Ladies and gentlemen, good day, and welcome to the Tata Elxsi Q2 FY 2024-2025 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shashank Ganesh from EY. Thank you, and over to you, sir.
Thank you very much. Good evening to all the participants on the call. Good morning for joining me from the western side. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. Therefore, it must be viewed in conjunction with the business risk that could cause further result performance or achievements that differ significantly from what is expressed or implied by such forward-looking statements. To take us through the results and answer your questions today, we have the senior management of Tata Elxsi, represented by Mr. Manoj Raghavan, Managing Director and CEO, Mr. Nitin Pai, Chief Marketing and Chief Strategy Officer, Mr. Gaurav Bajaj, Chief Financial Officer, and Ms. Cauveri Sriram, Company Secretary. We will start the call with a brief overview of the past quarter by Mr.
Raghavan, followed by a Q&A session. We would appreciate your cooperation in restricting yourself to two questions to allow participants a chance to interact. If you have any further questions, you may join the queue, and we will be happy to respond to them if time permits. With that, I would like to hand over the call to Mr. Manoj Raghavan. Over to you, Manoj.
Thank you, Shashank. Good evening, everyone. Thank you for joining us today for our Quarter Two FY 2025 Investor Call. Before we start discussing about the quarter two performance of the company, I'd like to take a moment to share the profound loss that the Tata Elxsi family feels in our hearts on losing Mr. Ratan Tata. He played a pivotal role in the founding of this company and had always encouraged the technology, innovation, and design-led business approach that Tata Elxsi is now well known for. His memory will forever remain in our hearts, and his vision and legacy will continue to shape our future. Coming to our second quarter performance, we are pleased to report a steady quarter, with revenues from operations growing to INR 955.1 crores, registering a quarter-on-quarter growth of 3.1%.
In constant currency terms, the operating revenues stayed flat, registering a modest growth of 0.2% quarter- on- quarter. Our transportation business continues to power the growth for the company, registering a healthy revenue growth of 4.4% quarter-on-quarter in constant currency terms. Our strong ADAS, connected, electric, and software-defined vehicle capabilities are helping us win large deals with global OEMs across the world, positioning us well for the continued transformation of the automotive industry. We won a landmark $50 million multi-year deal from a global OEM headquartered in Europe, which encompasses SDV and multiple domains of automotive engineering. This strategic engagement will enable SDV platform development and the next generation of mobility for this world-leading brand. During the quarter, we also announced a strategic engagement with Nidec Corporation, Japan, to support their group technology initiatives, especially for automotive market.
We also launched a global next-gen mobility innovation center in Bangalore in partnerships with MSIL. Our media and communication business declined by 2.2% quarter-on-quarter in constant currency terms, largely because of pending customer decisions on some large deals that we have been pitching for. And also natural completion of some of the projects that we have been working over the last several quarters. That said, we see green shoots for growth led by our network transformation offerings and the digital GenAI-led innovation for the future of media. I'm especially delighted with our world's first RDK Broadband implementation for Qualcomm, which allows global telecom operators to adopt this first-of-its-kind solution to deliver high-speed home and enterprise broadband services with a 5G network.
We also won a strategic AI center of excellence deal with a leading Middle East operator, which will support a company-wide transformation initiatives, including reimagining products, customer experience, operations, customer support, and software development. Our healthcare and life sciences business reported a decline in top line by 11.2% quarter-on-quarter in constant currency terms. This is due to delay in renewal and start of some new programs with our leading U.S.-based customer. We have added some new customers, including a global renal care leader and a U.S.-headquartered health tech AI leader, which should scale over the next few quarters. Skanray, a leading global med tech R&D and manufacturing company specializing in diagnostic imaging, critical care, and surgery OT solutions, has chosen Tata Elxsi as a strategic partner for advanced surgical imaging, core technology, and software platform development.
This underscores our unique ability to bring together design, cloud, and AI to reimagine healthcare diagnostics and patient care. Also, we launched a state-of-the-art robotics innovation lab in Frankfurt in partnership with Denso Robotics and AAtek, designed to revolutionize automation and robotics for various sectors, including precision surgery and healthcare. We are witnessing an unprecedented convergence of design software and digital technologies, such as AI, in how enterprises are reimagining their products, services, and customer experience. With our strong AI capabilities and design digital capabilities, we are well positioned to demonstrate and create value, win new customers, and engage deeper with our global customer base. Our operational and also delivery excellence, fiscal discipline, and differentiated offerings have contributed to our EBITDA margins expanding by 70 basis points to 27.9% for the quarter.
