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Ladies and gentlemen, good day, and welcome to the Tata Elxsi Q4 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Diwakar Pingle from E&Y. Thank you, and over to you, sir.
Thank you very much, [ Devin ]. Good evening to all participants on the call. Good morning, joining us on Western side. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known, unknown risks, uncertainties and other factors. Therefore, it must be viewed in conjunction with the businesses that would 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, Compliance Officer. We'll start the call with a brief overview of the past quarter and the year by Mr. Raghavan, followed by Q&A session.
Having said that, I would like to hand over the call to Manoj. Over to you, Manoj.
Thank you, Diwakar. Good evening, everybody. Thank you all for joining us today for the Q4 earnings call. By now, you would have received a copy of the Q4 earnings release and fact sheet, both of which are available on our website. As we are meeting at this fourth quarter earnings call, I'm happy to report that for the full financial year 2023, we've delivered a strong performance with revenue growing by 27.3% and profit after tax growing by 37.4%.
During the financial year, we crossed the INR 3,000 crore revenue milestone. For the fourth quarter of the financial year 2023, our revenue from operations was INR 837.9 crores, which translates to a quarter-on-quarter growth of 2.5% and year-on-year growth of 22.9%.
In U.S. dollar terms, the quarter-on-quarter growth was 2.9%. Our EBITDA for the quarter was at INR 249.5 crores, which translates to an EBITDA margin of 29.8%. Our PAT for the quarter was at INR 201.5 crores. In a year which had macroeconomic uncertainties and several challenges for the industry in general, we have been able to grow our revenues and protect our margins. I'm happy to report that the Board of Directors have recommended a final dividend of 606% for the financial year ending 31 March 2023.
This represents a 42.6% increase over the previous year and corresponds to a payout ratio of 50% of our PAT. Talking of our divisional performance for the quarter in constant currency terms, our embedded product design or EPD division grew 1.6% quarter-on-quarter and 13% year-on-year. The other 2 divisions, IDV and SI had a remarkable growth during the financial year. IDV grew 52.8% year-on-year and our System Integration grew 77.6% year-on-year.
And talking of the verticals, we had a steady quarter of performance for all our 3 verticals, but more importantly, our Healthcare and Media and Communications business both have returned to growth from last quarter, even if moderately.
We're building a strong deal pipeline and hope to see large deal conversions picking up over this quarter and beyond. Across the 3 verticals, our growth has been primarily volume-led, and we have witnessed strong growth with our large accounts. Across the key accounts, we have increased the wallet share against competition, underscoring our differentiated value proportion and offshore delivery capabilities.
I'm personally excited with the opportunity ahead in the automotive and transportation business. The scale and rate of transformation that the automotive industry needs to undertake changes driven by the regulatory, sustainability and evolving customer consumer preferences and business models, present extraordinary opportunity for Tata Elxsi. This transformation will demand deep domain knowledge, scale in software development, application of digital technologies like AI and IoT and more importantly, design will take a center stage in creating consumer delight.
I believe we are at the right place and bring the right capabilities and are engaged in the right conversations with global automotive leaders in their transformation journeys.
Our strategic long-term deal with Alps Alpine in Japan to establish a global engineering center for developing next-gen mobility solutions in India and a multiyear SDV deal with a European OEM reflect this opportunity. I do recognize that an offshore-centric and ownership-driven delivery model, it's not only harder to execute but also requires almost 3x the number of resources to deploy as compared to on-site deployment for the same impact on top line. However, we strongly believe that this is the only way to create long-term and sustainable value, and we are best positioned to deliver on this.
Equally, there's an emerging opportunity for applications around 5G that allow enterprises to harness the speed and reliability of this technology. We are seeing deals with operators and with enterprises to make this a reality. Two of the large deals that we announced this quarter precisely addressed this opportunity. We have been selected by a leading Middle East telecom operator as a design-led consultancy and development partner for next-gen applications around 5G, including Healthcare, IoT and connected digital services.
We also won a strategic deal with the world's leading telecommunications product company for 5G broadband software and solution deployment that will power the next-gen consumer devices.
Our Healthcare and Licenses business was impacted by the extension of regulatory deadlines, which cut into our existing work and revenues. But I'm happy to see the business recovering from the setback within a quarter and building a strong pipeline of deals and penetration into a new marquee customers. So we are seeing the success of our key strategies deployed over the last 2 years with strong synergies between the EPD, IDV and SI divisions playing out well, allowing us to address upstream and downstream product life cycle requirements.
