Strong growth & margin beat; BFSI weakness, H2 caution

₹16,180 Cr revenue +15.6% YoY; growth from Comms (+6% Q-o-Q), Retail/Transport (+9.6%), Manufacturing (+7% YoY)

EBIT margin 14.8% as stated; delivered OPM 17.8%, higher than guidance

Delivered PAT ₹1,609.7 Cr (+34.0% YoY), 9.9% NPM — mgmt understated growth by 10.8 ppts

12-month TCV up 34.8% YoY confirmed; Q2 quarterly wins of ~₹850 Cr equivalent; broad-based across verticals

BFSI +0.4% Q-o-Q, +1% YoY constant currency; sequential decline real despite higher base claim

Q1 guidance was 15% EBIT for FY27; Q2 reaffirmed same target despite delivering 14.8% EBIT (implied 15%+ expected going forward). No raise despite beat.

Q1 guidance: balance margin and growth; Q2 emphasis: growth prioritized going forward, AI-toolchain-led margin expansion ahead. Earlier: above-peer growth aspiration; now: 'will nail growth and margin' both for remainder of FY27.

Q1 guidance: positive contributions from BFSI; Q2 actual: +0.4% Q-o-Q (near-flat), down 3.9% sequentially. Management acknowledges slowdown, frames as margin-building for future. Pace below prior expectations.

No formal guidance in Q1; Q2 detailed: 25 industry AI use cases deployed, 100+ in progress, 200+ AI assets, Helix becoming AI-first transformation engine. Concrete progress, not yet a revenue line.

Q1 guidance: manage seasonality & European auto acceleration; Q2 update: sequential decline -3.9% in Manufacturing due to large program acceleration, but 'manageable within portfolio'.

Strong growth across service lines despite transformation. AI toolchain differentiation (Helix, Orion) enables clients to scale at speed. Digital enterprise applications growing ~13% YoY. BPS at 6.5% YoY. Growth broad-based; AI investments translating to better client outcomes, not margin-focused.

Management clarified: deflation debate is overblown. Reality is clients always delivered existing work more efficiently. Opportunity now is to take on wider scope (AI agents, modernization) at higher value, not just model-builder pricing. Shift from 'efficiency only' to 'efficiency + broader responsibility'. Not a cloud-like compression; more nuanced.

Too early for new three-year plan announcement; working on it. No unreasonable seasonality expected in H2. Company will continue to see some European auto weakness, but manageable within portfolio. Emphasis on growth; margin will follow naturally from AI toolchain differentiation.

For the quarter, had employee transfer from Orange large deal, and high utilization. Reality: we expect gross margin to expand via differentiated AI toolchain for fixed-price contracts (less head-count needed, higher productivity). Second, we're within 20 bps of stated margin aspiration (17.8% vs 15%+). Going forward, focus is growth + margin together, not sacrificing one for the other.

Comms fastest-growing (+6% Q-o-Q, +9.5% YoY). BFSI +0.4% Q-o-Q but +4.6% YoY constant currency. We grew at ~5.4% CC last quarter; expect to get back to or higher in next quarter. BFSI fundamentals are strong: high aspirations for market share. Hard work to shift large-cap company from mid-market focus, but we have ingredients in place now. Focus and leadership changes made; not because others less important, but prize in BFSI is very significant.

Growth: turbocharged revenue from accounts >US$20M now ~US$20M revenues annually; highest NPS for these accounts signals wallet expansion. Largest clients grew 11.7% YoY. Account size of top 10 increasing significantly ahead of competitors. Quantum: very early stage, not material revenue line next 12 months. But building capability ahead of peers. National Quantum Computing Centre collaboration, hackathon win, and partnerships with IHub show progress. Post-cryptography use cases gaining traction; 1-2% of BT network energy optimization potential is significant long-term.

Comms pipeline remains strong; Orange deal large and ramp-up delivering. FP margin: we've made progress; we're close to best-in-class. AI toolchain will be next major lever — differentiated toolchain per service line enables higher productivity, release head-count from FP projects to growth projects. Done with head-count reduction in key projects; now opportunity to grow revenue on released head-count.

Cloud cost increases are real driver; hardware capex is rising. Important: client spend on capex ≠ concern candid. Most enterprise IT budgets on tokens still very small fraction (~tens of millions, not hundreds). Yes, competitive intensity high, but clients expect productivity, not lower costs only. Shift to agentic models (open-source, open-weight) will happen over time; but pricing power on professional services should hold as competitive intensity reflects demand, not doom.

Qualitative: company prioritizing growth going forward; above-peer growth aspiration continues. Three-year plan in preparation but timing unspecified. YTD: Q1+Q2 growth ~16% YoY suggests full-year tracking above-peer peer (~8-10%).

Q2 delivered 14.8% EBIT, OPM 17.8%. Management held firm on 15% despite strong beat, implying H2 margin pressure or conservative outlook. AI toolchain expected to drive gross margin expansion but offset by head-count investments and wage inflation.

Capex strategy focused on AI capability infrastructure, not traditional IT. Quantum, Helix, and agentic capability buildout expected to continue. No P&L impact material until monetization phase.

BFSI +0.4% Q-o-Q and -3.9% sequentially despite prior growth guidance. Largest segment by revenue; slowdown signals execution challenges or market softness. Management frames as 'market-share building' but pace lags peer expectations.

Large European automotive program acceleration in Q1 caused sequential decline -3.9% in Manufacturing in Q2. 'Manageable within existing portfolio' per management, but near-term revenue drag.

Helix AI transformation still in capability-building phase (25 use cases deployed, 100+ in progress). Revenue contribution minimal; quantum initiatives explicitly 'not material next 12 months'. Clients still in pilot phase; path to scale unclear.

Q2 delivered OPM 17.8%, beating 15% FY27 guidance by 280 bps, yet management reaffirmed 15% target for full year. Implies either H2 margin compression expected or Q2 benefited from one-time items. Lack of raise despite beat raises execution concern.

24,000+ employees reskilled on AI productivity tools; 4,500+ on agent platforms; 38,000+ hold AI certifications. Head-count released from fixed-price projects being redeployed. Productivity/retention risk if AI monetization lags or utilization drops.