Our PAT grew by 24.6% quarter-on-quarter to INR 229.4 crores, with the superior bottom line performance further aided by earned incentives and tax credits from previous years. Our strategic focus on expanding our business in Japan, emerging markets, and capitalizing on the India opportunity is now starting to significantly contribute to our growth. During the quarter, our revenues from India grew by 31.2% year-on-year, while Japan and emerging markets grew strongly at 81.9% year-on-year. On the people front, at 12.5%, our attrition remains under control as we prepare to onboard the next batch of freshers. We've stepped into the third quarter of this financial year with the confidence of a healthy deal pipeline, continued growth, growth in the transportation business, large deal wins, and a recovery in our other key verticals.
I now open the floor for questions.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, if you have any questions, please press star and one. Our first question is from the line of Bhavik Mehta from JPMorgan. Please go ahead.
Thank you. So a couple of questions. Firstly, on the transportation vertical, you know, we have seen obviously very strong growth in the last two quarters, but, you know, given the environment is a lot of global OEMs are cutting back on EV targets, and given your deal pipeline and the deals already closed, how should we think about, the growth, in this vertical, you know, over the next couple of quarters going ahead?
Yeah. What you say is true. In general, the automotive industry, we see a lot of news out there. So the good part for us is, you know, there are deals that we have built, and there are deals that we have won, that we have to execute and ramp up. So while there is a sort of slowdown or, you know, softness in the automotive market, you know, in general, I think as far as Tata Elxsi is concerned, because of some of the deal wins that we've had, that we will ramp up, and some of the deals that we have already bid for, we are still hopeful that, you know, we will have a decent growth in H2.
Okay. Okay, got it. That's helpful. Secondly, on the healthcare side, are the headwinds from the U.S. and all behind now, and should we see growth coming back from Q2, or will it take some more time before the quarter comes back on the board?
We strongly believe that we have bottomed out. I mean, even in our Q1, we did indicate that we have this softness in the market. We believe we have bottomed out in Q2, and Q3 we should see a growth. Again, there are good conversations happening with customers, and there are also, you know, customer, pretty large customer of ours, where we've sort of, you know, there is some delayed decision. We hope that we will, you know, recover in Q3.
Okay, got it. And just last, do you think of a margin walk for this quarter?
I will, you know, ask, you know, Gaurav to take that question.
Hi, Bhavik. So our operating margin expanded by 70 basis points sequentially compared to quarter one. The major ups and downs for the margin walk, I think we have a cross-currency benefit of 160 basis points. Most of the, you know, the major currencies moved favorably for us in this quarter. Our other expenses came down, you know, substantially during this quarter compared to the last quarter. Last quarter, you know, we had one-time contribution. That has, you know, brought over 170 basis point, you know, almost 130 basis points uptick into the margins for our, at the operating level. We also mentioned last quarter that we will be doing the junior to mid-level salary hikes that we have done, you know, effective for July. That, you know, that has an impact of 120 basis points.
You know, our cost of other goods, you know, which entails some of the lab setups, tools, and other hardware that is required for some of the larger, you know, programs starting during the quarter, that has an impact of 100 basis points. So that sums up to, you know, up to 70 basis point increase in our operating margin on a quarter-to-quarter basis.
Okay. All right. Thank you. That's it from my side.
Thank you.
Thank you.
Thank you. Participants, if you wish to register for questions-
Sorry about that.
Please press star and one. Our next question is from the line of Sukkant Garg from Equible Research Pvt Ltd . Please go ahead.
Hi. So I have two questions here. One is related to the healthcare segment. Is there any loss of customer in case of our renewals? In the healthcare segment?
No, there is no loss of customer. We have had delays in the, you know, execution of, you know. Sorry, not execution, delay in start of new programs with existing customers.
