Indian engineering research and development (ER&D) firm Tata Elxsi reported a significant dip in its consolidated net profit for the third quarter of the financial year 2025-26 (Q3 FY26). The company's profit after tax (PAT) plummeted by 45% year-on-year to ₹108.89 crore for the quarter ended December 31, 2025. This substantial decline was primarily attributed to a one-time exceptional charge amounting to ₹95.69 crore, triggered by the implementation of new national labour codes in India, which became effective on November 21, 2025. Under accounting norms, Tata Elxsi was required to recognise the entire past service cost related to employee benefits immediately in its profit and loss statement. Despite the pressure on its bottom line, Tata Elxsi demonstrated resilience in its operational revenue, which marginally increased by 1.5% year-on-year to ₹953.47 crore. On a quarter-on-quarter basis, revenue from operations grew by 3.9%. The growth was notably spearheaded by the company's transportation business, which saw accelerated ramp-ups in software-defined vehicle (SDV) led OEM deals. Excluding the one-time exceptional item, the company's operational performance remained healthy, with Profit Before Tax (PBT) rising and Profit After Tax (PAT) increasing by 15.7% sequentially to ₹179.1 crore. This indicates that the core business performance was robust, and the profit fall was due to a specific regulatory impact rather than operational weaknesses. The news, published on January 13, 2026, highlights a mixed financial performance, with healthy revenue growth offset by the one-off statutory charge.