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    CANARYS

    CANARYS
    Information Technology·10 Dec 2025
    Management Summary

    Canarys Automations Limited reported a strong H1 FY26 with total income growing 166% YoY to INR 102 crores, driven by nearly 200% growth in technology solutions. The acquisition of Fortira significantly boosted global presence and revenue. While margins saw a slight dip to 13% EBITDA and 9% PAT due to strategic investments in product development and talent, the company maintains a healthy order book of INR 208 crores and a low debt-to-equity ratio of 0.1x, signaling a focus on future growth and transformation.

    Highlights

    6

    • Total income for H1 FY '26 stood at INR 102 crores, reflecting a 166% year-on-year growth.

    • Technology solutions vertical grew almost 200% year-on-year.

    • Order book now stands at a healthy INR 208 crores, with INR 151 crores from technology solutions and INR 57 crores from water resource management.

    • Acquisition of Fortira (51% stake in April 2025) contributed over USD 6.6 million in H1 FY26 revenues and USD 0.5 million in profit before tax, strengthening North American presence.

    • Launched AURYIS, an AI-powered software product, with positive pilot customer feedback and expected commercialization in 6-8 months.

    • Attrition rate dropped to 5% due to focus on skill upgrades, cutting-edge technologies, and company growth.

    Concerns

    4

    • EBITDA margin stood at 13%, a 'slight dip' from previous levels, attributed to strategic investments in team expansion, product development, and global scaling.

    • Profit after tax stood at INR 9 crores, reflecting a 9% margin, also impacted by growth-phase investments.

    • The company is currently 'cash flow negative' due to significant investments in product development, which is reflected in debt on the balance sheet.

    • Water resource management projects have longer payment cycles, leading to a more focused approach on opportunities with better commercial outcomes.

    Key financials

    Single quarter

    06 metrics
    1. 01Total Income₹102 Cr+1.7%YoY
    2. 02EBITDA₹13 Cr
    3. 03EBITDA Margin13%
    4. 04Profit After Tax₹9 Cr
    5. 05PAT Margin9%

    Segment breakdown

    Technology Solutions
    2% YoY Growth
    Water Resource Management
    20% Expected H2 Contribution
    List

    Order Book

    high confidence

    Total Value

    ₹ 208 crores

    as of 2025-09-30

    quantified

    Execution

    WRM contracts are 3-5 years, IT solutions 35-40% multi-year, rest short/mid-term (6, 12, 15 months)

    Composition

    Mix2 service lines
    • Technology Solutions72.6%
    • Water Resource Management27.4%

    Share of order book by service line

    "The order book is healthy, with a good split between IT solutions and WRM, but the company needs to check the threshold for announcing large orders."

    Source:
    Prepared remarks

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Debt

    Debt disclosed

    M&A

    Fortira

    acquisition · closed · Consideration ₹NaN (undisclosed)

    Liquidity

    Liquidity disclosed

    Company is cash flow negative due to product development investments.

    Guidance & targets

    6
    CategoryTargetPriority
    Talent
    Team training in AI, ML, and data skills
    25%
    		High
    Profitability
    Fortira EBITDA margins
    18%-20%
    		Medium
    Profitability
    Sustainable margins
    same amount as today
    		High
    Product Development
    AURYIS commercialization
    6-8 months
    		High
    Revenue Mix
    Water Resource Management contribution
    20%
    		High
    Growth
    Overall growth rate
    extrapolate past 2 years' 20% growth
    		Low

    Fortira EBITDA margin improvement

    next 1-2 years
    Currentless than 9% (FY24)
    Targetprogress towards 18%-20%

    Why it matters

    Indicates successful integration and profitability enhancement of the acquired entity.

    So is it fair to assume that 18%-20% is achievable in Fortira in the near term in the next 1-2 years maybe? Should be achievable.