Okay. Thank you. Then, my next question is, with regards to the transportation sector. So as we see the last quarter, the transportation sector has been growing pretty well, and this quarter as well, it has been, you know, there is a good growth. So how do you see this sector in the next H2 or the next year, FY 2026? Is it the same level of growth that you're going to achieve, or is it going to be upside down?
Very difficult to talk about FY 2026, the dynamics that is happening in the industry and the trends that we are seeing, right? But however, as I explained in the previous question, which Bhavik has asked, you know, the H2 for us, we are pretty confident because of the deals that we have already won and the ramp-ups that we have to do, right? And also some of the new deals that we have placed, you know, in the last quarter and ongoing deals that we are chasing this quarter also. So we see a good deal pipeline. And so I believe we can continue the growth in H2.
So, do we also see a consolidation at headcount level, or is it going to be bottomed out now and we are going to increase the headcount from now on?
You're talking of headcount?
Yes. Yes, yes.
Yeah. So we will be very cautious in adding headcount, and so we are very, very strict, you know, we will only add headcount where, you know, there is any specialized skills that we don't have to execute the projects that we have won, right? So, having said that, you know, we will add the freshers from the universities that we have hired for, you know, during the campus last year. They will start coming in in Q3 and Q4.
Is it majorly because of the consolidation of the projects that headcount has not been happening, or there are only existing projects that's been going on, due to which the headcount is stagnant?
So the headcount, we have seen a drop in the headcount because we have stopped aggressively hiring. We used to hire anywhere between 500-600 resources every quarter. That has dropped now, this quarter. So we have taken a very, very careful view of adding more headcount at this point in time, which is from a lateral point of view, right? And but having said that, from a fresher hiring perspective, we will continue to hire freshers in the H2.
No, I mean to say that if we are adding new projects and, if we are not adding the headcount, so what you want to say is the headcount that we have currently is.
Yeah, yeah. We have availability. We have a utilization of around 69%-69.5%. So we have enough headroom to manage the new projects with the headcount that is already available internally. We will still go ahead and hire only certain critical resources that we need to execute, you know, very specific projects and so on.
Thank you. Thank you very much. Thank you. That's all from my side.
Thanks.
Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Salil Desai from Marcellus Investment Managers. Please go ahead.
Thank you. Hi, Manoj. On the previous question, I want to kind of understand a little better. The whole of last year, or almost about five or six quarters now, we have added net headcount, and this quarter you seem to be turning cautious. So is there any change in the way you're looking at the outlook or in the last year, hiring pipeline was more than sufficient versus what growth expectations actually how the time goes? How should one reconcile the change in view on headcount versus growth?
You know, we have a healthy bench right at this point in time. Our utilization is only about 69.5%. So, given the overall, you know, status that we have in two of our major businesses, right, media and communication, as well as, you know, the healthcare and life sciences, we are a little cautious in adding more resources in those businesses. However, from a transportation and the industrial design business that we have, we are ramping up headcount and resources. So if you look at the overall level, you know, you might see a flattening or you might even see a dip in the headcount. But that is also because the last financial year, in Q2, we have added, you know, freshers.
We started the freshers hiring in Q2 itself. This financial year, we have pushed that to Q3.
I see. Okay. Okay, all right. And in case, you know, how would you like to comment on, say, how the overall supply side situation is? So if tomorrow, in healthcare things change and if you were to ramp up, what are the chances there could be constraint on finding the right people?
No, I think at this point in time, people is not a big challenge for the industry, so I think that's not going to be an issue, you know, going at this point in time. We can never know after two quarters what is the situation, but I think for the next two quarters, people are in the supply side should not be an issue.
All right. Okay, thank you very much.
Thank you. The next question is from the line of Moez Chandani from Ambit. Please go ahead.
Yeah, hi. Good evening, and thank you for taking my question. My first question was, that you previously said that you expected to close FY 2025 at a better growth rate than FY 2024. I want to check if that's still something that you expect to do for this financial year?
That's a very difficult question to answer at this point in time. If the Q2 performance was, you know, a notch better, we would have still been confident. We have, you know, though we have a visibility and so on, the industry cycles are so unpredictable, you know, nowadays. And, you know, what we hope to close, the deals that we are going after, we hope to close in three months is now getting pushed to six months and so on. And so there is a general slowness in the market.
