Xtranet Technologies Ltd (XTRANET) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to Xtranet Technologies Limited Q2 and H1 FY '27 earnings conference call hosted by Valorem Advisors. 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 Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, Purvangi.
Shivangi Jain (Valorem Advisors): Thank you. Good evening, everyone, and a very warm welcome to you all.
Shivangi Jain (Valorem Advisors): My name is Shivangi Jain from Valorem Advisors. We represent the Investor Relations of Xtranet Technologies Limited. On behalf of the company, I would like to thank you all for participating in the earnings call for the second quarter and first half of the financial year 2027. Before we begin, let me mention a quick cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief, as well as assumptions made by, and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial period under review. Now, let me introduce you to the management participating with us in today's earnings call, and hand it over to them for their opening remarks. We have with us Mr. Sukhbir Singh Kukreja, Managing Director and promoter; and Mr. Chetan Anand, Group Chief Financial Officer. Without any delay, I request Mr. Sukhbir Kukreja to start with his opening remarks. Thank you, and over to you, sir.
Sukhbir Singh Kukreja (Xtranet Technologies Ltd): Good evening, everyone. And thank you, once again, for joining us, the Xtranet Technologies Limited, earnings call. This is our second quarter and first half of the financial year 2027. We appreciate your continued interest in the company, and welcome all of our shareholders, investors, and other stakeholders for this earnings call. Before discussing our quarterly performance, I would like to briefly touch upon the evolving industry landscape and the opportunities available and present for our organization. The Indian data center industry is entering into significant growth phase driven by the adoption of artificial intelligence, cloud computing, enterprise digitalization, rising data consumption. India's installed data center capacity is expected to increase nearly fivefold to approximately 7.5 GW by March 2030, supported by the investment of more than INR 3 lakh crore over the next 4, 5 financial years. This expansion is expected to create opportunities across data center infrastructure, cloud hosting, network infrastructure upgrade, and managed IT services. The broader Indian IT service industry is also evolving with the growing demand for AI, cloud adoption, cybersecurity, and enterprise digital transformation projects. Revenue growth for Indian IT service companies is projected at 3% to 5% in FY '27. While near-term growth is expected to remain measured, the adoption of emerging technologies and the enterprise modernization initiative offers meaningful and long-term opportunities for the sector. Against this backdrop, we believe that the companies with integrated capabilities across data center infrastructure, enterprise applications, digital transformation services, and proprietary technology platforms, we will be well-positioned to address the evolving technology requirement of the business. Xtranet is strategically positioned to address these evolving requirements through its integrated technology capabilities. Xtranet Technologies Limited is an integrated technology solution provider working with over 24 years of experience catering to the government, institutions, private sec, public sector undertaking, and private enterprises. Our business spans the technology lifecycle, encompassing data center infrastructure and IT operations, enterprise application, digital transformation services, and proprietary platform built by Xtranet. Two of our platforms, SynErgy, which enabled low-code, digital transformation, and XtraTrust, which is a compliance and trust PKI based authentication solution, we further strengthen our integrated service offerings. Our largest business vertical, data center infrastructure and IT operation, remains a key growth driver. Our capabilities in the segment cover data center and disaster recovery infrastructure, infrastructure modernization, cloud infrastructure, ongoing IT operations, and enabling us to support clients across their critical infrastructure requirements.
Sukhbir Singh Kukreja (Xtranet Technologies Ltd): finance, human resource, supply chain workflow, change management and other related modules. In our digital transformation services segment focus on enabling organization to transform from legacy system to scalable and integrated digital transformation platform. Through our application cloud and analytics capabilities, we also leverage the technologies such as artificial intelligence, internet of things and blockchain to facilitate automation, enhance security, enabling real time monitoring and support data driven decision making. Our proprietary platforms present another important dimension of our business. ExtraTrust provides solution for secure authentication, digital signature, trusted digital transaction particularly across regular regulated environments. ExtraTrust is among the Certifying Authority approved by Ministry of Electronics and Information Technology, GOI, Government of India and is authorized to issue digital signature certificates and also provide eSign certificates. Its regulatory position combined with the mission critical nature of digital trust applications provide the foundation for long term adoption and customer relationship. Over the years we have established a strong execution track record having delivered 175 plus projects during three financial years including more than 50 plus data center related projects. Our operation extend across 15 plus states and 10 plus industries, reflecting our diversified presence across customer segment and geography. Government and PSUs client contributing approximately 47% of of our FY 26 revenue. We are supported by the workforce of more than 500 permanent employees and 350 plus contractual employees providing the execution capabilities required to service our diversified project portfolio. An important differentiator of our businesses the combination of project-led execution with opportunities in recurring managed services and platform-based offerings. Our solution are strengthened by establishing relationship with leading technology partners and our experience in executing complex technology projects. Going forward, our presence across e-governance, digital trust, smart cities and enterprise infrastructure providers with the exposure to savior several important areas of technology led transformation. We remain focus on leveraging our integrated capabilities, strengthening our customer relationship and expanding our participation in mission critical technology projects. With that overview let me now take you through the key operational and business highlight for the quarter and half year under the review. We delivered a successful quarter with exceptional growth and robust execution momentum across all our business verticals. During quarter two FY 27, we secured fresh order of approximately 90 crores taking our order book to around 390 crores. Our bid pipeline also remained strong at over 2,000 crores providing opportunities to further expand our business. During the quarter we also secured orders from the BFSI segment and the extension of existing customer mandates further strengthening our client relationships. Our integrated four vertical business model continues to be an important competitive differentiator. Through data center infrastructure and IT operations, enterprise application, digital services and our proprietary platforms we are positioned to address a wider range of technology requirement through integrated solutions. This approach also create opportunities for cross-selling, deeper customer engagement and longer duration of engagements. An important strategic development during the quarter was the formation of Xtranet Data Center, a dedicated subsidiary focused on developing and operating data center infrastructure. Through this initiative we aim to address the growing requirement of our existing enterprise and BFSI institutional customers across hosting, cloud infrastructure and managed services. This represent an important step towards expanding our infrastructure capabilities and building opportunities for recurring annuity based revenues. We are also focused on scaling our proprietary technology platform ExtraTrust and Cynergy which together contributing 14% of our revenue. ExtraTrust addresses opportunities in digital signature, eSign, authentication, PKI, secure digital transformation particularly across the BFSI, government and enterprise segment.
