30% revenue growth masks 25% PAT decline amid Nagarro integration

30.3% YoY revenue growth delivered; management understated

EBIT ₹697.7Cr / ₹4,663.9Cr = 15% exactly

₹351.5Cr / ₹4,663.9Cr = 7.5% exactly

Reported PAT -25.4% YoY; operating PAT 10.6% margin (3.1% points transaction cost impact)

Confirmed; healthy top-customer concentration improving

EBIT margin 15% vs. ~16% prior Q1 and ~16.3% prior-year Q2. 130 bps YoY decline despite revenue growth; wage hike and one-time deal costs culprits

Stated operating PAT growth 5% YoY, but reported PAT -25.4% YoY. Even adjusting for 3.1% transaction cost, core weakness significant vs. revenue growth story

Top 5 revenue up 38.9%, top 10 up 29.9%, top 20 up 25%. Healthier concentration than recent history; vendor consolidation actually driving deeper engagement

North America +22.5%, Europe -8.5%, India +19.4%, rest of world +67%. Europe decline client-specific (one customer consolidation, one ramp-down); not structural demand issue

No forward guidance provided this call vs. prior calls with explicit targets. Long-term aspirations ($2B FY27, $5B FY31) reaffirmed but no new numbers

High-tech companies and within high-tech part, ISVs are 20% of ISVs on bleeding edge with max adoption. BFSI slower adoption given regulatory nature; will follow. Management comfortable with growth trajectory across segments.

Decision-making slowdown in last few weeks was apparent; not productivity issue. TCV at all-time high. Revenue conversion 75–80% of deal pipeline running. Deal quality maintained; some slippage into next quarter acknowledged.

Combination of both. Large deal includes software licenses embedded in products. As Software Reinvention practice grows, license cost may go higher but opportunity for moat; management believes upside in profitability.

Wage hike a one-time shock. Large deal impact to gradually reduce as revenue scales. Management targets 16–17% margin range as aspiration but doesn't give forward guidance. Optimization ongoing on deal and cloud spend.

Deal was included in last quarter TCV as all-time high. Current quarter ACV slower due to decision slowdown, not deal quality. Nagarro has 200+ USD 1M+ customers with ~10% overlap. Expect 5–6 months post-closure to build synergy plan. Two companies working independently until closure.

Key difference: AI enables deeper product intelligence and faster product-to-market (50% faster). Commercial model outcome-based with revenue share and cost savings guarantee. Validates large deal from last quarter (6.5-year engagement, $650M value). Market positioning unique; 9 of top 10 tech companies served.

Intangibles from product portfolio takeover (20 products, engineering roadmap, third-party licenses, cloud spend reduction). Margin of Nagarro deal will improve as AI optimizes cloud and re-architects products; lower third-party license cost. Portfolio approach: Healthcare may go slower, but high-tech gains offset.

Healthcare should see growth from next quarter onwards. Historical strength: FY'25 Q3/Q4 grew 52.6% and 33.6% YoY. Some customer dynamics temporary; pipeline healthy. Large research organization engagement underway. Expect inflection in Q3–Q4 FY27.

Debt to be raised at ~5–6% range, competitive linked to SOFR rates. Currently in refinancing process with existing bankers and exploring alternatives. Revolving credit facility by banks; no specific timeline yet.

Current Q2 annualized ~$1.95B run rate (USD 487.6M). On track; achieved via AI modernization, Software Reinvention Services, and Nagarro integration

Current 15% (down from prior 16.3%). Recovery contingent on large deal optimization, cloud cost reduction (FinOps/AI), and AI-driven higher-margin bookings

€1.4B bridge loan to refinance; deal closure Q4 CY26/Q1 CY27. ₹25–30M transaction costs over next 3–4 quarters. 5–6 month synergy planning post-close is uncertain; antitrust clearance pending Austria/Spain

EBIT margin 15% down 130 bps YoY; large deal amortization (engineering product portfolio) 90 bps drag. Wage hike 180 bps headwind only partially offset by ESOP savings and favorable forex. Gradient to 16–17% aspiration depends on multi-quarter large deal maturation and cloud cost optimization—both uncertain

Europe revenue down 8.5% YoY (client-specific: consolidation of one major customer, ramp-down of another). North America +22.5% growing concentration in single region. One major customer consolidation impacting tactical decisions

Healthcare & Life Sciences growth only 12% YoY vs. historical 50%+ growth in FY25. Temporary slowdown attributed to one large customer dynamics and consolidation. Management expects recovery from Q3 FY27 onwards, but timing and magnitude unspecified

Management acknowledged decision-making slowdown in last few weeks of Q2. ACV bookings ₹481M down from prior ₹536.8M, attributed to macro delay not productivity. Risk: if slowdown persists, Q3 bookings may also face headwind