But having said that, we still hope, you know, to show a superior, you know, growth in H2 to return back to our, you know, the growth that we used to happen, you know, maybe four quarters ago or six quarters ago. So at this point in time, I would say our target is definitely to go after, you know, end the year with a double digit, you know, constant currency growth. I know it is asking too much and it is tough, but what really, you know, why I'm a little confident is the sort of deals that we are pursuing and sort of pipeline that we are seeing. We could, we definitely want to, don't want to lower our goals.
We still want to go after that, you know, double-digit growth, and we'll put in all our best to see whether we can reach that.
How has growth been with our top client versus growth across the rest of the auto OEMs? And are we still seeing pressure on tier one suppliers versus the auto OEMs that we had noted previously?
So yes, I think auto OEMs are definitely, you know, growing faster than the Tier 1s, so which is positive. So I think not just the top customer, OEM customer that we have, the other OEM customers have also shown growth in the quarter. The Tier 1s, I think only a few Tier 1s I could say are showing that growth. A lot of the other Tier 1s are either remaining flat or there is some degrowth happening. But overall, at a portfolio level, the percentage of revenues from OEMs definitely has grown as compared to Tier 1s .
Understood. Thank you. And just one last question on my side. Can I get a little more details on the timelines for the large deal that we won this quarter? When do we start expecting it to contribute to revenues, and, how long is the deal for?
It's a five-year deal, and the ramp-ups would start maybe middle of this quarter, not tomorrow, but the major ramp-ups will start from January onwards.
Understood. Okay, thank you so much, and back to you.
Thank you.
Thank you. The next question is from the line of Bhavik Mehta from JPMorgan. Please go ahead.
Yeah, thank you. Can you comment on the demand trends you're seeing in the Media and Communications, because this vertical has been weak for quite a long time now? Are there any signs of this bottoming out at all, or do you think these headwinds can continue for the next couple of quarters as well?
Yeah, it is, frankly, the media communications is a bloodbath. You know, you look at any company in this area, you look at any competition, you look at overseas companies, everybody is. I mean, all of us have seen this tightening of budgets and huge amount of consolidations happening in this industry, vertical, lot of cost takeouts. The deals are primarily around cost takeouts and consolidations and so on. So I think while we are still staying afloat and, you know, what we're trying to do is to really use, you know, we have invested in a set of products and solutions and IPs.
We're really pushing some of those forward and really we are going to customers and saying that, "Hey, we can do things, you know, what do you say? In a lot more efficient manner, we can help you take you know, costs out." So those are the value propositions that we are taking to customers. I think definitely the confidence is there in terms of you know growing. But whether the growth will be significant or not, I think it's very difficult at this point in time, because most of our deals are you know comes with a huge amount of negotiation and you know cost takeout. So we will grow, but will it be a significant growth or not?
Very difficult to say at this point in time over the next couple of quarters, H2.
Okay, got it. And lastly, on the margin side, I think last time, there was a target of maintaining the margins at a very equal level. So does the target still remain or will it come down given the Q2 revenue down?
No, I think, we continue to, you know, target our margin in those, you know, expected band that we have communicated earlier also. Of course, there would be, you know, one-off blips here and there. This quarter there was a salary increase done for the junior team, but with the H2, we believe to be a better go, you know, half for us, you know, compared to the H1. So we believe that we can improve on the margins from here on.
Okay. Thank you.
Thank you. The next question is from the line of Sulabh Govila from Morgan Stanley. Please go ahead.
Yeah, hi. Thanks for taking my question. So my first question is on the transportation vertical. Just wanted to understand the large SDV deal that we had won in Asia, which is providing some growth in this particular quarter. Is this fully ramped up or it has tailwinds in the coming quarter as well?
Yeah, Sulabh, I can take that. I think we have done a reasonable part of that ramp up, but we still have some room to go.
And that would be fully done in 3 Q or that will be an increasing momentum?
I think it'll kind of peter out in about two quarters. So we should be done largely in Q3 with some amount of lift further in Q4.
Okay. Okay, understood. And with respect to the healthcare vertical, I understood that we mentioned that it is sort of bottomed out, but just wanted to understand in this key customer where we were trying for renewals and new project starts, so do we now have the green light for these renewals and project starts, or that is still pending?
