Crizac Ltd (CRIZAC) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (Equirus Securities Limited): Ladies and gentlemen, good day, and welcome to Crizac Limited Q2 FY '27 earnings conference call, hosted by Equirus Securities Limited. 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. Samarth Patel from Equirus Securities Limited. Thank you, and over to you, Mr. Patel.
Samarth Patel (Equirus Securities Limited): Good afternoon, everyone, and welcome to Crizac's Q2 FY '27 earnings conference call. We have with us from the management, Dr. Vikas Agarwal, Managing Director of the company, Mr. Manish Agarwal, Chief Financial Officer, Mr. Christopher Nagle, Chairman of the company, and Mr. Sanjeev Sancheti from Veritas Advisors, the company's Investor Relationship Advisors. Sanjeev sir, if you can start with and take us through the Q2 performance and the outlook for the second half and FY '27, after that, we can open up for the Q&A. Over to you, Sanjeev sir.
Sanjeev Sancheti (Veritas Advisors): Thank you, Samarth. Good afternoon to all, good morning to all the participants. Before I hand over the call to Dr. Vikas Agarwal for the opening remarks, I would like to draw your attention to the Safe Harbor Statement in the earnings presentation. I request each one of you to go through the disclaimer in that presentation before the meeting starts so that all of you are aware of the same. Over to you, Dr. Vikas Agarwal.
Vikas Agarwal (Crizac Ltd): Thank you, Sanjeev ji. Good afternoon, everyone, and thank you for joining us for the earnings call for the second quarter of FY '27. Let me begin with the macro background that impacted quarter two FY '27 performance. As you all are aware, the conflict in West Asia between February and June disrupted international travel and led to widespread flight cancellation, while a sharp currency movement in the key source market made overseas education costlier. It also caused a lot of uncertainty between students. As a result, a number of prospective students, predominantly at post-grad level, postponed their study plan. This impacted our quarter two performance with operating income of 1,027 million INR, a decline of 36.7% year-on-year, operating EBITDA of 330 million, and a PAT of 369 million. For H1 FY '27, the operating income was 3,039 million, down 18.3% year-on-year, and a PAT was 840 million, down 10.7%. The revenue was deferred, not lost. Quarter three and quarter four are our peak intake season, and a strong quarter two, quarter three has already been built in quarter two. We recognize revenue only once university confirms enrollment, which typically happens 45 to 90 days after the course begins. The revenue we reported in quarter two came mainly from application processed in quarter one and before, the period most affected by the disruption. While the work our team did in quarter two is what will show up in quarter three. Most of the students who will drive our quarter three revenue have secured their admission, their visa, and have been, their visa have been approved and some of them have already started their journey and courses at university. This gives us the high confidence that quarter three FY '27 revenue will grow in the range of 10% to 12% over quarter three FY '26. Further, a large share of application that will form the base for quarter four revenue has
Vikas Agarwal (Crizac Ltd): already been received and is being processed. Hence, barring any Black Swan event, we are confident that our revenue and profit for FY '27 will be in line with FY '26 despite the difficult year for the industry. The guidance we had given earlier. We also remain committed to rewarding the shareholders. Even in the quarter affected by external disruption, the board has declared the interim dividend of rupees 4 per equity share. And we expect the total dividend of FY '27, including the final dividend, to be in the range of 8 to 10 rupees per share. This is backed by our debt-free balance sheet, continued strong cash flow from operating and net cash of approximately 5,984 million. Before turning to our operating performance, I want to highlight an important development for our largest market. In this budget on 28th October, the UK government proposed to set graduate visa at two years for graduate of high-compliance university with strong labor market outcome rather than 18 months that would otherwise apply to all the students from January '27. We see this as a signal that after a period of restrictive policy, UK is becoming more open to welcoming international students and talent. The government is yet to define which universities will qualify, but the direction is constructive and it rewards compliance and student quality, on which our platform is built. More significant than the headline numbers, however, are the underlying drivers of our business. We continue to gain market share while policy headwinds reduced visa volume in our key markets. Between FY '24 and '26, UK sponsored study visas fell 20% while Crizac student grew 53%, taking our share from 3.5 to 6% globally. Among Indian students, our share rose from 9% to 13.9% even as the visa granted to Indian students fell by 22% in the same time. Among Indian students from outside India, our market share more than doubled from 1.5% to 3.7%. Through this period, we not only gained market share, but also grew our absolute numbers. As immigration policy comes under political scrutiny, government are not closing access to international education. Rather, they are becoming more selective about who is admitted. In response, universities are consolidating their recruitment partnerships, retaining those with strong compliance framework and broader reach. Our market share gains indicate that universities are increasingly choosing Crizac at precisely the time they are applying greater scrutiny to their choice of partners. We believe this demonstrates the resilience of our business model across market cycles. The market share gains are underpinned by three core strengths of our platform. The first is the depth of our university partnership. We work with over 600 institutions as of today and our relationship with each of our top 30 partners extends beyond 5 years. The second is the breadth of our counseling partner network, which comprises of more than 18,500 partners, of whom 4,942 are active during first half. The third is our scalable technology platform, which processed over 2 lakh applications from 92 unique countries, with student enrollment rate of 12.8% on rolling 12 months basis.