Where we are seeing increase in duration and size of our deals leading from this upselling and cross-selling, this is reflected in the strong performance of our IDV and the System Integration business in FY '23.
On the attrition front, our annualized attrition for the fourth quarter stood at 17.3%, which is, again, one of the lowest among our peers in IT industry at large. So we enter the new financial year with a confidence of working with the marquee set of global customers, scaled delivery capabilities from talent investments that we've made over the year and a unique proposition of design digital that is more relevant today than ever. I strongly believe we are in good shape to move forward.
And I now hand over the floor to E&Y for the Q&A session. Over to you, Diwakar.
[Operator Instructions] The first question is from the line of Bhavik Mehta from JPMorgan.
A couple of questions. Firstly, on the transportation vertical, we saw a very sharp deceleration in growth on a sequential basis. So was it due to any project deferrals or ramp downs, which is altering the quarter? And what's the outlook going into 1Q as well in this vertical?
The second question, again, is on the other 2 verticals, which is Media and Healthcare. So we saw some growth coming back in 4Q, but what's the outlook going forward? Do you expect growth to start accelerating from here on or do you expect it to remain maybe weak for a couple of more quarters before we start seeing greenshoots over here?
And lastly, just a [ book-to-gain ] question on the ESOP, the shareholders approved the ESOP scheme in March. So what is the outlay going to be and any impact on margins because of that?
Sure. So on the Transportation business, I -- we have won significant deals in the quarter. We have announced that. So we strongly believe that moving forward, we have a good deal pipeline, and we are seeing customer confidence in the value proportion that Tata Elxsi has. So I think from Transportation business, I strongly believe that, that growth that we've shown over the years, we will be able to replicate that in the coming financial year.
On the Media and Healthcare business, yes, we've seen some amount of greenshoots and some amount of growth come back. It is still early days, I would say. But from a midterm to long-term perspective, I see no challenges for us, and this business will definitely recover. And more important, as we see a lot more of these 5G opportunities and deals that are coming back, we -- I strongly believe that towards the later half of Q1 and Q2, we will see the growth coming back into Tata Elxsi. So on that front, I think we are pretty confident.
Regarding ESOPs, I think on a quarterly basis, we are looking at about INR 4.5 crore-or-so of expenses that we would incur on the ESOP front.
Okay. That's helpful. But first on the transport, what was the reason for the weakness in 4Q? Because 3Q was a very strong growth of 7%, now we saw only 1.5%. So any color on that would be helpful.
No. I think you should -- it's very difficult for you to look at -- it's a large business that we have. So you don't really look at it from a quarter-to-quarter basis in that sense. You look at it from a midterm to a long-term perspective. The fact that we have continued to grow and grow significantly over the year is what you need to look at. So I'm not really that much bothered about this 1 quarter issue because we definitely see strong deal pipelines and so on.
There have been some amount of deferments in some of our customer places. But that is fine, and we strongly believe that growth will come back in Q1 and Q2.
[Operator Instructions] The next question is from the line of Vimal Gohil from Alchemy Capital Management.
Yes, my questions on automotive growth has been answered. So just on cash flow, despite our P&L growing very strongly this year, operating cash has been slightly muted, and that is largely driven by our increased -- sharp increase in receivables. So how do you see that going forward?
I would request Gaurav to answer that question.
Yes, so this quarter, if you see, there is an impact on trade receivables. This is primarily because we embark on the system transformation in the quarter 4, which kind of a little bit rolled over the invoicing that has to be done to the customer. But I think that is only a short-term phenomenon. We believe that, that cash flow will be back in that and we will recoup those collections in the coming quarter. So that will get normalized over the next 1 quarter.
Understood. Understood. Sir, just wanted your comments on this Alps Alpine initiative that we've taken. If you could just highlight something more on that, what would be our revenue model? And could we see some contribution accruing from that? I know it's a -- as you highlighted, it's a very, very significant effort -- offshore effort from our side. But just wanted to understand, do we already have some clients here or is it still very early stages?
No. So we have set up a global delivery center for them, and it is a multiyear engagement. I would look at it anywhere from a 5- to 10-year sort of road map. That is a road map that we have at this point in time. The color I would like to say is, especially with Japanese customers and so on. The first couple of years of engagements are very, very critical. So we have been engaged with them for a few quarters right now before we got into this -- before we were impaneled as a global partner for them, right, in some sense.
