3i Infotech Ltd (3IINFOLTD) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to 3i Infotech Limited Q2 and H1 FY '27 earnings conference call. We have with us the senior management team represented by Mr. Raj Ahuja, Group Chief Executive Officer, and Mr. Kalpesh Shah, Chief Financial Officer. The management will be sharing the key operating and financial highlights for the quarter and half year ended September 30, 2026, followed by a question and answer session. Please note that some of the statements made in today's discussion may be forward looking in nature and may involve risks and uncertainties. Documents relating to company's financial performance is available to the stock exchange. Trust you have been able to go through them. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Raj Ahuja. Thank you, and over to you, sir. Thanks, Ann. Before I start, just to add
Raj Ahuja (3i Infotech Ltd): our Company Secretary Varika is also in the call, so we have all
Raj Ahuja (3i Infotech Ltd): representing represented 3i in this call. Okay, let me start. Good afternoon everyone, and thank you for joining us for 3i Infotech's quarter two and half-year one FY 27 earnings call. It's my pleasure to connect with our shareholders, analysts, and stakeholders as we review our performance for the first half of the financial year and share our outlook for the period ahead. At the beginning of FY 27, I had spoken about our transition from building the foundation of transformation to deliver measurable business outcomes. During the first half, we have made steady progress in strengthening our core business, improving execution, and aligning our organization with our evolving capabilities. We are done with the groundwork of building capabilities and execution and now as we move into the second half of FY 27, our focus is on building business momentum, expanding our market presence, and driving sustainable, profitable growth. We will continue to prioritize operational and delivery excellence and disciplined execution as we advance towards our Vision 2030 ambitions. I believe the progress made so far provides a strong foundation for the next phase of our journey, where our priority will be to translate our strategic initiatives into consistent business performance. With this context, let me take you through our financial performance, key business developments, and strategic priorities. Let me be- begin with our financial performance. During quarter two FY 27, revenue from operations stood at approximately Rs 182 crore, representing year-on-year growth of around 4.1% and sequential growth of approximately 2.3%. For H1 FY 27, revenue from operations reached approximately Rs 360 crore, around 4.2% higher than the corresponding period last year. For the second quarter, EBITDA stood at 13.7 crore rupees with a margin of approximately 7.5%, and profit after tax was 6.7 crore. For the first half, EBITDA stood at Rs 25.2 crore with a margin of approximately 7%, and profit after tax was Rs 13.2 crore. The number are strictly not comparable to the last year's numbers where we had one-time income of approximately Rs 27 crores net of taxes in the first half of the last year due to US ERC credits. For the H1 FY 27, despite investment of working capital in new contracts for more than 20- Rs 20 crores, especially in India and Middle East, and expanding capabilities through CoEs, cash flow from operations were positive at Rs 2 crore, adding to our cash reserves. Our focus remains on sustaining growth in core operating revenues while improving delivery productivity, strengthening cost discipline, and enhancing the quality of our business mix. We're aligning our investments in sales, talent, and technology with opportunities that support strong operating performance over time. Our results include investments made so far in creating capabilities through AI, automation, ERP, security, and application modernization centers of excellences, adding relevant subject matter expertise, completing creation of our leadership team, and investment in processes and technologies. It also includes one-time cost pertaining to cybersecurity event, some old tax dispute settlements, and legal cost pertaining to our investment me- investor matters. We continue to maintain a healthy talent environment with voluntary attrition declining to 18% in half year FY 27 from 22.2% in half year FY 26, reflecting improved work- workforce stability and the positive impact of our people-focused initiatives. Turning to our business performance, quarter two FY 27 saw continued momentum through new business wins, contract renewals, and expansion of existing engagements. We added 25 new clients during the quarter, strengthening our presence across banking, insurance, energy, manufacturing, government, consumer, and technology sectors. In India, our engagements covered application development and maintenance, infrastructure management, data analytics, and business intelligence. Internationally, we secured opportunities across North America, the Middle East, Asia-Pacific in digital engineering, cloud services, APIs, integrations, DevOps, and automation.