    How to verify

    key_financials.segment_breakdown[name='Fortira'].metrics[label='EBITDA Margin']

    Risks & concerns

    4
    RiskSeverity

    Margin compression due to strategic investments

    EBITDA margin dipped to 13% and PAT margin to 9% due to investments in people (senior leaders), product development, and global scaling, which is expected to continue for a few more quarters. — Management acknowledged

    medium

    Cash flow negative due to product development

    The company is currently not generating positive cash flow, with product development investments showing up as debt on the balance sheet. — Management acknowledged

    medium

    Longer payment cycles in Water Resource Management (WRM)

    WRM projects have longer payment cycles, leading the company to adopt a more focused approach on opportunities offering speed, scale, and better commercial outcomes. — Management acknowledged

    low

    Integration and cross-selling challenges for Fortira

    Integrating Fortira's solutions and cross-selling Canarys' offerings to its existing enterprise customers takes time, as these customers need to digest new solutions before placing new work orders. — Other acknowledged

    low

    Q&A highlights

    8

    “The objective is to invest and grow Fortira as well. We are also taking our solutions into Fortira's customer, and we are also trying to build these similar margins there. Yes, it takes some time because we need to integrate and take our solutions and get new business delivered and also consolidate. But the objective is definitely to improve the margins of both Fortira and Canarys. And I think that is quite possible. Should be achievable.”

    Analyst questioned if Fortira's margins could reach Indian levels (20%) in 1-2 years, and management confirmed it's achievable, indicating future profitability targets for the acquired entity.

    asked by Rahil Dasani

    2 min read6 chapters

    Detailed Narrative

    01

    H1 FY26 Performance Overview

    Canarys Automations Limited reported a robust H1 FY26, with total income reaching INR 102 crores, marking a significant 166% year-on-year growth. This performance was primarily fueled by the technology solutions vertical, which saw an impressive nearly 200% year-on-year growth. Despite this strong top-line expansion, the company's EBITDA margin stood at 13% and Profit After Tax margin at 9%, reflecting a slight dip attributed to strategic investments in growth initiatives.

    02

    Strategic Acquisition: Fortira

    A key milestone in H1 FY26 was the strategic acquisition of a 51% stake in Fortira, a U.S.-based AI, data, digital engineering, and IT consulting firm, completed in April 2025. This acquisition significantly bolstered Canarys' global presence, particularly in North America, and contributed over USD 6.6 million in revenues and approximately USD 0.5 million in profit before tax during H1 FY26. Management aims to improve Fortira's EBITDA margins from less than 9% (FY24) to 18-20% within the next 1-2 years through integration and cross-selling Canarys' solutions.

    03

    Product Innovation: AURYIS

    Advancing its innovation agenda, Canarys launched AURYIS, its first AI-powered software product, on August 20, 2025. Designed for the pharmaceutical and life science sector, AURYIS is an intelligent compliance assessment platform. Pilot customer feedback has been positive, and the company anticipates its first commercial engagement within the next 6-8 months. This product is a testament to Canarys' investment in AI and proprietary language models to drive flexibility and scalability.

    04

    Business Strategy & Growth Drivers

    Canarys' growth strategy is built on three pillars: proprietary software tools, strong alliances with global technology leaders (e.g., Microsoft, GitHub), and a talented team with expertise in AI, ML, data automation, and cloud. The company focuses on sectors like Banking, Retail, Insurance, Manufacturing, Pharmaceutical, and Healthcare (BRIMPH). A key goal for FY26 is to train 25% of its team in AI, ML, and data skills. The order book stands at INR 208 crores, with INR 151 crores from technology solutions and INR 57 crores from water resource management.

    05

    Financial Health & Investments

    While the company reported strong revenue growth, its profitability margins (13% EBITDA, 9% PAT) saw a slight decline due to ongoing strategic investments. These investments are directed towards team expansion, product development, and global scaling, including bringing in senior leaders. Management acknowledged that the company is currently 'cash flow negative' due to these product development investments, which are reflected as debt on the balance sheet. The debt-to-equity ratio remains low at 0.1x, indicating a conservative capital structure.

    06

    Talent & Attrition Management

    Canarys successfully reduced its attrition rate to a low 5% in H1 FY26, which is significantly below sector averages. Management attributed this success to a strong focus on skill upgrade capabilities, extensive training programs for employees in AI, ML, and data, and the overall growth trajectory of the company. The positive work culture and engagement in cutting-edge technologies have motivated employees, contributing to talent retention.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.