The challenge for them, if you look at it, is outside of Japan, and they had a large presence in China, and because of the geopolitical issues and so on that we're seeing, they definitely needed to find a partner in another country to derisk their China presence. And that is where Tata Elxsi came in and since we already had a relationship with them, and this really helped us.
And of course, we delivered significantly on the existing projects that we are developing for them. So that really gave them the confidence to trust us as they are engineering parts beyond China. And this could be a significant business for us, a long-term business, that we would continue to grow over the subsequent years.
And sir, just on margins, do you think you will be able to recoup what you're effectively highlighting is about 0.5 percentage of impact -- incremental impact because of margin of ESOPs? So how do you plan to sort of cope with that going ahead?
Yes. So of course, we have different levers available, including utilization. Yes, there will be costs that will be coming in because of wages and salary hikes and so on. So I think for the year, we are pretty well positioned to be in, say, a band of, I would say, from a PBT perspective or I would say, between 28% to 29%. So that is a band that we're targeting to operate in.
The next question is from the line of Sulabh Govila from Morgan Stanley.
So I had a couple of questions. So one is with respect to the divergence in growth within the top 10 client bucket and outside of that, so the outside of top 10 client buckets, the growth was a bit soft. So just trying to understand what you're hearing from clients with respect to the spending patterns and whether the growth that you're expecting in the coming year, it's going to be broad-based or you expect the top 10 clients to continue to do well for you?
The second bit is on the margin spread, if you could provide the margin walk for the quarter as well as if you could talk about where we are on the investment journey that we started with respect to hiring middle-level managers and developing on-site location in Germany, for example. So where are we in that process? And how do we plan coming into next year?
Sure. So I would say we definitely have been able to mine, especially our large customers, pretty well, not just in the quarter, but I think over the financial year, I think we have done a commendable job in really increasing our wallet share and taking business away from competition and really growing in that account, right?
And when we say growing the accounts, as you may realize, we -- a lot of our business is offshore based. So we have been able to convince customers to move a lot of work offshore and that has really helped us. So we will definitely continue to grow our top 10 accounts within the next financial year and so on.
When I say top 10, it includes the top 20 customers that we are looking at. So I think overall, if you look at it in the market, yes, it is a difficult macroeconomic situation. And the ER&D budgets are all discretionary. So we see some signs of it. There are some customers that continue to invest and grow and trust Tata Elxsi's delivery capabilities and work with us and so on.
But there are a few -- the customers that have had some issues in terms of their own R&D initiatives either getting paused or put on hold or whatever -- for whatever reason, right? So beyond the top 20 customers, so we definitely have a set of accounts that we would really want to push into the top 10 and top 20. So we are focused on that, and we're really working on that select set of customers to see how we can move them into -- gain larger market share there and move them into a bigger bucket and so on.
So that's something that we continue to do. But at the same time, if you look at the overall set of customers, large set of customers that we have, there could be a few customers that have some issues in their own business and so on.
So that is why I think there's a relatively softness in the -- beyond the 20 bracket, I would say. But I think that happens every quarter, and I don't think it is a cause for concern. So definitely, a large part of our growth will be pushed by our top 20 customers. At the same time, there is the next set of customers also that we are carefully curating and really working with very, very clear objectives of moving them from one bucket to another. So that's something that we continue to do.
From all the initiatives that we have hiring managers, mid-level managers and the offices in Germany and other places, right? So we have also investments in U.K. as well as in U.S. and so on. We have -- over the year, we have -- those investments continue. And I think those ramp-ups are happening satisfactorily.
In fact, we have been able to deliver value for some of our customers, including in Germany and U.K. based out of our delivery locations in that respective countries. So I think it is still a work in progress, and we would continue to execute on the strategies that we have laid out. And we are as per our plan. So I don't think we have a concern there.
The SMEs, the mid-level managers and so on that we continue to both internally ramp up resources as well as hire laterally. So that efforts continue.
Regarding the margin, Gaurav, can you answer that?
Sure. This is Gaurav. I will take your second question on the margin walk. If you see for the quarter margin on the EBIT front, it was narrowly below the what we delivered in the last quarter, just 30 basis points. That is primarily to do with the campus onboarding that we did during the quarter. And also what Manoj also alluded to the fact that we continue to make the investment into the people, subject matter experts and [indiscernible] our sales team across the location, which is important from the forward-looking strategy and the technical capability that we want to continue to build upon.