Raj Ahuja (3i Infotech Ltd): Our efforts to diversify the consumer portfolio are also reflected in the revenue mix, with the contribution from our top five customers declining from 27.2% in half year FY26 to 23.5% in H1 FY27, reducing concentration and strengthening our business base. During the first half, we recorded a total contract value order booking of ₹467.3 crores and an annual contract value of ₹379.5 crores including renewals and new businesses, reflecting continued business opportunities across our portfolio. Going forward, our focus will be on strengthening existing accounts, acquiring new customers and converting our opportunities pipeline into larger solution-led engagements to support sustainable growth. Coming to the geographical performance, our international business continues to be the key contributor to overall performance with the US remaining our largest market, accounting for approximately 49.1% of Q2 FY27 revenue, followed by India at 34.9%. The Middle East delivered strong growth, with revenue increasing 54.3% quarter-on-quarter to ₹24.5 crore, driven by new business engagements. During the quarter, the US contributed ₹89.4 crore, India 63.6 crore, and Asia-Pacific ₹4.5 crore. Going forward, we'll focus on strengthening our presence across key international markets, expanding strategic accounts, and pursuing new opportunities aligned with our evolving technology capabilities. We're also focusing on increasing our pace in new geographies added last quarter, namely Canada and East Africa, where initial interactions have been good, creating a reasonable funnel in the very first quarter of operations. As part of our ongoing business transformation, we have moved towards a more capability-led structure. Building on the Center of Excellence led model introduced last quarter, we have aligned our business offerings with our growing capabilities to better serve our customers and support technology-led growth. Effective October 26, we transitioned our business into three capability aligned service lines to depict our new and evolving Center of Excellences. One, Digital Engineering Services, which was formerly known as Application, Automation and Analytics division; second, Cloud Infrastructure and Security Services, formerly known as Infrastructure Services; third, Business Process Services, which retains its existing identity with an enhanced focus on AI and automation-led services. This transition brings together our domain expertise, technology capabilities and delivery strengths under a more focused structure. Our objective is to move beyond individual service engagements towards broader integrated solutions and long-term customer partnerships. With this business realignment, let me take you now to the performance of our three business segments. Digital Engineering Services remains our largest business, contributing approximately 74.1% of half year FY27 revenue. With capabilities spanning Application Engineering and Modernization, Enterprise Applications, Data and Analytics, Intelligent Automation and Quality Engineering, we are focused on supporting customers in their digital modernization and transformation journeys. Cloud Infrastructure and Security Services contributed approximately 17.9% of H1 revenue. Our focus in this unit is on strengthening capabilities across hybrid cloud, cyber security, digital workplace, enterprise automation and AIOps to help customers build secure, resilient, and efficient technology environments. Business Process Services accounted for approximately 7.8% of H1 revenue. There are a lot of headwinds in this business due to increased usage of AI, automation,
Raj Ahuja (3i Infotech Ltd): Alongside our business capabilities, artificial intelligence remains an important focus, as we continue to integrate AI and automation across all our services, platforms, and internal operations. During the quarter, we advanced our capabilities in Gen AI, Agentic AI, intelligent automation, and AI-led quality engineering, while developing a centralized AI repository to bring together reusable solutions, frameworks, and use cases. Our technology capabilities are supported by over 150 data and advanced analytics professionals and 350 certified automation and quality engineering specialists serving more than 20 active customers globally. Going forward, our focus will be on translating these capabilities into scalable, AI-enabled solutions that improve customer outcomes, enhance delivery productivity, and create new business opportunities for us. To create an enhanced value and focus synergies, we have decided to integrate all our AI, analytics, and automation CoEs into a separate legal entity. These businesses require a different rhythm with consulting and senior-level partnership mindset to be successful. To enable this, the board has already approved setting up of a subsidiary in the last meeting, which is part of our stock exchange filings. We also might look into some partnership in this entity in future to increase their overall stakeholder value. To further support our technology-led growth, we continue to strengthen our NuRe