Seshaasai Technologies Ltd (STYL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, you are connected for the Seshaasai Technologies Limited conference call. Please stay connected, this conference will begin shortly. Participants, please stay connected. This conference will begin in another minute. Thank you.
Moderator: Ladies and gentlemen, good day and welcome to Seshaasai Technologies Limited Q2 FY '27 earnings conference call. 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
Moderator: pressing * and then 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Jagtap from E&Y Investor Relations team. Thank you, and over to you, sir.
Pratik Jagtap (E&Y Investor Relations): Thank you, Sagar. Welcome everyone, and thanks for joining Seshaasai Technologies Limited Q2 FY '27 earnings call. The results and presentation have already been mailed to you and you can also view them on our website at www.seshaasai.com. In case anyone does not have the copy of investor presentation or press release, please do write to us and we will be happy to share them with you. To take us through the results today, we have the management of the company represented by Pragnyat Lalwani, Chairman and Managing Director; Gautam Jain, Whole-Time Director; and Pawan Kumar, Chief Financial Officer. Pragnyat will start the call with brief overview of the company and business update, which will be then followed by Pawan who will take us through the financial performance for the quarter. And then we will open the floor for Q&A session. As usual, I would like to remind you that anything that is mentioned in this call which reflects any outlook for the future or which can be construed as a forward-looking statements must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited, to what we have mentioned in the prospectus filed with SEBI and subsequent annual reports that you can find on our website. Having said that, I will now hand over the call to Pragnyatji. Over to you, sir.
Pragnyat Lalwani (Seshaasai Technologies Ltd): Thank you, Pratik. Good day, everyone, and thank you for joining us for our Q2 and H1 FY '27 earnings call. I hope you have had the opportunity to review our financial results and presentation. Let me first take you through the key business highlights, after which Pawan will discuss the financial performance. We are pleased to report another quarter of healthy growth. Revenue from operations increased 15% year-on-year and 7.7% sequentially to Rs. 4,053.1 million. For the first half, revenue increased 17.9% year-on-year to Rs. 7,817.8 million. The quarter combined broad customer engagement with a meaningful sequential recovery in profitability. Payment Solutions was the principal growth driver in Q2. Revenue reached Rs. 2,182.6 million, up 21.7% year-on-year and 38% sequentially. Revenue growth was broad-based, but led by Payment Solutions, supported by higher volumes of payment cards across banks, metal cards growth, mass transit programs and payment card exports. We retained wallet share with our largest customers and won one multi-year tender during this quarter. Communication and Fulfillment Solutions revenue was Rs. 1,290.1 million. It remained broadly stable year-on-year, but moderated sequentially because Q1 and Q4 carried larger volumes and certain yearly recurring one-time projects that tend to execute in those periods. We continue to retain wallet share with our top customers. We added one new enterprise account in the quarter and renewed a 3-year contract with a leading PSU bank for fulfillment solutions offering. We also renewed a 3-year contract with a leading PSU life insurer, securing a significant share of the business. IoT Solutions IoT Solutions revenue grew 45.6% year-on-year to Rs. 551.9 million. Sequentially, revenue moderated from a high Q1 base, reflecting retail sector seasonality and the normalization of volumes following a large retail customer migration which happened in Q1. RFID continues to present significant long-term growth opportunities across retail, logistics, pharmaceuticals and manufacturing, driven by increasing adoption of traceability and automation solutions. We are strengthening system integrator