We will have some partial restart this quarter. So to that extent, we have seen some visibility, and we hope, you know, by Q4 we will have, we'll be back with the full, you know, plan.
Okay. So, does that mean that, whatever revenue decline we've seen in the past two quarters, that will fully come back in a couple of quarters?
That is the focus and that is the intent, that we have.
Okay. Okay, understood. And the last bit is the on this media and telecom side, the a new program that you launched on the taking the capability from media side to telecom on this RDK Broadband implementation. So just wanted to understand how big you think this opportunity is for you can become as a percentage of revenue or of this vertical as a whole? How should one think about that?
Yeah, maybe I can take that. I think we see it in two contexts. One is that telcos are typically stayed shy of broadband and so on, and there have been only options have been either certain open standards or very proprietary devices that come from incumbent device suppliers that telcos had to adopt. I think for the first time, this offers a clear path where there's an open standard, there is global adoption, and somebody like a Qualcomm backing it up. I think we are going to see significant movement of operators to adopt this kind of technology, but you have to understand, this is all going to be CapEx linked. So to that extent, I think you will see it play out over the next two years.
So to be clear, I think the big opportunity for us is not only to support that adoption and, I think the biggest gain for us would be really our entry into telcos using this venture. So in that sense, for us, it's a very strategic long-term play rather than anything that, we see in the very short term.
Okay, understood, and is there a particular billing model or monetization in this, which is involved? How should one think about that?
No, at this time, it is still clear product engineering, right? So there is no fancy model that comes in.
Yeah, it will be outcome based, or it will be time and material. It's a standard model.
Okay. Understood. Thanks for taking my question.
Thanks a lot.
Thank you. The next question is from the line of Kamlesh Kumar, who's an individual investor. Please go ahead.
Hi. Am I audible?
Yes, Kamlesh.
Yeah. First of all, I convey my condolences on the sudden death of Ratan Tata. It is a loss for not only Tata Elxsi, but the group companies, the entire Indian population. Such a great leader. Okay, coming back to the question, I was just going through the presentation. I saw that there's major revenue coming from Europe and U.S., which is close to 70%. And considering the job loss data which is released today, the job loss claim data, which is released today, there is an increase of around 20,000. So do you foresee any impact due to any slowdown in Europe or America on Tata Elxsi outcome in Q3 and Q4?
Yeah, maybe I can take that. I think typically we are dependent on, if you understand our company profile, I think we excel in offshore delivery. So to that extent, we typically engage with customers with the promise of fantastic engineering delivered with talent that can scale from India. And our on-site revenues are fairly minimal, and they're predominantly driven to support projects that we already won. Because the model of delivery also is a little bit ownership-driven. So to that extent, Europe and U.S. job loss data does not have as much of a consequence. It should be a bit of a tailwind, because that means that there are more jobs coming our way.
Yeah, thank you.
Thank you. The next question is from the line of Rajesh from Zenith. Please go ahead.
Hello, am I audible, please?
Yes, please go ahead.
Yeah, good evening. First of all, congratulations for a good set of numbers in this challenging environment, and I must appreciate and thank all the management team over here for the continuous effort. My question would be, like, do you foresee any opportunities in the defense and semiconductor sector? And do we have the capabilities or in case not, are we trying to build any capabilities in that area?
Yes, I think both you know defense and the semiconductor industry is of interest to us. So we've been working with the various DRDO labs and ISRO and you know the defense establishments on projects from time to time. Given the focus of the Indian government in a lot of you know new projects, especially in the defense you know from India and India-based companies and so on. So we believe it's a good opportunity especially with the capabilities that we have in you know in imaging in you know hardware designs in the wireless technologies.
There are a lot of things that can, you know, most of the devices, what do you say? Electronics that come out are a combination of many of these technologies. So we are actively looking at, you know, opportunities that come this way. And I think that is definitely an area of, you know, focus for us. Similarly on the semiconductor side, you know, there's a lot of investments coming in in fabs and foundries and so that is another area we would definitely look at to see. We are currently engaged primarily in helping semiconductor companies more on the software application side.
Mm-hmm.
