

TELX



TELX undertakes skill-building initiatives aimed at empowering women through

vocational training, entrepreneurship development, and mentorship



Through the social activity forum of Elxsians (SAFE), employees volunteer in

community services, such as blood donation drives, tree plantations, school

teaching, and rural development work.

KPIT



KPIT has adopted 177 schools in Pune and Karnataka under the ‘Chhote

Scientists’ initiative, promoting STEM education and providing scholarships to

underprivileged students.



The company has also established vocational training centers to equip youth

with practical skills in IT, electronics, and related fields, enhancing their

employability.

TTL



Initiatives like ‘I GET IT’ and the transformation of training institutes into

Centers of Excellence are focused on skill development and career

advancement, aimed at building a skilled workforce for future challenges.

Governance

KPIT



TTL



KPIT holds a ‘Low Risk’ ESG rating of 18.8 from Sustainalytics, ranking 281st out

of 939 companies in the software & services industry group.

TTL holds a ‘Low Risk’ ESG rating of 19.5 from Sustainalytics, ranking 331st out

of 941 companies in the software & services industry group.

The company's governance strategies are aligned with global frameworks such

as the

UN SDGs,

ensuring that its operations contribute positively to global

sustainability efforts.

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

RECENT STRATEGY/THEMATIC REPORTS

August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

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We have forward looking estimates for the stock but we refrain from assigning recommendation

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August 2025

Technology | Auto ER&D – Thematic: An incomplete revolution

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Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change

without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their

directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or

seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct

and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly

accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is

being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This

report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution,

publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or

may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

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Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Registration granted by SEBI, enlistment as RA with Exchange and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 - 71934200 / 71934263; www.motilaloswal.com.

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Grievance Redressal Cell:

Contact Person

Ms. Hemangi Date

Ms. Kumud Upadhyay

Mr. Ajay Menon

Mr. Neeraj Agarwal

Mr. Siddhartha Khemka

Contact No.

022 40548000 / 022 67490600

022 40548082

022 40548083

022 40548085

022 50362452

Email ID

query@motilaloswal.com

servicehead@motilaloswal.com

am@motilaloswal.com

na@motilaloswal.com

po.research@motilaloswal.com

Registration details of group entities.: Motilal Oswal Financial Services Ltd. (MOFSL): INZ000158836 (BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412, BSE

enlistment no. 5028 . AMFI: ARN .: 146822. IRDA Corporate Agent – CA0579, APMI: APRN00233. Motilal Oswal Financial Services Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Insurance,

Bond, NCDs and IPO products.

Customer having any query/feedback/ clarification may write to query@motilaloswal.com. In case of grievances for any of the services rendered by Motilal Oswal Financial Services Limited (MOFSL) write to

grievances@motilaloswal.com, for DP to dpgrievances@motilaloswal.com.

August 2025