Vikas Agarwal (Crizac Ltd): Our technology remains central to our strategy. In March 2026, we have committed 2.5 million USD to the in-house development of Edumentor, our AI-led platform, our student university matching and mentorship under the leadership of Mr. Dishan Kamdar, our chief innovation officer. Together with our technology investment, this is making our platform AI ready, which we believe will strengthen our competitive positions as we grow. Stricter visa and immigration policies are recurring risk in our industry, and they have historically been cyclical. We believe we are close to the end of this recurrent cycle, as the UK budget propose suggest and we expect the benefit of conditions normalise. Over the long-term, the structural demand of quality international education remains strong underpinned by growing aspiration across the world. Our presence across more than 90 countries and 15 destination market positions us to capture it. That said, we recognize that diversification across destination will take time to reflect our performance. In H1 destination outside UK accounted for approximately 9.5% of total applications, which is more than double the 4.7 in first half of FY '26. Revenue however is yet to follow, with these destinations contributing only 1.4% of the total as of today. That is typically a new destination where conversion starts slowly and improve as the business deepens. So, we see this gap as headroom rather than shortfall. To summarize, Quarter 2 was an exceptional driven by unforeseen external events with 10% to 12% growth in Quarter 3 already in sight and our key intake, including the peak intake quarter still to come in the second half. We believe H2 FY '27 to be significantly stronger than H1 and ahead of H2 FY '26. That keeps us firmly on track to deliver the revenue and profit in line with FY '26. The same pipeline visibility that allows us to flag Quarter 2 impact in advance is what gives us the confidence today. With that, I will hand over Mr. Christopher Nagle, our Chairman, who will share his perspective on global industry environment and Crizac's competitive positioning. Over to you, Chris.
Christopher Nagle (Crizac Ltd): Thank you, Vikash, and good afternoon to everyone on the call. Let me start with the broader landscape. Immigration and study visa policies continue to evolve across the major study destinations and, in several markets, they have become more restrictive. Student demand is shifting between destinations as a result and these patterns can change quickly. Currency movements and geopolitical developments add to the uncertainty for students and families and their timing is hard to predict. What has not changed though is the underlying demand. Aspirations for quality international education continue to grow across the world and destination countries continue to need international students. As compliance requirements rise, universities are also becoming more selective, favoring fewer, larger and more compliant recruitment partners. The UK, which is our anchor market, illustrates this well. Net migration has fallen sharply as immigration rules have become more restrictive
Christopher Nagle (Crizac Ltd): graduates, it marks an encouraging shift in tone. After years focus on reducing numbers, the UK government is now signaling that it wants to attract international students and skilled graduates with the stated aim of building Europe's most business-friendly migration system for highly skilled people. From a university perspective, a longer post-study work period is linked to compliance and graduate outcomes, which rewards the same quality the universities now expect from their recruitment partners. For universities, international students are central to financial sustainability. Domestic tuition fees remain capped, while international fees are uncapped and a growing number of English higher education providers are reporting or forecasting deficits. What universities need is a reliable flow of genuine, well-prepared students. That is why the Agent Quality Framework and stricter compliance standards for sponsoring students are raising the bar for recruitment partners. This favors selective, scaled, and structured platforms like Crizac, and it is reflected in the market share gains Vikash just outlined. At the same time, we are working actively to develop new corridors beyond our traditional routes, such as students from Africa to India and from Malaysia to China. Complimented by our recent acquisitions, these corridors will broaden our source and destination mix over time. Our focus through this phase is on what we can control: the quality of the applications we put forward, the depth of our 600+ institutional relationships, and the strength of our leadership. With Eric Wemenga now leading our UK and European operations, our university relationships are in experienced hands. And I continue to support the team at the board level. With that, I will hand over to Manish for the financial overview.
Manish Agarwal (Crizac Ltd): Thank you, Chris. Good afternoon, everyone. As Dr. Vikash has covered the revenue performance, I will focus on the remaining elements of our financial performance. Operating EBITDA for Q2 FY27 stood at INR 330 million, down 44% from INR 590 million in Q2 FY26. EBITDA margin was 32% as compared to 36.3 in Q2 FY26, a decline of 418 basis points. This reflects lower operating income and a higher cost base from our team built out, technology investment, and expansion. Sequentially EBITDA margin improved by 233 basis points from 29.8% in Q1, supported by a lower cost of service. For H1 FY27, operating EBITDA was INR 930 million, down 24.9% at an EBITDA margin rate of 30.6%. Other income for the quarter was INR 85 million. Depreciation is INR 38 million, compared with INR 61 million last year, reflecting a change in depression depreciation method from written down value to straight-line method, effective 1st April 2026, applied prospectively. Profit before tax for the quarter is INR 401 million, down 38.1% on Y-o-Y basis. Profit after tax is INR 369 million, down 23.7% at a PAT margin of 33.2%. This decline in PAT was narrower than operating EBITDA, owing to higher other income, lower depreciation, and lower tax charge in the quarter. For H1 FY27, PAT stood at INR 840 million, down 10.7% at a margin of 26.3%, with earning per share of INR 4.8. Crizac remains net debt-free with free cash of INR 5,958 million as on September 30th, 2026, up from INR 4,693 million in March '26. On annualized basis, H1 ROE is 24.6% and ROCE of 31.3%, reflecting the asset-light nature of our model. Net cash flow from operating activity for H1 is INR 1,269 million, or 136% of operating EBITDA.
Manish Agarwal (Crizac Ltd): Part of this reflects favorable working timing and we expect cash conversion to normalize over the year. As Dr. Vikash mentioned, the board has declared an interim dividend of INR 4 per equity share, amounting to INR 700 million. On the outlook, as Dr. Vikash outlined, we expect Q3 FY27 revenue to grow by 10 to 12% over Q3 FY26 numbers. As most of the students behind this revenue already have their admission and visa in place. With a large share of application for Q4 already received and being processed, we expect FY27 revenue and profit in line with FY26 numbers. What I can say with confidence is that the structural demand for international education remains intact, our balance sheet is strong and our in organic pipeline is very active. We remain constructively optimistic about the medium-term opportunities. With this, I hand back to the operator to open the floor for questions. Thank you.
Moderator (Equirus Securities Limited): Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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 comes from the line of Samarth Patel from Equirus Securities. Please go ahead.
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