So we continue to invest in that in those parameters. So that's why the EBIT margins came 30 basis points lower compared to the last quarter. But if you see at the PBT level, PBT level, our margin was 29% this quarter compared to 28.7% last quarter. So in fact, on the PBT, we have delivered better and stronger growth in the margin this quarter. That has to do with the higher other income due to the interest income and the R&D credit that we get from some of our on-site businesses and exchange gains that we have made during the quarter.
If you see at the PBT level, we have done better than the last quarter. And PAT is even better than that. At the PAT level, we had done 23.3% and that is almost 37.4% on a year-to-year basis. If you see on the full year basis, we have a 37.4% growth in our PAT.
The next question is from the line of Utkarsh Katkoria from PGIM India Mutual Fund.
Sir, I just wanted to understand in light of the Tata Technology IPO that is likely to hit the market, how do we compete for businesses versus the Tata Technology, which is a part of the same group? And what is our go-to-market strategy? And how is that different, say, from Tata Technology or some of the other players in the sector?
Yes. So Tata Technology is a group company. And as you know, Tata Technology is a subsidiary of Tata Motors, right? And they get a significant portion of their business from the group companies, TML and JLR. A lot of their business is around definitely the mechanical engineering, the PLM, they do a lot of work on the ERP side.
And of course, in a few verticals, I think automotive, aerospace, industrial and those are the verticals that they operate in. Whereas Tata Elxsi is primarily focused on the embedded engineering, hardware and software along with a strong focus on design. So literally speaking, we are orthogonal -- 2 orthogonal entities. The service offerings are literally orthogonal. So I think from Tata Elxsi's perspective, we really don't see an impact of Tata technologies affecting our business, but they have a very, very strong portfolio of services that they deliver to their customers and we are literally a complementary sort of offerings that we have.
Maybe I can just add a little bit. This is Nitin here. I just look at it from a [ different ] perspective. Tata Technologies has been in business for many years now. And they have been in the market for many years now. So in that sense, from a competition and a customer perspective, they're already there. They are already factored in. It's only for investors that there is a new factor because they're now coming up with an IPO rather than being a subsidiary that is not investable, right? So in that sense, there's no change of status or world view doesn't change for us at all.
Right. Right. So what I understand is that while they are heavy on automotive and we are also heavy on automotive, the kind of service offerings they have are very different from what we are doing.
Yes. Orthogonal, I would say. Yes.
And when it comes to other segments, we are -- have strength in Healthcare and Communication while they have more strength in aerospace and industry.
Yes. That's correct. That's correct.
Okay. So is there a time when both Tata Technology and Tata Elxsi together have gone to a client to sort of win some part of the business, is there a combined go-to-market strategy ever or we operate completely in different spaces?
No, we are 2 different companies. So we operate independently. But at the same time, we've had occasions where we have come together to deliver end-to-end service for a customer. So that has also happened.
The next question is from the line of CA Garvit Goyal from Invest Research.
Hello? Am I audible.
You are. Yes, please go ahead.
Just 1 question basically on the margin sustainability side. So do you think this level of margins, EBITDA margins are sustainable going forward for next 2, 3 years?
It's very difficult to forecast 2, 3 years and so on. But if you look at the next financial year, we strongly believe that we can sustain this level of margins.
Okay. Understood, sir. And what about the growth outlook for next year?
We are pretty bullish about the growth prospects that we have. Yes, there are still macroeconomic uncertainties and challenges that are there in the industry. But I guess we will get out of it. It's a question of 1 quarter or 2 quarters timeframe. There are parts of our business that are already showing greenshoots, and that is what we will really focus on. And we really hope that we'll be able to get back to a decent growth path.
The next question comes from the line of [ Ajay Arjun ] from Astute Investment Management.
My question is, does AI and generative AI like ChatGPT effect positively or negatively our profitability and billable values going forward?
This is Nitin here, Ajay. Maybe I'll take that question. If you look at it, ChatGPT has the greatest impact on jobs that are automatable easily. So to that extent, a lot of typically what would constitute shared services, creative services and so on is where we believe the impact is a lot more direct from generative AI.
But when it comes to very domain-focused problems, and let me give you an example. When it comes to autonomous cars, for example, you have to train cars to be able to drive on roads and deal with scenarios that are completely complex and different. You cannot use the generative AI like ChatGPT to train cars to drive on roads.
You can ask ChatGPT, what is the best car to buy, but you can't allow it to run the car that is -- that you want to buy. So to that extent, I think the fact that we operate in domains, the problems that you address are very deep domain problems, for example, recommendation engines that go into OTT products. That tells you what do you like, what should you watch next and so on.