But having said that, that is an opportunity for us to really look at as at chip design. I mean, for many years, we've had that semiconductor. We had a unit that usually focused on chip design, and we actually tapped out, you know, chips, SoCs for our customers, right? Maybe ten years ago.
Right.
That definitely, we know the domain, we know the field. Definitely an opportunity for us to really get back and see you know what sort of investments we should be making, and rebuilding some of the capabilities that got sort of let go right at that point in time. Yes, I think both of these are okay.
But the size is very huge, I think, so as I understand.
Yeah, it is. I mean, each of these come with their own complications, right?
Okay.
These are really, you know, high-tech areas, right? They're not run-of-the-mill projects and so on.
Mm-hmm.
So we really need to have that capability to really enter the field and stay in the field, right? So that's something that we are evaluating from a future perspective.
Okay. Yeah. Thank you, and all the best. Yeah, thank you.
Yeah.
Thank you. The next question is from the line of Harshal Sheth, who is an individual investor. Please go ahead. Mr. Sheth, your line is unmuted. Please proceed with your question. As there is no response from the line of current participant, we'll move on to the next question. Next question is from the line of Vinesh Vala from HDFC Securities. Please go ahead.
Yeah, sir. Thanks for the opportunity. Just one clarity that you told us, we are bottoming out in Q3, and our pipeline remains strong. So what's the overall view on that?
Sorry, your voice was sort of echoing. What was the question once again?
Hello. So if I heard it right, you told that we are bottomed out in Q3, expecting to bottom out in Q3 for the healthcare vertical. Am I right?
Yes, that's correct.
Okay, okay. So, another question I was having that, as you told that you, OEMs are growing faster than tier one. So what would be the percentage of OEMs of the total transportation?
Today, I mean, this quarter, we are at 68%, from an OEM perspective
of our you know overall transportation revenue.
Okay, so it is 68%. And we expect that to go ahead?
Some of the large deals that we have won are all OEM deals. So, yes, over a period of time, yeah, next couple of quarters, we expect especially the OEM business to grow.
Okay, great. Thank you. That's all on me.
And just, Vinesh, the bottoming out was referring to Q2, not Q3. Just to clarify for healthcare, right?
Thank you. The next question is from the line of Niket from MO Asset Management Company. Please go ahead.
Yes. Thanks for the opportunity. I just two questions. One, if you can just, give some color on how the JLR ramp-up has been happening, and what do you expect for the H2 of this year?
JLR has been, you know, a steady customer of ours. And, you know, a lot of new age capabilities that they have built simply built based on the work that we have been doing with JLR, including software-defined vehicles and, you know, the complete EV, the powertrain area. So a very, very strong, you know, lock-in with JLR, right? So that's been a fantastic journey, you know, for us. Having said that, you know, we all know JLR is also going through its own, you know, issues. Their sales are going down. So, while JLR continues to be an important customer, we definitely, you know, have built other OEM customers. And, the H2 growth for us will definitely come.
Of course, JLR will continue to grow, but there'll be faster growth in other OEMs.
Got it. Got it. And the second question was, you know, if you look at the business model of Tata Elxsi, obviously, auto has been a consistent growth driver for you, with a bit of volatility, on healthcare and media and entertainment. Do you think that while these are three major verticals that you continue to run, of which two continue to remain fairly volatile, you would need one or two new verticals to come, and ensure that, you know, the growth is much more, I would say structural rather than a bit cyclical, at least on, you know, a couple of those segments that I mentioned about.
How would you look at newer verticals being added or any M&A activity kind of opportunity within the existing verticals to ensure that the growth is slightly more higher than what you are currently at?
No, you know, I agree. I mean, it's not as if transportation was always firing, right? During COVID, if you look at it, transportation segment actually went down, and it was the media and communication and the healthcare that actually grew at that point in time. So, I think we are very much aware, but I think that is also the strength of this sort of, you know, three verticals that we have, right? The sort of orthogonal and, you know, having said that, we are looking at, you know, newer areas, newer industry verticals to get in. There are many options that we have been evaluating.
So yeah, so I think hopefully, from our next financial year, you know, strategy perspective, definitely there's a focus in building newer verticals. We will announce that at the appropriate time.
Got it. Perfect. Thank you so much, and I'll come back and in queue.
