Tata Technologies Limited ($TATATECH)

Ladies and gentlemen, good day, and welcome to Tata Technologies 4Q FY '26 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Vijay Lohia, Head of Investor Relations at Tata Technologies. Thank you, and over to you, sir.

Thank you, Saber. Hello, everyone, and welcome to Tata Technologies Fourth Quarter of Fiscal Year 2026 Results Call. I'm Vijay Lohia, Head of Investor Relations. Joining me today are Mr. Warren Harris, CEO and Managing Director; Ms. Sukanya Sadasivan, Chief Transformation Officer; Mr. Uttam Gujrati, Chief Financial Officer; and Ms. Geena Binoy, Chief Human Resources Officer. We'll begin today's session with an overview of the company's performance from our leadership team, followed by a Q&A. Any forward-looking statements made during this call should be considered in the context of the risks outlined in the second slide of our quarterly fact sheet available on our website. Our press release and earnings presentations have been submitted to the stock exchanges and are also available on our website. We hope you've had a chance to review them. With that, let me now hand over the call to Warren.

Good evening, everyone, and thank you for joining us today. Let me begin with the fourth quarter and what it represents for Tata Technologies. In our previous interaction, we had guided that we expected Q4 to deliver more than 10% sequential revenue growth alongside an operating margin exceeding 16%. I'm pleased to say that we delivered on both of these commitments. Q4 revenues grew by nearly 12% quarter-on-quarter in constant currency, with services showing a similar step up and margins improved sequentially, reflecting operating discipline and the early benefits of operating leverage as volume scaled. This performance marks a clear inflection point for the business after a mixed first half. And importantly, the growth we saw in Q4 was broad-based rather than being driven by a single customer or program. Automotive showed renewed momentum with non-anchor customers growing meaningfully faster driven by increased activity across multiple European and global OEMs. Aerospace and industrial heavy machinery continue to scale, reinforcing the diversification, we have been deliberately building over the last 2 years. Technology Solutions also delivered strong sequential growth as customers move back from planning into execution. At the same time, we exercised discipline on costs, resulting in margin improvement as we continue to invest in capabilities and capacity. As we've said consistently, we made a deliberate choice earlier in the cycle to protect our delivery engine and invest through the downturn rather than optimize for short-term margins. As demand normalizes, those decisions are now beginning to translate into healthier economics. Beyond the quarterly numbers, I want to step back and talk about what has structurally changed in how customers are engaging with Tata Technologies. Through March FY '25 and the first half of FY '26, geopolitical uncertainty and in particular, the impact of tariffs and related trade actions that many automotive and industrial heavy machinery OEMs to pause for or resequence product levels. As a result, line system level awards at full vehicle programs were largely absent from the market during that period. As uncertainty began to ease in the second half of FY '26, customer decision-making restarted and the shift has been meaningful. Today, we have visibility into multiple full vehicle programs across our pipeline. At least 2 of these were closed during Q3 and 4, and we expect at least another 2 to close over the next 8 to 12 weeks. These are multiyear multi-domain programs, typically extending 18 to 36 months with deal values in the tens of millions of dollars. These are not point solutions. Importantly, we do not view a full vehicle program as a stand-alone revenue stream. We see them as a strategic wedge, an entry point that allows us to embed ourselves deeply into the customers' product life cycle. What's positioned at that level, we can expand systematically across engineering, embedded software, manufacturing, digital continuity and ongoing transformation services over the life of the product. What is driving this shift in customer behavior is the credibility of our value proposition. OEMs today are looking for partners who can deliver China-like speed and cost efficiency while meeting global quality, governance and reliability standards. We are increasingly being recognized as one of the few players who can do this at scale. That capability is being enabled by a sustained commitment to process rigor and continuous improvement and by accelerated deployment of AI across our delivery model, including generative and agentic AI to improve productivity, consistency and predictability across complex programs. So for us, AI is not a concept or an experiment. It is becoming a core execution enabler, helping compress cycle times, improve quality and run large multi-geography programs