Pragnyat Lalwani (Seshaasai Technologies Ltd): partnerships to develop differentiated end to end solutions integrating hardware, software, and data intelligence. In parallel, product qualification is underway for SIM card supplies to another large telecom operator. We remain optimistic about the long-term growth potential across RFID, IoT, and BLE-based traceability, SIM and eSIM solutions. External environment continue to be challenging with the USD/INR remaining elevated, higher fuel prices having its impact on logistics and input material costs. Cost of materials, therefore, increased faster than revenue on a year-on-year basis. Sequential revenue growth with a better product mix outpaced the increase in material costs, driving an 89 bps improvement in gross margin to 42.5%. We remain focused on diversified sourcing, calibrated inventory planning, localization, and procurement discipline. The contribution from our top 10 customers was 57%, reflecting a well-diversified portfolio while retaining deep relationship with large clients. Our sustained focus on R&D, product innovation, and continuous technological advancement is deeply embedded in our organizational culture. This commitment is reflected in our growing intellectual property portfolio. During the quarter, we filed two new patent applications, taking our cumulative filings across products and solutions to 21, of which five have been granted. Our subsidiary, Autoll Solutions, also filed for four new patent applications this quarter, bringing its cumulative filings to seven, out of which two have been granted. These milestones reflect our ongoing efforts to develop differentiated solutions and strengthen our technology-led competitive advantage. As we look ahead, our focus remains on strengthening our core business while building new avenues for sustainable growth. Our diversified portfolio, long-standing customer relationships, strong execution capabilities, and continued investments in technology position us well to navigate evolving market conditions and capitalize on emerging opportunities. Our priorities remain clear: deepen our wallet share with existing customers, scale our premium and metal card offerings, strengthen our IoT portfolio across RFID, SIM, and eSIM solutions, and export, expand our export business. We will continue to invest in R&D innovation, manufacturing capabilities, and strategic partnerships to develop differentiated, higher-value-added solutions for our customers. Alongside these initiatives, we remain committed to operational excellence, improving efficiencies, and disciplined execution with a clear focus on long-term value creation. Thank you for your continued trust and support. We look forward to updating you on our progress in the coming quarters. With that, I will now request Pavan to take you through the financial and operational highlights for the quarter. Over to you, Pavan.
Pawan Kumar (Seshaasai Technologies Ltd): Thank you, Pragnyat sir. Good day everyone, and thank you for joining our Q2 and H1 FY '27 earnings call. Let me begin with a summary of our consolidated financial performance. In Q2 FY '27, revenue from operations increased to 4,053.1 million, representing a growth of 15% year on year and 7.7% sequentially. Total income was 4,112.5 million, up 16.4% year on year and 7.2% sequentially. Gross profit was 1,724.4 million with the gross margin at 42.5%. Gross margin improved by 89 bps sequentially due to operating leverage and a favorable product mix. It remained 331 basis points lower year on year primarily due to the elevated USD/INR and the geopolitical situation and its related impact on input costs. EBITDA increased 12% year on year and 12.9% sequentially to 1,065.6 million. EBITDA margin was 26.3%, an improvement of 121 bps over Q1 FY '27. Operating EBITDA, that is excluding other income, was 1,006.2 million with a margin of 24.8%. Operating EBITDA grew by 7% year on year and 15.2% sequentially,
Pawan Kumar (Seshaasai Technologies Ltd): demonstrating improved operating leverage during the quarter. Finance costs declined by 74.9% year-on-year, reflecting the benefit of debt repayment. Profit after tax increased by 21% year-on-year and 15.6% sequentially to 697.3 million. PAT margin improved to 17.2%. For H1 FY27, revenue from operations was 7,817.8 million. EBITDA was 2,009.7 million and profit after tax was 1,300.7 million. EBITDA margin for the half year was 25.7% while PAT margin was 16.6%. Our balance sheet remains strong. Cash and liquid investments were 3,144 million. As at the end of Q2, unutilized IPO proceeds were 1,196.1 million. Cumulative utilization was 4,803.9 million, including 849.2 million towards capital expenditure, 3,000 million towards repayment of borrowings, 343.7 million towards issue expenses and 611 million towards general corporate purposes. Overall, Q2 FY27 delivered healthy growth, a sequential recovery in margins, and a stronger cash conversion outcome. We will continue to invest for growth while maintaining financial discipline. Thank you once again for joining us. With this, I hand it back to the moderator to open the floor for the Q&A session.
Moderator: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and then 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. Again, to register for a question, you may press star and then one. Your Your first question comes from the line of Aditya with Avendus Spark. Please go ahead.
Aditya (Avendus Spark): Hi, sir. Am I audible?
Pragnyat Lalwani (Seshaasai Technologies Ltd): Yes, you are audible. Go ahead.
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