The AI that goes into cars that allows it to drive or the AI in Healthcare that looks at radiology results, looks at precise image mapping, identifies diseases. So if you think about it, these are specific problems. These are not generalized problems. So to that extent, we see very little impact from ChatGPT or generative AI directly in our businesses.
However, there are areas where we are actually starting to use it ourselves, right? And there are very interesting applications that we can use it beyond what we do today. So that would be our assessment at this time.
Would it be on balance the cost-cutting area or improve your billable values or reduce your billable values in future?
So for us, I think we see AI is something that enhances value all the time. So even in our own domains and our own projects, we don't see stand-alone AI projects. We see AI building into the projects that we deliver. So to that extent, I think ChatGPT is just another lever in the armory.
Yes, I agree. But apart from that, there are so many new AI solutions that are going to be available soon. So that I'm asking my question in that context. It's not limited to ChatGPT.
No, sorry. So your question is? If you can repeat that question in that case, please?
Will AI affect you positively or negatively...
AI is a great positive.
Yes, it's already a great positive for us.
What you're saying is it's always has been a great positive, it will continue to be a great positive and generative AI by itself doesn't represent a threat.
The next question is from the line of Akshay Ramnani from Axis Capital.
So my first question is on employee cost. I'm just trying to understand it. It is up about 4.5% on a sequential basis. If I look at last quarter headcount, it was flat this quarter headcount is also up by about 2.2%. And I'm assuming we didn't have a [indiscernible] this quarter. So what explains this increase in employee cost?
Akshay, this is Gaurav. Let me take that question. The employee cost increase, as mentioned earlier, is because of on the headcount increase that we have done, also some of the on-site investment that we have done in the people, sales, subject matter expertise. And also remember that while we have a benefit from the exchange on the revenue side, but for the on-site headcount, there is also a cost impact that comes from the exchange movement during the quarter compared to the last quarter. Plus, we have certain new contribution plans that we have started in the U.S. geography, which -- for which also cost got added in this quarter. So those 3, 4 factors added to the cost from -- when you compare from the last quarter.
Got that. Got that. And other expenses line item has been quite volatile over the past 3 quarters. So any sense on what's the sustainable basis number there? Or is it expected to volatile in the near term as we see it.
So if you see in the last 3 quarters, after quarter 4 and quarter 1 or quarter 1 of this financial year when the COVID-related lockdown started to open. So we have to open back to offices, travel start to kind of -- started again. So there will be -- slowly that cost started to come back. And as people started to come back, we also need to set up the facilities, then there are certain increase in the discretionary expenses.
But on a quarter-to-quarter, there will always be event, which will be very quarter specific, which may not have the cost in this quarter versus the last quarter, but most of the cost that was not there during the lockdown period is now back. So probably, if you see the quarter-to-quarter average, that would be the level of the operating, I would say, the other expenses that we will operate now.
Sorry, you mentioned quarter 2, quarter 3 average, is it?
No, no, I'm saying last 2 quarter averages, if you see, don't take 1 quarter as a benchmark of basis, but take a couple of quarters to take an average as what percentage of our overall operations, where we will run those other expenses.
Got that. Got that. And 1 question was to Manoj. So Manoj, if you can touch upon the hiring outlook for next year and maybe based on the deal wins which you have in hand. How do you expect the revenue to shape up over the next couple of quarters?
Yes. So from a hiring perspective, in this financial year, we will be adding almost, I would say, 2,200-odd headcount. That is the current plan that we have, out of which almost 1,800-or-so would be the fresh grads that we would add. And about 450, 500, gross -- I mean, net laterals that we will add. So that is the sort of headcount that we are looking.
From a growth perspective, I think I've already answered, we definitely see in each of the businesses that we are, we see a good confidence of the opportunities coming back. There are large deals that we are signing, in the process of signing. There are a lot of discussions happening with customers. So yes, there is a little bit of the macroeconomic uncertainty. So I would say, let's wait for the quarter and see how it rolls out, but we are sitting out here today, we are fairly confident of the way forward.
Got that. Just one, if I can squeeze in. So offshore revenue has come off slightly in this quarter. Is it just a quarter phenomenon or is there anything -- any reversal you are seeing there?
I think it is not significant.
Yes, it is very marginal. That kind of a movement between on-site and offshore depending upon the project completion in a quarter will always be there. But if you see that range of movement quarter-to-quarter, that is very insignificant.
The next question is from the line of Urmil Shah from Ageas Federal Life Insurance.