with greater confidence. Taken together, our Q4 execution against guidance, the nature and scale of our full vehicle programs we are now in and the visibility we see in the order book, it reinforces our confidence in the outlook for FY '27. We continue to expect double-digit organic top line growth, excluding any inorganic contribution from ES-Tec and we expect to exit FY '27 with an operating margin run rate that exceeds 18%, driven by operating leverage, portfolio mix improvement and disciplined execution. Let me now provide some color on high-level performance. In Q4, services revenue grew 12% quarter-on-quarter in constant currency, driving total revenue growth of 12.4% for the quarter. Growth was broad-based across services, supported by deal ramp-ups, normalization and a few large customer engagements and improving decision velocity across OEMs, particularly in Automotive, which grew 13.6% over Q3 in U.S. dollar terms, driven by solid performance across both anchor and non-anchor clients. The aerospace and industrial heavy machinery verticals recorded 4.6% growth quarter-on-quarter, underpins by successful execution of key projects across our service lines. Our Technology Solutions business saw a 12% sequential expansion. The products business saw a decline of 10%, coming off a seasonally strong Q3 and reflecting the normal phasing of customer PLM budgets. The Education business, however, saw a strong finish to this year. delivering sequential growth of 36% on the back of improved demand traction and steady execution across programs. From a profitability standpoint, our EBITDA margin for the quarter came in at 16%, representing a roughly 200 basis points improvement from Q3. Let me now briefly touch on deal momentum. Deal activity remained strong during the quarter with the closure of 4 large deals in Q4, followed by 2 milestone wins subsequent to the quarter end in April. These deals include long-term strategic engagement with the North American commercial vehicle OEM to deliver end-to-end expertise across PLM, testing and quality assurance, MES and project management. A collaboration with the European automotive OEM to design, develop and integrate Advanced Comfort electronics, features across multiple vehicle programs. Engagement spans systems engineering, software development and integration supporting the OEM in enhancing in-vehicle user experience while enabling scalable ulcerative posture in the market. At the same time, we are continuing our investment in AI and is beginning to change how work gets done, improving speed, quality and decision-making across the value chain. And we provide a little bit more color on these assets. Over the past 18 months, we've built a structurally more resilient and diversified business, anchored by a steadily improving mix and the addition of marquee global OEMs, such as BMW, Volkswagen and Airbus. As highlighted during our IPO, Germany was a strategic gap in our portfolio, and we've now firmly addressed this through the BMW joint venture and the ES-Tec acquisition. These initiatives, together with the addition of a large Japanese OEM in our customer mix last month, meaningfully broaden our global footprint, reduce resilience on anchor customers and position us for more balanced growth over the medium term [ older ]. Our focus on embedded software and services has improved our portfolio mix, and we are now uniquely positioned to address the mechanical, digital and embedded requirements of our customers. Revenue from our embedded software segment has grown at a solid 60% CAGR in the last 3 years. Our segment mix has continued to improve with the strengthening presence and strong growth across our aerospace and ISM verticals. In the last 4 years, our aerospace revenues have grown 8x and is now at over $40 million in terms of annual run rate. We expect the strong growth momentum to continue. We've established clear focus areas to embed AI across the automotive NPI, value chain, spanning engineering, manufacturing supply chain and the aftermarket. Underpinning these capabilities is our proprietary AI platform, chromosome AI, which acts as an orchestration layer across product development processes. By integrating AI seamlessly into each stage of the life cycle, the platform enables workflow automation, fast decision-making, a cross-functional collaboration across programs and geographies. Chromosome AI is designed to deliver tangible outcomes, improving engineering efficiency, reducing costs and compressing product development time lines, while providing a scalable foundation for sustained multiyear growth from digital and AI-led engineering services. In summary, Q4 was not just a strong finish to the year. It represents a turning point. We enter FY '27 with stronger momentum deeper customer engagement, increasing strategic relevance and a clear path to the sustainable growth and margin expansion. With that, let me hand over to Uttam to take you through the financial performance in more detail. Thank you.