Sukhbir Singh Kukreja (Xtranet Technologies Ltd): Agentic AI and no code low code solutions that help enterprise to streamline workflows and accelerate digital transformation using the AI platform. We see opportunity to expand these platform alongside our existing services, deeper customer relationships and grow recurring revenues. On the international front, we continue to explore business opportunities, technology partnerships and strategic collaborations, leveraging our integrated capabilities across infrastructure, digital services, proprietary solutions and PKI solutions to gradually expand our market reach. Looking ahead, our focus remain on accelerating the execution of our existing order book, converting the substantial bid pipeline of around 2,200 crores into the confirmed business and strengthening our procurement, supply chain, delivery capabilities to support higher business volumes. We remain equally focused on improving profitability, operating cash flows, and capital efficiency as we scale our business operations through H2 FY27 and FY28. Overall, we enter the second half of FY27 with encouraging business momentum, a healthy order book and a substantial pipeline of prospective opportunities. Our priority remains to build on our integrated technology capabilities, strengthen customer relationship and translate these opportunities into sustainable long-term growth. With that, I would like to hand over to our Group CFO, Mr. Chetan Anand, to take you through the financial performance for the quarter and half year under review. Thank you all, once again, for attending the earning and investment investor call for the FY27 H2 H1. Over to you, Mr. Chetan.
Chetan Anand (Xtranet Technologies Ltd): Good evening, everyone. I'm pleased to share that Xtranet has delivered a strong financial performance during Q2 and H1 FY27 with significant growth in revenues, substantial improvement in profitability and continued expansion in operating margins. During Q2 FY27, our consolidated revenue increased by 63% year-on-year to approximately 110 crores, while operational EBITDA grew by 144% to approximately 22 crores with margins improving to 20.42%. Our PAT increased by 111% to approximately 14 crores with PAT PAT margins strengthening to 12.49%. For H1 FY27, revenue grew by 42% to approximately 160 crores. Operational EBITDA increased by 123% to approximately 33 crores with EBITDA margins improving by 749 base basis points to 20.49%. PAT doubled to approximately 20 crores with margins improving to 12.37%. What is particularly encouraging is that our profitability is growing significantly faster than our revenue, demonstrating improved operating performance, execution efficiency and the strength of our integrated business model. Another import important development is the continued diversification of our customer base. Historically, government and PSU business represented a significant portion of our revenues. However, with increasing traction from private enterprises, BFSI institutions and other corporate customers, our government business contribution has now reduced to approximately 30 to 35%. This is an important structural shift for Xtranet, as it creates a more diversified revenue base, reduces concentration on government projects and provides opportunities for deeper enterprise relationships, recurring services and sustainable growth. During the first half, we have strategically strengthened our procure procurement and supply chain arrangements to support accelerated execution in the coming quarters. Our focus has been on securing timely availability of hardware and software, improving procurement certainty, and protecting projected margins against supply disruptions and pricing fluctuations. While this has temporarily increased our working capital requirements, we believe these investments will support stronger execution, revenue growth and profitability during H2 FY27. We are continuously strengthening our billing, collections and working capital management processes with the objective of improving operating cash flow generation as execution progress. Our order book currently stands at approximately 390 crores, supported by fresh order wins of around 90 crores during Q2.
Chetan Anand (Xtranet Technologies Ltd): pursue accelerated growth in the second half. The momentum achieved during H1 gives us confidence in our full-year performance, and our ambition is to surpass our original revenue guidance while sustaining strong EBITDA and PAT margins. To conclude, Xtranet is entering an important phase where our focus is not merely on increasing revenue, but on building a larger, more profitable and financially stronger technology company. Our priorities remain clear, accelerated growth, improved profitability, a diversified customer base, stronger operating cash flow, and disciplined capital allocation. We believe the foundations being established today will support sustainable growth and long-term value creation for our shareholders. Thank you.
Moderator: Thank you so much, sir. Ladies and gentlemen, we will now begin with 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 please 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. First question comes from the line of Anil Joshi, an individual investor. Please go ahead.
Anil Joshi: Good evening, sir. So, my question is new data center subsidiary following the formation of dedicated data centers subsidiary, what is the proposed investment outlay in implementation timeline and funding strategy? And additionally, what is the capacity and revenue contribution does management envisages from the business over the medium term?
Sukhbir Singh Kukreja (Xtranet Technologies Ltd): We have we have created a subsidiary because it's a asset-intensive business, and initially we are planning to start with the 2 MW with the expansion capacity of around 10 MW. So, we have already formed a separate subsidiary and organizing the investment for that particular business. So specific to the numbers, Mr. Chetan will give you the answer on the numbers for this particular subsidiary investment. Over to you, Mr. Chetan.
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