Thanks.
Thank you. The next question is from the line of Manik Taneja from Axis Capital. Please go ahead.
Thank you for the opportunity. My apologies, I joined the call late. I actually wanted your inputs on a couple of things. Number one thing is we've seen headcount come off in the current quarter. If I recall correctly, last quarter, while you've been talking about budget investments from a headcount standpoint this year, but you've been talking about hiring freshers in the current quarter and thereby expect the headcount to go up. If you could talk about the plan on that front. And also, with regards to JLR, if I go through the annual report, the approval that one has taken in terms of labor party transaction limit, that suggests that JLR will essentially grow in excess of 50% this year.
Are we on track with some of the challenges that you spoke about in case of JLR in the near term? And also, how should we be thinking about the ramp-up on the auto OEM deals, given the way headcount essentially has been coming? Thank you.
Yeah. So coming to your fresher, you know, the question regarding freshers, no, we have not added any freshers in this quarter, in Q2. The fresher addition will happen in Q3, right? So that is about the freshers. From a JLR perspective, you know, what we have taken, the omnibus approval that we've taken is INR 1,000 crores. And that is really, you know, we looked at it from a two-year perspective, right? So that we don't need to go again and again to the investors for approval. And the intent was never to say that, "Okay, JLR will be a INR 1,000 crore in this financial year." So I think the JLR has been growing pretty well for us, but still there's a long way to go to achieve the INR 1,000 crore number that you're talking.
That will be a good target for us, you know, eventually. Was there any other question?
So my question was with regards to how should we be thinking about the growth trajectory, given the headcount has been coming off the last couple of quarters? And the last question from my end, you had spoken about FY 2025 being a better growth year than FY 2024, when you had announced your full- year numbers. Clarification on that is, are we looking at this from a constant currency growth, rupee number, dollar number? Because if I do some math, the asking, the ask rate for second half is extremely high if I seem to be on constant currency growth.
So I think we've discussed that in a previous question as well. Yeah, so when we looked at the end of Q1, we were pretty confident in terms of you know, being able to better our growth in the last financial year. However, with now, you know, H1 gone, while the intent is still there to see if we can, you know, get to a double- digit, you know, constant currency growth, I know the ask is huge. But the good part is that, we have won certain deals and, you know, we'll have to ramp up them over the next, you know, half year.
On top of it, there are other deals that we have, you know, that we are bidding for. That also gives us a good feel that, look, it is possible. Having said that, I know it's an extremely difficult task, but we don't want to change our goals, right? Our short-term goals, now. We will take a look at it at the end of Q3 and see where we stand.
Manoj, I know I'm pushing you, but given the state of news flow from global auto OEMs in the recent months, and each of them essentially is in their own specific volume-related challenges or optics on the EV side, do you think given the tailwinds that this industry segment has enjoyed in the last three, four years, we could probably go through a phase of slow decision-making and reprioritization at customer end and thereby some pressure for the auto vertical segment?
It is, it is true. I say, I think, I think this question was also asked earlier. You know, so it is true that the general auto industry is going through a slowdown. You know, EV sales are not picking up. All of that is true. But having said that, you know, there are deals that we have already closed that, ramp-ups are happening. So the confidence comes from the fact that, look, there is a visibility that we have, and we are also looking at new deals, you know, if I look at the pipeline that we have. And the good part is some of these deals are not necessarily from, you know, U.S. or, Europe OEMs.
There are substantial deals in Asia and Japan and so on, where we see that, look, many of these, some of these OEMs have been late to the party, and so they are in a hurry to catch up. So we would definitely see some of these deals, you know, closing. And again, you know, we don't need, you know, 20 deals to close in our favor, right? All we need is one or two large deals every quarter, you know. So I think we are there. We are seeing some of those deals. And even if the industry is going through a lot of turmoil and so on, all we need is those one or two deals that will really help us and keep us afloat.
Thank you, and all the best for future.
Thank you.
Thank you, Manik. Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Wonderful. Thank you so much, you know, for all the questions. We will get back again end of Q3, and hopefully we will have, you know, a better growth story at that point in time. Thank you so much, and good night, good evening. Take care.
Thank you. On behalf of Tata Elxsi, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.