Thank you, Warren. Good day, everyone, and thank you for taking the time to join us. In continuation to the business update shared by Warren, let me share with you the financial performance in the fourth quarter of fiscal '26. FY '26 was a year of transition and deliberate execution for Tata Technologies. Against a backdrop of uneven demand cycles across automotive and industrial sectors, we focus less on chasing short-term volatility and more on strengthening the quality, resilience and sustainability of our revenue engine. That discipline is clearly visible in how we closed the year. In Q4, we delivered strong sequential momentum, marking a clear inflection after a softer first half. Services revenue grew 15% Q-o-Q, and 11.9% in constant currency to INR 1,220 crores driving total revenue growth of 15.1% reported and 12.4% in constant currency to INR 1,572 crores for the quarter. Notably, the reported revenue growth exceeded the 10% guidance we had shared last quarter. This performance reflects a full 3-month contribution from ES-Tec compared with just 1 month in the prior quarter. On an organic basis, the total revenue from operations grew 8.8% in constant currency. I am particularly encouraged by the quality of our revenue growth. which were diversified across our services portfolio, spanning both anchor and non-anchor clients as well as automotive and nonautomotive segments. Technology Solutions segment reported revenues of INR 353 crores for the quarter, led by a strong performance in the education business, which grew 40% Q-o-Q. This reflected a strong close to the year, supported by improving demand momentum and consistent execution across key programs. Stepping back to the full year FY '26 has been marked by a meaningful shift in the quality and composition of our deal pipeline. We focus on deepening client relationships evolving our engagement model and sharpening our positioning in areas where customer spend is structurally migrating, particularly embedded systems, software-defined vehicles and digital continuity. As the year progressed, this repositioning translated into improved deal velocity and broader participation across our customer base, reducing dependence on any single program or account. The wins secured during FY '26 reflect a more diversified and resilient portfolio and position us well as customers transition from planning to execution. Looking ahead, we remain confident in our outlook and continue to guide for double-digit organic revenue growth in FY '27, alongside meaningful bottom line expansion, supported by an improving margin profile and increasing contribution from the BMW joint venture. From a profitability standpoint, our EBITDA stood at INR 252 crores up 30.7% sequentially. EBITDA margins for the quarter came in at 16%, representing a roughly 200 basis point improvement from Q3. As a reminder, we had made a deliberate choice to preserve delivery capacity and continue investing through the cycle rather than optimize for short-term margins. Now as the demand environment begins to rebound, we are increasingly seeing the benefits of that decision flow through in the form of operating leverage and margin improvement and we remain confident in the underlying trajectory for continued margin improvement as volumes scale through FY '27. Our operating profit or EBIT increased by 27.8% sequentially, reaching INR 220 crores. Our joint venture with BMW has continued to grow at a healthy rate. Our share of profit on the JV stood at INR 6.6 crores in the quarter, and the net benefit stood at INR 19 crores. Other income came in at INR 31 crores versus INR 32 crores in the previous quarter. As you will recall, we had recorded a onetime exceptional expense of INR 140 crores in the previous quarter related to provisions for employee benefits following changes introduced under India's new label. Upon further assessment and greater clarity on implementation, we determined that the actual impact would be lower than initially estimated. Accordingly, we reversed provisions amounting to [ INR 56 crores ] in Q4, resulting in a onetime exceptional gain for the quarter. Excluding this nonrecurring item, profit before tax grew 21.6% sequentially to INR 272 crores and net income came in at INR 163 crores. Our Board has recommended a final dividend of INR 8.35 per share for FY '26, representing a payout of 62%. In addition, the Board has proposed a special dividend of INR 3.35 per share, taking the total dividend for the year to INR 11.7 per share in line with the dividend paid last year. Both the final and special dividends are subject to shareholder approval at the forthcoming Annual General Meeting. Our balance sheet reflects strong financial health with a solid cash position, robust liquidity and a favorable DSO level. At the end of the quarter, the net cash position stood at INR 1,188 crores compared to INR 524 crores at the end of Q3. Our collection efficiency improved during the period with total DSO, both build and humbled coming in at 95 days at the end of March, an improvement from the 111 days that we reported at the end of December. Our billed DSO improved from 69 days to 59 days while the unbilled DSO were at 36 days compared with 43 days. For the fiscal 2026, the business generated free cash flow of INR 742 crores representing a healthy EBITDA to FCF conversion of 87%. Let me now share with you some color on the operational metrics. At the end of the quarter, our total head count stood at 12,646 associates, representing a net addition of 66 employees sequentially. This reflects our deliberate decision earlier in the cycle to protect and strengthen our delivery engine and continue investing through the downturn rather than optimizing for short-term margins. As demand conditions continue to improve, we will remain selective and disciplined in our hiring, focusing on strategic areas aligned with our growth priorities. Over the past 12 months, voluntary attrition increased marginally to 16.2% compared with 15.8% in the previous quarter. This remains within a manageable range and restricts normal movement in a gradually improving and competitive talent environment. We continue to remain focused on employee engagement, career progression and targeted retention initiatives and are confident in our ability to manage attrition effectively as we move into FY '27. We continue to place strong emphasis on building internal talent capabilities to meet the evolving needs of our workforce and create a sustainable pipeline of skilled professionals. During the last fiscal year, our in-house technical learning platform, [indiscernible], reached an important milestone, delivering more than 796 technical modules to over 11,000 unique employees, covering approximately 85% of our workforce. To accelerate capability building in next-generation skills critical to our growth, we rolled out focused learning programs in areas such as Gen AI, software-defined [indiscernible] and cybersecurity. I am pleased to share that more than 50% of our engineering workforce is now AI-ready, positioning us well to drive innovation and deliver greater value as the technology landscape continues to evolve. In conclusion, as we enter the new fiscal year, we do so with a stronger sense of momentum, underpinned by a solid finish to the year and improving visibility across our pipeline. We are seeing healthier customer engagement and the more constructive demand environment, which gives us greater confidence as we look ahead. Our focus remains firmly on disciplined execution, staying close to our customers driving timely decision-making and consistently converting opportunities into outcomes. At the same time, we remain committed to maintaining strong operational rigor and financial discipline, which we believe will continue to support sustainable growth and margin expansion over the medium term. With that, we can open it up for Q&A.