My question is a follow-up on the transportation business. Sir, just to understand, you mentioned that there were a few decisions that happened in case of select clients. Was it towards the back of the quarter or it was more that 1 project got completed and the ramp-up of the follow-up time? Secondly, as regards to geography performance, U.S. has been relatively softer in this quarter. Was it to do more with the auto business or it was broadly across the verticals? And lastly, as regards to the top 5 clients in the auto segment, how has the performance been specifically for the Transportation segment among the large clients?
Yes. So maybe I can take that on behalf of Manoj. This is Nitin here. With respect to auto and the revenue ramp-up over the last quarter, it's a combination of factors. So to some extent, like Manoj said, there are projects that have ended and the renewals and extensions have taken a little time in some cases. In some cases, it's about -- I mean, including Alps Alpine and so on, you'll find that the whole announcement was made on May 20 -- sorry, March 23, almost the last week of the quarter, right? Because the inauguration was done on that time, and we have started to build up the entire center starting from them.
So I really liked to have had that announcement made in the first week of Jan and then got to building the business and ramping up revenues right from there. So to that extent, I think nothing to worry, it's simply a combination of factors, but the path ahead is clear. Moving to your second point in terms of U.S. For us, U.S. is far more secular. In fact, Europe is typically auto dominated while U.S. is a lot more Media and Healthcare. So to that extent, that more or less explains the softness at all, right? And was there anything else that you had Urmil?
The top client of the transport vertical?
I think they're doing extraordinarily well.
Yes. We don't see an issue there in the top 5 customers there. So...
Sure. And sir, just on the Alps Alpine deal, which quarter should see a ramp-up of the deal?
It will happen over this financial year right from Q1 to Q4. So it is not going to be a step change right from Q1, it will be a gradual ramp up that will happen.
Sure. So safe to assume that...
Sir, sorry to interrupt you, we request to please rejoin the queue for further questions. The next question is from the line of [ Ajay Gurj ], an individual investor.
Yes. So I believe all the questions have already been answered by the previous [indiscernible], so no further question from our end.
The next question is from the line of Tushar Bohra from MK Ventures.
Sir, first, I would like to understand some of the initiatives beyond your top 3 segments: Automotive, Media and Healthcare. You have been ramping up on initiatives in defense, aerospace, maybe a few other industries or segments. If you could give more qualitative comments inputs around that. And in a related question, we're seeing a revival of manufacturing domestically, a lot of interesting opportunities coming up: EMS, semiconductor space and so on. Does Tata Elxsi have a play in any of these areas, [indiscernible] defense offset, for example, or defense related stuff in India? Is there anything interesting things you would like to highlight? And lastly, I want to understand on the IP front, if there are any notable wins or any interesting qualitative comments on your IP side?
Sure. So maybe on the IP front, I would ask Nitin to respond. So yes, apart from the 3 main verticals that we have, we've really been focusing on our design business and within the design business really focusing on, of course, consumer electronics, manufacturing is an area that we have been investing in. And you rightly said that in India, we see a lot of opportunities in the manufacturing space, especially with our Industry 4.0 and IoT solutions that we have.
So yes, so we are building that muscle, and we have some interesting deals that we have won over the last financial year, right? So that's something that -- and I think that progress is pretty satisfactory, I would say.
We are really not working from a defense perspective, but we really work with organizations like ISRO or VSSC. So I'm happy to let you know that we have been involved in the Gaganyaan project, and we have done some very fantastic work there. And whenever -- I mean, I'm not sure whether they've already published it in our website and so on.
Okay. So at an appropriate time, we will definitely talk about that. It's a cutting-edge work that we have done. And we're very proud of the type of work that we have done for ISRO. Yes. On the IP front, is there anything that you want to specifically talk about?
Yes. So I think, Tushar, to that extent, there is nothing new to report in terms of a portfolio. We're building some, and we have some very interesting IP that we are investing in, especially that leverage is AI significantly. Whether it is to be able to do predictive maintenance and prognostics relating to automotive or otherwise relating to battery technologies and being able to predict state of charge and advanced algorithms that power EV experiences.
We are investing in ad tech, especially the recommendation engines and related content moderation and so on where we see a lot of opportunities around how do you manage and automate the management of content that's being published on social media or in streaming video and so on. So in that sense, there is very selective and very careful investments that we're making to develop some more or augment our existing platforms and products with AI-based capabilities.
