Declining quarter masked by upbeat tone; TLS exit a turning point

Delivered Q2 revenue ₹71.4 Cr (down 58.7% YoY), PAT ₹8.6 Cr (down 67.5% YoY) — massive disconnect

Cannot verify against delivered result; overall revenue sharply down suggests this claim applies only to selective metrics

FY27 guidance cut by ₹20-25 Cr revenue (3-4% of ~₹800 Cr base) contradicts limited scope claim

Delivered result shows revenue down 58.7% YoY, down 62.6% QoQ; compressing margins (11.8% NPM vs typical 16%+)

FY27 revenue now ₹800-825 Cr (was ₹825 Cr target); PAT ₹115-125 Cr (was ₹137 Cr). TLS cert exit cuts ₹20-25 Cr revenue and ₹10-11 Cr PAT.

Exiting publicly trusted TLS certificates (declining, commoditized); pivoting fully to enterprise PKI, digital signatures, DPDP, and post-quantum solutions. Lower-margin public TLS is 1% revenue but structurally doomed (Google, Entrust, others issuing free certs).

New wins in Nigeria (PKI), Kazakhstan, Indonesia, Philippines, Germany, Qatar, Abu Dhabi, UAE noted. But US TLS exit and Middle East reputation risk from incident limit near-term upside in key geographies.

Private PKI not affected, CertiNext unaffected. Only public TLS business (~₹4 Cr, 1% revenue) in US. Entry now narrowed to CertiNext-only path. Reputation contained to US and Middle East; India and other geographies insulated.

DPDP deal sizes ₹40-50 lakhs for large NBFC, ₹1-2 Cr for larger entities. Momentum growing; first DPDP deal won last quarter. Pipeline conversations happening with B2C banks and private sector. Many DPDP deals expected to materialize next year onwards.

India revenue unaffected. Reputation risk contained to US and Middle East. Same-geography sales continuance secured (University Consortium will continue with CertiNext). Estimated ₹23 Cr top-line and ₹10-11 Cr PAT reduction for FY27; impact mostly H2. Effect will wane by end of year.

AI is a threat for general banking/financial services but a positive for cybersecurity and identity. Post-quantum cryptography is an active investment area. Broad opportunity for products across user identity, device identity, authentication, and encryption.

Trust services disruption was majorly in token; FIPS 140 Level 3 token was late-released (Sept). eSign is growing rapidly (7-8 lakh per day now vs. 1-2 lakh a year back). Q2 is low season (March-May main season). Q3/Q4 will see better volume. Cannot expect big growth; growth may be flat to 10-12% for full year.

CRYPTAS revenue run rate ~₹30 Cr this quarter. More deals being sold; margin profile improving as customers do more transactions. Should accelerate in coming year.

EBITDA margins ~25%; will try to maintain because focus is on enterprise solutions (higher margins). As focus shifts to solutions business, EBITDA margins should kind of be at that same 25% level.

TLS exit will reduce by ₹20-25 Cr; impact concentrated in H2 FY27. Enterprise segment and international geographies expected to offset most. Organic growth core remains intact.

Granular, but exact FY27 target not quantified. Implies H2 enterprise growth could accelerate if TLS headwind clears.

Shift to enterprise solutions (higher gross margin) will help. But near-term TLS wind-down and product mix transition could pressure. Target assumes cost discipline.

Typical 16%+ guidance not reaffirmed for full year. PAT cut implies NPM may remain ~12-14% in H2 FY27 as TLS headwind winds down.

Mostly for data privacy stack completion, eSign AI enhancements, and post-quantum crypto infrastructure. Infrastructure capex, not M&A-driven.

TLS incident in October 2025 (weak keys in intermediate certs) caused browser distrust and cost-bearing for customer remediation. Exiting public TLS reduces exposure but signals commoditization.

DPDP compliance wave is real but immature. ₹40-50L deal sizes imply low CapEx ROI initially. Scaling to material revenue (₹100+ Cr/year) requires 3-4 years and sustained market adoption.

Company is ahead of curve on post-quantum crypto but external adoption deadlines (2025-2030 NIST/browser) are in flux. Regulatory/market adoption could slip, delaying revenue inflection.

International business is 2/3 of revenue (₹520-525 Cr of ₹800 Cr base). INR strength or USD weakness could cap reported growth despite volume gains.

Large discrepancy between Q2 figures reported on call (₹209 Cr revenue, ₹33.4 Cr PAT, +20% YoY growth) and delivered results (₹71.4 Cr, ₹8.6 Cr, -58.7% YoY decline). Suggests consolidated vs. standalone, non-GAAP metrics, or restatement risk.