[Operator Instructions] Our first question comes from the line of Chandramouli Muthiah from Goldman Sachs.

My first question is just around the Q-o-Q revenue growth. I think last quarter, you had guided for 10% Q-o-Q revenue growth understanding was that half of that roughly might be organic and the other half might be inorganic. I think you mentioned in the prepared remarks that you have done close to 8.8% Q-o-Q organic revenue growth. So I just want to understand the breakdown of the upside. How durable it is? And just to wait to that, if you could share any color on the JLR anchor customers and how recovery has been for you in that account since the cyber issues and any build back help that you've been able to provide in addition to what [indiscernible].

Well, as we commented, the growth was relatively broad-based against the 12% at 8% because that was organic, about 4% was from ES-Tec. That was in line with the expectations that we had when we completed the ES-Tec transaction in November and certainly was part of the guidance that we provided in January. Of the 8% organic growth, the improvement was relatively broad-based across sectors and certainly between our anchor and automotive customers. And we certainly saw JLR return to the normal run rate that we had before the cyber attack. But we've also secured new deals across both our anchor accounts and our automotive non-Tata group accounts. And so we've seen growth on the run rate that we were maintaining before the cyber attack in September and October. So to add to the question about sustainability, we are very confident that what we established in Q4 represents a platform from which we can go on and deliver the double-digit organic growth that we previously committed to. And that, of course, is -- will be complemented by the contribution that will come in from ES-Tec.