There are some wins and there are some interesting -- in fact, I would say, there's very good traction that we are seeing, especially with our IoT platforms, connected car platform. We are seeing some good traction with T-play, which is our white label OTT platform, especially in emerging markets. I'm hoping that we can make some of these announcements and you'll actually see that also reflecting a little nonlinearly in our revenues in the quarters to come.
Just a quick follow-up on the question. By when do you think your non-top 3 segment performance will be reasonably large enough to report as separate segments? And on the design side work that we're doing in these new areas, you mentioned manufacturing, industrials and so on, does it translate to work on the embedded side and longer-term commitments? Or does it remain at a design level kind of an engagement, get in get out quickly? How do you...
No, that is a change that we have brought about over the last 4 to 6 quarters, right, where we strongly, we have been pushing design. Design as an entry strategy. But definitely, our focus is to look at the downstream activities, including software, hardware development and end-to-end product maintenance and the life cycle of the product, right? So that's how we have been -- and what you have also done is to strongly integrate the design capabilities in our sales kit, right? So that the sales team that goes ahead, talks from a design perspective. So I think that has actually also helped us mine our existing customers and also open new logos for us.
And -- so that is a very strategic move that we have done and definitely in the quarters to come, that's something that will help move both top line and bottom line for the company.
The next question is from the line of [ Rajesh ] from Zenith Financial Services.
Yes. I just wanted to check, like do we have the capabilities? Or do we have any plans to work on to something like the geospatial technologies? Because somebody mentioned about aerospace and defense sectors.
No, no. We -- currently, we are not focusing on that.
And we don't have any plans in time to come?
No. It's a very, very niche area that we really are not -- at this point in time, we're not even thinking about it.
Okay. And apart from the 3 segments, you just mentioned that you are also working on some other manufacturing and other segments. So how soon or how -- when can we see appreciable reporting of revenues from the other segments?
Yes. So whenever we reach a size that we believe we can report and we can sustain that particular thing, right? So that is when we will talk about it. We don't want to pressure ourselves by giving you a number or a timeframe today and -- so we will take it -- whenever we are confident we'll come out and we will...
No, if somebody is taking a long term view, say, 3 to 5 years. So can we see that change happen?
Definitely, in that timeframe, you will be able to see.
The next question is from the line of Sanjaya Satapathy from Ampersand Capital Investment Advisers.
Sir, you mentioned that you are fairly confident of the transport vertical growth, which would be something similar to that 25%, 30% kind of growth that you have seen in recent years. But at the same time, there was a bit of a slowdown in Q4. So just what -- I mean, you have tried to explain it, but I just want to understand that when will we start seeing the acceleration in that vertical for revenue?
No. So you will definitely start seeing that as we close the deals and there are definitely large deals at this point in time that we are bidding and we have been shortlisted and so on, right? So it's a question of when the paperwork is done and then we'll be able to get into a billing situation and so on. So what -- we were expecting some of the deals to close maybe early part of Q4.
And some of those have got deferred. So I think we are in active pursuits in many opportunities, I would say, the funnel is pretty strong. But yes, there has been some delays due to the market situations and so on. So I'm really not that concerned about it, and we will definitely recover moving forward.
Yes. So Sanjaya, I think simply put, we should pick up speed.
Understood, sir. And considering that your Media, you have already managed to get a lot of orders. So basically FY '24 could be a year in which there will be more balance to it. Is that what you will say?
That's what we are hoping for, especially we want all the engines to start firing, right? Yes, we've had some weaknesses in the last financial year in a few of our verticals. And we've -- over the last few quarters, we've been working hard to really put in steps to really get back to a growth path. And I hope we will see that -- those results in subsequent quarters.
The next question comes from the line of Karan Uppal from PhillipCapital (India).
Firstly, on Transport vertical. So on the SDE related deals, any sense of the range of the deal size? Because one of your companies have announced 2 deals which are in the range of $150 million to $250 million. So anything which you can give a sense on? And secondly, you are speaking about transport and broadcast but on Healthcare, any outlook which you can provide for FY '24?
Yes. So on the deal sizes, yes, the deals that we have also closed are multimillion dollar deals. So definitely, yes, the opportunity exists. And you -- if you look at it, we bring very, very strong domain capabilities in this area, especially on cloud and DevOps and IoT and then so on, right? And this entire, what do you say, software-defined capabilities that they've built over many quarters, right?