platform ecosystem and proprietary solutions, focusing on scalable offerings that compliment our core business, core services business. There has been some improvement both in product and GTM strategy in this area. We should mature by the year end FY '27 and will start adding their base to the 3i Infotech story. We're also deepening our strategic technology partnerships to expand our solution capabilities, strengthen market reach, and create new business opportunities. Our emphasis remains on leveraging these collaborations to deliver greater customer value and support long-term growth. With the addition of leadership in this area, we have started working closely with large partners both in India and internationally to focus on long-term industry-specific solutions rather than just being in services. As we move forward, operational efficiencies, delivery excellence, and accountability remains key priorities. We continue to strengthen our delivery practices, optimize resource utilization, and leverage automation to improve productivity and support sustainable profitability. Our people remain central to this transformation. We're investing in leadership development, multi-skilling, and future-ready capabilities across AI, Cloud, Cybersecurity, and Digital Engineering to support our evolving business needs. Our six-pillar framework, people, process, productivity, platform, partnering, and profitability continues to guide us our efforts towards building a stronger, more agile, and scalable organization. Before moving to our outlook, I would like to briefly touch upon two ongoing matters. The RailTel contractual dispute continues to progress through the arbitration process, while the eMudhra related matters remains under review post response from EOW, and we're expecting closer of the matter in the current quarter. In parallel, we continue to work on old legacy matters pertaining to RBI, FEMA, entity simplifications, and closing old inter-company transactions. Being old matters, the progress has been slow, but steady, and the impact of that will continue to be part of our financials and disclosures as per requirements. We remain committed to following the appropriate legal processes and will keep stakeholder informed of any material development as required. Looking forward to second half of FY '27, our priority is to build on the progress made so far by driving business growth now, strengthening by strengthening our sales pipeline, expanding customer relationships, and converting our CoE-led capabilities into larger solution-led opportunities. We'll also continue to advance our AI and platform initiatives, develop industry-focused offerings, and improve delivery productivity to support sustainable and profitable growth. Our Vision 2030 is not just about achieving a financial milestone, but about building a stronger, agile, and technology-led organization recognized for its capabilities, customer trust, and consistent execution. The first half of '27 has laid a foundation through our business alignment, capability development, and operational improvements. Our priority now is to translate this progress into measurable business outcomes and long-term value creation for our
Raj Ahuja (3i Infotech Ltd): as. I believe we are moving in the right direction and my leadership team and I remain focused and committed on delivering the next phase of our transformations with discipline and commitment. Before I conclude, like to thank our customers for their continued trust, our technology partners for their collaboration, and our employees for their commitment and dedication. I also extend my appreciation to all our shareholders and investors for their continued confidence and support. We remain committed to building a stronger, more agile, and technology-led 3i Infotech with a clear focus on sustainable profit growth and long-term stake- stakeholder value. Thanks aga- Thank you once again for joining us today. With that, I will hand over the call back to the moderator for the question-and-answer session. Thank you.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rashida Saifi from Robo Capital. Please go ahead.
Rashida Saifi (Robo Capital): Good afternoon. Am I audible?
Moderator: Yes, ma'am.
Rashida Saifi (Robo Capital): Okay. I just wanted to know what do you expect the revenue growth to be in H2 FY27 and '28?
Raj Ahuja (3i Infotech Ltd): Hi, Rashida. If the question is only on the revenue numbers, we don't give any like say outlook for the future as of now. What we are expecting is this momentum to continue to build and the growth will continue from where we have finished the H1. We have set the base at this point of time and from here, the only based on our order booking, based on the funnel what we have, and based on our customer relationships what we have built in the last 1.5-2 years. Now, we are working on increasing the revenue based from here to the next levels. I we don't give a formal outlook of the numbers, so all the numbers are in line with what we have given our Vision of 2030 and we are progressing towards that.
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