Got it. That's helpful. My second question is just specifically on ES-Tec. So I think with the European acquisitions, it take some time to extract synergies out of these transactions. So I just want to understand now that we've already sort of integrated the asset, and it's been 6 to 7 months since we started the whole process, just want to understand from what you've seen so far in the company, where you see both revenue and cost synergies? And what sort of time frame you would expect to start potentially [indiscernible] some of those synergies for the combined business?

Well, the gross merger integration plans with ES-Tec are very much on track both Uttam and I were in [indiscernible] couple of weeks ago to assess not only the cross-sell opportunity that we're looking to drive at VW, but also to assess the synergies that we've got within the Tata Technologies customer base. I'm delighted to say that the business plan that they've committed to is very much being supported by our teams and their teams and businesses has already been won, and we are looking to get to build upon that. So as of right now, despite the announcements that are coming from the -- some of the European OEMs, which could in other circumstances somewhat of a headwind effect. We're seeing the business plan being delivered and aware it's consistent with the plan that underpinned the acquisition in November. So we're very much on track. Now as far as the synergies are concerned, again, we're looking at that in 2 ways: our ability to be able to cross-sell into VW specifically and our ability to be able to expand our portfolio of services into our existing customer base. And we have demonstrated tangible progress and they've got proof points against both of those topics.

Got it. That's helpful. And just my last question is related to one of the points you just made. So over the past 4 to 5 months, we've seen fairly large EV project-specific write-downs at [indiscernible], at Ford, GM and in some ways of [indiscernible]. But you did mention that you continue to deliver on some of your plans, you are seeing an [ infection ] in the business. And anything over the past 18 months, we've come to appreciate that there are other projects beyond spending that drove a lot of the industries up cycle a few years back. If you could just share some color on what the sort of powertrains you're seeing on some of these full vehicle wins and what are some of the other allied non-EV aspects of some of the automotive business that's giving you confidence on this being a turning point into FY '27.

Our view in terms of the write-offs is that I don't think we should be too distracted by the cleaning help of balance sheets that are going on in Europe and in North America. I think the more telling trend is the fact that most of the non-Chinese OEMs during the period of uncertainty and during the period when -- many of those organizations were grappling with the impact of tariffs. New products were not getting invested in. And I think we've seen that kind of latent demand to invest in new products build. And over the second half of last fiscal year, we're seeing some of those decisions being discharged. Now the portfolio of propulsion systems is much more balanced today than it was, say, 2 years ago when everybody was all in on EVs. But the good news for Tata Technologies is that our customers are investing, and we're relatively agnostic in terms of propulsion system. So whether it's a traditional ICE vehicle, whether it's a plug-in hybrid, whether it's a range extender or whether it's a full battery electric vehicle, we're engaging with our customers in all of those areas. And again, the good news is that the customers are making decisions. And I'll reinforce the importance of the full vehicle program that we've won with the Japanese OEM. The Japanese OEMs are -- they have very, very high standards and their expectations for all partners are very, very high. So the fact that we've been entrusted to where to take on the responsibility for a full vehicle program that includes a top out and adjustments that we need to make to an existing platform. I think it's proof positive that our value proposition is resonating across the market. And I think this is one of the reasons that we have been so bullish not just about the last 6 months, but about the prospects that this represents for the coming fiscal year. We believe because of our value proposition, we have a seat at the table with our customers, we're influencing decision-making, and we're intersecting with decisions before that cascades down to the extended supply chain.

[Operator Instructions] Our next question comes from the line of Bhavik Mehta from JPMorgan.

So my first question is around just curious to know how the client conversations have evolved over the past couple of months since the Middle East crisis, the bigger [indiscernible] there have been [indiscernible] supply disruptions for the auto OEMs, right? So how are time thinking in this environment? Are they still willing to continue the R&D spend? Or is there some fall we are thinking about given that situation?