So I think we are pretty confident on the deals that we have picked up, right, at the right margin levels for us, right? So I think that's something that we will be very, very careful. And again, most of the deals that we picked up are offshore led, right, which means they're not really looking at on-site led business. Most of our deals are offshore led. So yes, it will take a little while to show in terms of revenue growth and so on. But I think we are on a very, very good wicket and very good path to take the growth forward.
Right. And Karan, I think the second question was on Healthcare and the fact that we are [indiscernible] I think I would simply put it this way, if you look at it, it's been on a great path. And suddenly, in a quarter, you had a setback of all part of the business, just vanishing or rather diluting because of the regulatory deadline stage. [indiscernible] happened was something that was supposed to be delivered in 4 quarters is now allowed to be delivered over 16 quarters, which means that the TC doesn't change, but our entire business is now going to be spread over 16 quarters.
I think the Healthcare business has done extraordinarily well in my opinion, not only to recover, but also to find different customers, different work within existing customers and has nothing to do with regulatory that allows you to recover.
So for me, I think the great plus point, the 1-plus percent return back to growth quarter-on-quarter from the previous quarter, which essentially sets the pace for new customer additions and new business. So in that sense, we are very, very both happy as well as bullish on Healthcare. Yes, maybe a quarter more of speed that needs to pick up. But long term...
Yes. It's a long time laid business. It takes lead time to really convert. So I think we are working very hard on that.
So sir, just to understand, you're saying that Healthcare might grow lower than the company average, while Transport may grow higher than the company average. Based on whatever comments you have made, this is what that I can conclude or maybe you can correct me?
No, we are not making those statements. You're putting words into our mouth.
The next question is from the line of Urmil Shah from Ageas Federal Life Insurance.
Yes. Just on the supply side front. Manoj sir, you had mentioned that at least on the auto front previous quarters, had there been more billable headcount, growth could have been better. So going into FY '24, is the supply side easing and it could be also a lever for margin...
[indiscernible] your voice is also breaking and -- so supply side, yes, definitely, I would say, supply side is easing out a little bit. And as compared to maybe a couple of quarters, I think we're in a better position.
We have actually built up bench strength, right, which is significant. And we have been investing in people over the last, I would say, 3 to 4 quarters and would have seen even from a headcount perspective, we have been investing. So I believe we have a healthy bench available today, and we'll be able to use that bench to really deliver the growth that we are planning.
So yes, I think from a supply side, at the 3 critical resources, we still -- I mean, SMEs and so on, we still have -- we could do definitely, if you had more recourses, we'll be very happy. But having said that we are in a better situation as compared to a couple of quarters ago.
Sure, sir. Sir, and as regards to these prices for this year, we should be following the normal cycle?
Yes. Yes.
We have the next question from the line of Vimal Gohil from Alchemy Capital Management Private Limited.
Gentlemen, just 1 question on Media and Comms around 5G. If you could just maybe highlight are you seeing this demand from 5G coming in from existing customers because you -- I think some of your -- couple of your top 5 customers are [indiscernible] or are you seeing some of your newer customers embracing newer solutions around 5G? And what sort of [indiscernible] we seen exactly doing so?
This is Nitin here. Maybe I'll take that. The 2 deals that we announced are actually 2 new customers for us. So you'll find that in the deal that we announced, you'll find that there's a Middle East telecom operator who has deployed 5G and is now looking at monetization opportunities both B2B as well as B2C. And for us, that's a fantastic intersection because we're saying, look, if opportunities are going to be with what can you do with logistics, connected cars, connected fleet? What can you do with connected and digital health? What can you do with media?
So for us, we are coming in as on top of 5G and what ties the industries that we are in and applications there from a monetization perspective. So that's the telecom opportunity where we're on the side of the operator and looking at how to make money from 5G. The other deal, if you look at it that we announced was with absolutely world-leading technology company to build a -- telecom product company to build products that would go into the consumer homes for broadband and fixed wireless access. It's 5G on the -- in talking to the world, and it will possibly be Wi-Fi and so on talking to the home. So for us, these are completely new deals, completely cutting-edge work.
And we believe this can be replicated very, very well across both new customers as well as existing customers. So to that extent, there are conversations going on. There's some want to work going on with existing customers. I think these deals represent great opportunities to replicate.
As there are no further questions, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Yes. So thank you, everyone, and really look forward to seeing you again in the beginning of Q2. And we definitely hope that we'll be able to deliver better results to you in this quarter going forward. Thank you so much, and have a good day.
Thank you. On behalf of Tata Elxsi, that concludes this conference. Thank you for joining us. You may now disconnect your lines.