Key takeaways of the call

The company has delivered steady growth across businesses and geographies.

The company has won some large deals in both automotive and Media & Communications verticals and added new customers across geographies. The performance was a combination of mining existing customers as well as new customer additions.

The 7%qoq growth in revenue is largely due to combination of new deals as well as execution of deals slipped from Q1 to Q2.

The share of top client (JLR) stood at 16.3% in Q2FY20. The share of contribution by top client to top-line stabilized at around 16% compared to steady decline since Q1FY19. The company has not lost wallet share but the client has cut down his budget.

The Embedded product design (EPD) vertical registered a growth of 5.3%qoq in Q2FY20. Similarly the industrial Design & visualization registered a growth of 12.9% qoq and systems integration up by sharp 27%qoq.

In EPD, the transportation vertical saw a sharp recovery from last quarter with a growth of 9%qoq. It overcomes the decline with the top customer that impacted the results of the company in the first quarter of FY20. The company lost a quarterly revenue of about Rs 30 crore in JLR and hope things will improve in H2.

The media and communication registered a steady growth of 5%qoq. But there is small blip in case of Healthcare but that is largely due to delay in paper work impacting conversion of deals. However the company expects healthcare to definitely return to growth in Q3FY20.

Excluding the retiral benefit the staff cost in absolute terms for Q2FY20 was almost equal to that of Q1FY20.

The salary hike proposed in Q2FY20 was postponed and will come to effect in Q3FY20 onwards. The increase in salary will be about 7-8%.

In Tata group extending the retiral benefit available at group level for the CEO is left to the decision of the BoD of the company. And the BoD after considering the service of outgoing MD has decided to extend it and it was accounted.

The company has time till end of the fiscal to decide whether to adopt new tax rate or not. So the effective tax rate of the company will be about 31-32% till the decision is made.

Strive to maintain an EBITDA margin of 22-24%. Similarly strive to achieve double digit sequential growth in revenue.

The company has visibility of new deals in H2FY20. Q3FY20 will be soft considering holidays and furlough.

The company clearly sees growth despite softness in automotive segment. With in transportation, the non automotive segments of rail and aero are witnessing steady growth. Similarly the non transportation business also there is visibility.

Two to three years back the deal size looked at by the company was around USD 100k-500k but the company now looks at deals in the range of USD 10-20 million. While the USD 500k to 1 million deals are of 6-18 months. In engineering business in case of multiyear deals if the macro environment is difficult the axe will first land only on R&D and that hits the company.