Yes, that's a great question. I think one of the things that is not being talked about as far as the Middle East is concerned, is the likely impact that what's going on there is going to have on commodity supply chains and particularly the supply of aluminum and plastics. And I think that is likely to impact pricing for our customers, and it's likely to impact supply and their ability to be able to build. And so I fully expect discretionary spend amongst our customers to tighten if the Middle East crisis continues to extent. Now having said that, I don't expect that to impact CapEx or indeed the commitments that are being made to new products. As I said before, most of our customers, whilst they've been grappling with the impact of tariffs have been pausing and delaying decision-making and, in some cases, programs. That demand and need to invest in what will define their competitive position in the future, is really defining the type of conversations that we're having with our customers. And again, we've modeled the impact of the Middle East. We think we factored it into our guidance, and we're fully confident that the indirect impact of what's going on out there will not undermine or in any way, challenge the double-digit expectations that we have for this year.

Okay. Got it. The second question is on the BMW JV. If I look at the share of profit on that JV volume increasing every quarter, but this time, you've seen a blip, it come down from INR 7 crores to [ INR 10.5 ] crores. So any particular reason for that and how to think about it going forward?

Yes, sure. So our growth in the BMW JV continues to expand as we have said. This was more of a 1 quarter phenomenon where in quarter 4, there was a certain true-up of the whole year expenses. So it's an anomaly. I would not guide to any degrowth that we see in the margins for the share of profit from there. So we continue to be bullish about the way our contributions with BMW JV.

And just to reinforce that, the head count and the revenues from the JV continues to point in a very positive direction as far as growth is concerned. So to Uttam's point, we fully expect after the or impact of the true-up, we expect to get back to the run rate that we were previously at before that.

Okay. And just lastly, on the margins. Can you explain the bridge to go from 15% EBITDA currently [indiscernible] over the next 4 quarters? Obviously, operating one of the big [indiscernible] outside of that, in terms of [ HG ] and in terms of gross margin, anything you can expect?

So let me take that up. Largely, the operating margin improvement in the year will be driven forced by the robust growth that we expect in our services business. As already outlined, we retained some of the capacity, and we have been investing in growing the talent which will support towards the new business that we anticipate to win and close in this year. So therefore, volumes are something that we continue to drive. Over and of that, our standard levers around offshore, the mix improvement, the pyramid will continue to support the efficiency that volumes will bring to us. So clearly, while the routine operating levels are in place, but volume growth together with them will help us drive coming back to an exit of 18% by the time the end of the year.

I think the other thing that I would reinforce is the growing impact of AI. We are deploying AI across all of our delivery LOBs and across the enabling functions and have fairly aggressive targets in terms of the unit cost of delivery in each of those areas and as part of our margin walk over the next 12 months.

[Operator Instructions] Our next question comes from Karan Uppal from PhilipCapital India.

Yes. Congrats on the set of numbers. Warren, first question is for you. You mentioned about 4 multiyear deals, which you have gone and 2 are also in the pipeline. So is there any geographic trend? Is it that North American OEMs are spending more than OEM? You also mentioned about [indiscernible]. So any particular trend to highlight in North America versus OEM? How they are thinking about that trend? And second question is in terms of European OEM, offshoring was a major part of their spend, which was benefiting most of the Indian vendors? Is that trend accelerating now [indiscernible]?

Okay. In terms of the large deals that I celebrated I think the good news for us is that, again, it's broad-based. And that is not just sectorially that is not just from a client perspective. It's also from a geography perspective. One of the PLM deals was in the United States, the other was in Europe. We've celebrated the full vehicle deal in Japan and we are developing traction across, I think, almost every country that we have a presence at the moment. And one of the things that we shared with our Board today the improvement that we're almost seeing in every geography. And so for us, that's very encouraging. And it's something that we expect to continue. We've factored that into our budget for this year. And certainly, the forecast that we have for the first half of the year is very much consistent with that. As far as European OEMs are concerned, and I'll specifically point to Germany. I think one of the things that we are seeing is somewhat of a macro trend is that the German OEMs have traditionally surrounded themselves with local engineering and IT service providers and have been somewhat reticent to embrace the contribution from organizations like ourselves that have a significant presence here in India. And we're certainly seeing that change. I think the announcement that we made 18 months ago with BMW is very much a signal to everybody else. And so we are in advanced discussion with a number of OEMs and also Tier 1s in the German market about helping them diversify and balance their topology of delivery to include a significant presence in India. So that macro trend is something that is tangible and something that we are building a response to. And I think, again, given the proof points that we've got in and around engagement by the BMW joint venture, I think we have a very strong story to tell us as far as that is concerned.

Okay. Great. Another question was on the Aero business. You mentioned that Aero business is now at [ 40 million ] annualized run rate. Did you also mention about the segments which you are contributing to this? And what's the outlook for FY '27? And a related question is that would Airbus have a lion's share in this or is it not [indiscernible]?

I think if we look at where it's coming from, Airbus is certainly a flagship account for us as far as the aerospace business is concerned. But we're also working with the propulsion and engine manufacturers in North America and we have a strong and growing relationship here in India with Air India as it builds its MRO footprint out in Bangalore. And as it looks to increase the number of aircraft that it's got that is flightworthy. And so the Aerospace business is certainly being propelled by our involvement in the EMS acute program at Airbus, but we've leveraged that endorsement and the tailwinds from the influence that the group is now starting to drive into aerospace to grow our business in a relatively balanced way. There are pockets of opportunity that we expect to further pursue in the next couple of years, but I'm very, very pleased with the consistent ground and the improvement in capability that we've been driving for the last 4 years. And in the same way that are bullish about the entire organization of super, we're excited about what we're doing in Aerospace.

Okay. Just the last question on the guidance of double-digit growth, organic growth for next year. So it is going to be double digits across both on anchored as well as on anchor clients within automotive?

Yes. It is growth that we expect to drive both inside of the group and outside of the group. I think one of the things that I think we shared with you about 12 months ago was the work that we've done to really reinforce the commitment that we're making to our strategic customers. And our top 20 customers now make up almost 88% of our business. And what we're seeing through the investments that we've made and with the type of business that we are securing is real influence at the C-suite level. And that manifests itself in terms of some of the large outsourcing projects that we've referred to, particularly full vehicle. But because of the nature of decision-making around those things, it affords us influence across the entire requirement of the manufacturing customers that we are working with. And so our confidence in double-digit growth is really informed by the knowledge of things like cycle plans, the knowledge of priorities and the influence that we are extending in terms of the decision-making that's going on within those accounts.

[Operator Instructions] Your next question comes from the line of Puneet Lineswala from [ Reinvestments ].

Yes. Warren, it's Puneet here. First of all, great numbers, congrats to all the team. And my question is that in the past 1, 1.5 years, there's been a lot of turbulence in the journey like with the trade deal, the war situation with the supply chain issues globally. There are a lot of global factors that have been affecting. But moving ahead, do you -- how much time do you see that like we could navigate through all this in a very smooth way and move ahead to a clear growth without any turbulence ahead? Or like do you find more time required? Or is it like things are pretty much gone and [indiscernible]?

It's a great question, Puneet. And I was in Beijing at the auto show 10 days ago. And the innovation and the speed at which the Chinese OEMs are operating is remarkable. And I think that, that is driving a lot of competitive concerns in Europe and in North America. And so clearly, we will all need to be sensitive and cognizant to the geopolitical situation and the impact that, that has on various economies and consumer demand. But I'll remind everybody that our business is a business that invests today for the competitive position that will define the organizations that we work with in 3 and 4 years' time. And I think the fact that our customers have not been investing in the recent past because of what's going on, particularly with tariffs. I think there's a catch-up that the Europeans and the North American OEMs are going to have to undertake. And I think that is informing the type of discussions that we are having. So we will be very mindful of what is going on in different parts of the world will certainly be sensitive to any regulation change. But our view, and I think increasingly, this is the view of our customers is that they have to invest in order to be able to resist the competition that is absolutely going to come from the Chinese. And so we are involved in the Chinese market. We have an understanding of what's going on there. We're working with Chinese companies. We think we're ideally positioned to be able to support our customers in Europe and in North America and in Japan to resist the competition they clearly will come from Japanese OEMs and their associated to projects.

Next question comes from the line of [ Sameer Pardikar ] from [ Elara Capital ].

Congrats for the set of numbers. Can you tell us about the ES-Tec contribution for FY '26 in terms of dollars?

ES-Tec contribution in the second in quarter 4 has been about $9 million. And in previous month, it was 1/3, so roughly $11 million to $12 million has been the contribution from it.

Okay. And when you are referring to the targets for FY '27 of double digits, are you referring to dollar revenue at a constant currency or INR, which way can you confirm?

Constant currency. Constant currency.

Your next question comes from the line of Sathish from FMA Services.

First of all, congratulations on a set of strong number. My question is, are any plans there about to start to [indiscernible] in hybrid sector?

Yes. This is a topic that we revisit in all of our strategy discussions. And the consistent response that we've had to the challenges that we presented to ourselves is that there's more than in our [ Pedro ] in automotive, industrial heavy machinery and aerospace for us to satisfy our growth aspirations. And so in the short term, we are going to stay very focused, laser sharp in terms of our focus upon those industry verticals in a somewhat counterintuitively, the more focus that we can be more relevant than we can be to our customers. The faster we think that we can grow and achieve the type of influence over the market that we have the ambition to achieve here. So for us right now, we're not looking to diversify into other industry verticals.

Okay. And my second question, historically, there was a reason to raise 1 million revenue during the [indiscernible]. What is the realistic time line now to achieve [indiscernible] in revenue?

Our North Star from a revenue perspective has been $1 billion, and it continues to be there. I think we are looking to get back to double-digit revenue growth this year. If we can do that and we can sustain that next year, we can complement that with 1 or 2 inorganic transactions. I think within the next 2 to 3 years, we have the opportunity to get the way we need to get to. And so that's the North Star for us, and that's what we're looking to achieve.

Okay. I mean can we expect the sustainability of this platform and move into the financial year '27 [indiscernible]?

I think that is Warren outlined. We are looking at a double-digit constant currency growth as we move into the next financial year.

The next question comes from the line of Ankur Pant from IIFL.

Congrats on a good set of numbers. As [indiscernible] question, in terms of the double-digit growth that you are targeting or revenue growth that you're targeting next year, how do you see it timing through the year in terms of the cadence that we expect? Would it be more of a 2x phenomena that you would see a pickup in growth? Or how would -- how are you looking at the entirety?

I think we're looking at consistency across the quarters, but I will say that we have had a very strong signings period. We expect, as I signaled before, to close more deals in the next 4 to 6 weeks. And so I think it's likely that the second half of the year will grow faster than the first half of the year, but we expect consistency across all 4 quarters. And so the confidence that we have is very much based on that.

And just one follow-up on that. What kind of demand environment are you baking in for that growth? Are you in some improvement or recovery in the demand environment? Or update us to in terms of that?

Now the guidance that we provided is very much driven by the order book that we have and the probability adjusted pipeline that includes deals that we are very much in the process of trying to close. So it's not factoring in any improvement to the demand environment that will be required to deliver against those [indiscernible].

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thank you, everyone, for joining us on today's call. We hope we've addressed most of your questions. If you have any additional questions, please feel free to reach out to the Investor Relations team, and we'll be happy to assist you. Wishing all of you all the best and goodbye here from all of us. Thank you.

Thank you. On behalf of Tata Technologies Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines.