Datamatics Global Services Limited — Q3 FY26 earnings call

Call held 29 Jan 2026

Management summary

Datamatics Global Services Limited reported a strong Q3 FY26 with robust revenue and EBITDA growth, driven by operational efficiencies and cost optimization. While Digital Experiences faced softness due to client transitions, Digital Technologies and Operations performed well. The company is actively integrating AI, particularly Google Gemini, across its operations and solutions, with a focus on productivity and new revenue streams. Despite a one-time exceptional charge impacting PAT, underlying profitability remains strong, and management expects high single-digit growth for FY27.

Highlights

  • Total revenue stood at ₹510.1 crores, marking a 19.9% YoY and 4.1% QoQ growth.

  • EBITDA reached ₹96.2 crores, growing 76.4% YoY and 8.3% QoQ.

  • EBITDA margin improved by 604 basis points YoY and 75 basis points QoQ to 18.9%.

  • Digital Technologies segment delivered double-digit revenue growth and sustained double-digit EBIT margin.

  • PAT after non-controlling interest was ₹36.4 crores, impacted by a one-time exceptional charge of ₹40.3 crores.

  • Excluding the one-time impact, PAT would have been approximately 12.7%.

  • Net cash and investment net of debt stood at ₹540.2 crores as of December 2025.

  • The company is investing ₹40-50 crores annually in transformation technologies, including AI.

Key financials

  1. Revenue ₹510.1 Cr +19.9%YoY
  2. EBITDA ₹96.2 Cr +76.4%YoY
  3. EBITDA Margin 18.9%
  4. EBIT ₹74.2 Cr +65.9%YoY
  5. EBIT Margin 14.6%
  6. PAT (after NCI) ₹36.4 Cr -42.5%QoQ
  7. PAT Margin 7%
  8. EPS ₹6.16

What they filed

Q1 FY27: revenue up 9.8%, net profit up 44.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue407 425 497 468 490 +20%510 +20%519 +4%514 +10%
EBITDA49 55 75 76 89 +82%96 +75%111 +48%101 +33%
Net profit42 75 45 50 63 +50%36 −52%45 +0%72 +44%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹510.1 Cr Total
  • Digital Operations ₹273.8 Cr 53.7%
  • Digital Technologies ₹169.6 Cr 33.2%
  • Digital Experiences ₹66.7 Cr 13.1%

Order book

medium confidence

Pipeline

deal pipeline tcv

Pipeline is fairly strong with a little uptick, mood is improving, velocity is slow but slight upward trend.

Management noted a fairly strong pipeline with a slight uptick, despite ongoing uncertainties in the US market, indicating an improving mood though velocity remains slow.

Source: Q&A

Capital allocation

high confidence
  • Liquidity Cash ₹540.2 Cr Net cash and investment net of debt stood at INR540.2 crores as of December 2025, indicating a strong liquidity position.
    As of December 2025, our net cash and investment net of debt stood at INR540.2 crores.

Guidance & targets

Revenue

  • FY27 Revenue Growth Revenue · FY27 · Medium confidence high single-digit growth
    we are looking at high single-digit growth. And then, of course, occasionally, we do look at M&A. So I'm not factoring M&A into this, but the high single digit is something that would be a decent number to look at.

    — Rahul Kanodia

Profitability

  • EBITDA Margin Profitability · Ongoing · High confidence sustain and keep improving
    Yes, we will be sustaining the EBITDA margins. We continue to look at in terms of how we can keep our cost in control and keep growing. That's basically the key thing that we are looking at. So EBITDA will maintain the EBITDA margin and keep improving.

    — Ankush Akar

Investment

  • AI/Transformation Technologies Spend Investment · Annual · High confidence ₹40-50 crores a year
    our spend, I can't specifically say AI, but our spend on these transformation technologies is roughly Rs. 40 crores to Rs. 50 crores a year.

    — Rahul Kanodia

Segmental Performance

  • Digital Experiences Recovery Segmental Performance · Q1 next year · Medium confidence will pick up
    Digital Experiences will have a little muted thing, but I think it will pick up in Q1 of next year.

    — Rahul Kanodia

Employee Costs

  • Wage Hike Cycle Employee Costs · April-May time frame · High confidence next financial year
    The next cycle will probably be next financial year, April-May time frame.

    — Rahul Kanodia

  • Routine Gratuity Increase Employee Costs · Next quarter onwards · Low confidence maybe 0.5
    From the next quarter onwards, it has become a routine marginal increase in gratuity. So we expect something in the range of maybe 0.5.

    — Rahul Kanodia

What to watch in Q4 FY26

Digital Experiences Segment Performance

Q1 FY27
Current Soft, full impact of client transitions in Q4 FY26
Target Pick up in Q1 FY27 due to new logos

Why it matters

This segment experienced softness this quarter, and its recovery is crucial for overall growth, especially as new logos are expected to contribute healthier margins.

Digital Experiences will have a little muted thing, but I think it will pick up in Q1 of next year. So Q4 might be a little soft, but Q1 will pick up.

Risks & concerns

  • Softness in Digital Experiences segment

    medium

    Performance remained soft due to two customers transitioning work to captive centers, with full impact expected in Q4 FY26.

    Management acknowledged

  • Uncertainties in the U.S. market and political overhang

    medium

    The U.S. market remains lukewarm due to political reasons and pressures, contributing to overall market uncertainty.

    Management acknowledged

  • AI disruption and data security concerns

    medium

    AI disruption creates uncertainty, and clients have concerns about data security when AI solutions access core systems, leading to slower adoption.

    Management acknowledged

  • Clarity on new labour code regulations

    low

    Regulations for the routine marginal increase in gratuity are not yet fully clear, though the impact is expected to be minimal (around 0.5).

    Management acknowledged

Q&A highlights

6 direct
Outlook for Digital Experiences segment Direct
Digital Experiences will have a little muted thing, but I think it will pick up in Q1 of next year. So Q4 might be a little soft, but Q1 will pick up.

Clarifies the near-term challenges and expected recovery timeline for a segment that performed softly this quarter.

Asked by Dhanshree Jadhav

Impact of new labour codes on financials Direct
It is just for this quarter in the sense that there is a backlog because of the one-time hit with a retrospective effect. Therefore, this quarter has taken a big hit. From the next quarter onwards, it has become a routine marginal increase in gratuity. So we expect something in the range of maybe 0.5.

Addresses a significant one-time exceptional item (₹40.3 crores) and clarifies its non-recurring nature, providing comfort on future profitability.

Asked by Yatin Shah

Performance and integration of TNQ Tech acquisition Direct
So, TNQ is doing good. -We are successfully integrating it very well into the company. Overall, we've had a sequential quarter-on-quarter growth of 4% as you see. So that, of course, includes TNQ as well as the rest of Datamatics. So, the growth is not coming from the acquisition.

Provides an update on a past acquisition, confirming successful integration and contribution to organic growth, validating the acquisition strategy.

Asked by Grishma Shah

Company's strategy and differentiation in AI Direct
We have gotten Agnetic Al workflow built. We have a whole platform. We've trained several people. I think the key to this market is how fast you can move in the market. And we've had a good start. We've moved in fast. We've got a few very good customers. So that's really the key.

Highlights Datamatics' specific approach to AI, focusing on workflow automation and delivering ROI, which is crucial for competitive positioning in the evolving IT landscape.

Asked by Srinivasu

Sustainability of EBITDA margins Direct
Yes, we will be sustaining the EBITDA margins. We continue to look at in terms of how we can keep our cost in control and keep growing. That's basically the key thing that we are looking at. So EBITDA will maintain the EBITDA margin and keep improving.

Reassures investors about the durability of the improved EBITDA margins, which were a key highlight of the quarter's performance.

Asked by Rahil

Conservatism of FY27 high single-digit growth guidance Partial
The growth that you see includes some degree of an acquisition, and therefore, you see a bump up. We rather be conservative because there's still a lot of uncertainty, partly thanks to the political situation, partly thanks to the disruption that AI can have.

Explains the rationale behind the growth guidance, acknowledging both organic and inorganic contributions, and external uncertainties, providing context for future expectations.

Asked by Rahil

Industries best suited for AI adoption Direct
So the industries that are very heavy with information processing are the more likely ones. So banking, finance, and insurance are adopting it quite well. They have a concern about data security and data privacy. But aside from that concern, they are very, very open to using AI.

Provides insights into market opportunities and challenges for AI adoption across different verticals, guiding expectations for future business development.

Asked by Bimal Parekh

3 min read 6 chapters

Detailed narrative

Robust Q3 FY26 Financial Performance

Datamatics delivered a strong Q3 FY26, with total revenue reaching ₹510.1 crores, reflecting a 19.9% year-on-year and 4.1% quarter-on-quarter growth. EBITDA stood at ₹96.2 crores, growing 76.4% YoY and 8.3% QoQ. The company's EBITDA margin expanded significantly by 604 basis points YoY and 75 basis points QoQ, reaching 18.9%, driven by improved operational efficiencies and disciplined cost optimization. EBIT for the quarter was ₹74.2 crores, up 65.9% YoY and 7.7% QoQ, with an EBIT margin of 14.6%.

Impact of Exceptional Items on PAT

Despite strong operational performance, PAT after non-controlling interest for Q3 FY26 was ₹36.4 crores, down 42.5% QoQ, and the PAT margin was 7%. This decline was primarily due to a one-time exceptional charge of ₹40.3 crores related to changes in new labour codes, specifically for gratuity and leave encashment liability. Management clarified that excluding this one-time impact, the PAT margin would have been approximately 12.7%, indicating healthy underlying profitability. The impact from labour codes is expected to be minimal (around 0.5) from the next quarter onwards.

Segmental Performance Overview

All three business segments contributed to quarter-on-quarter revenue growth. Digital Technologies revenue grew 10.8% QoQ to ₹169.6 crores, maintaining a double-digit EBIT margin of 10.8%. Digital Operations revenue was stable at ₹273.8 crores, with an improved EBIT margin of 18.1%. The Digital Experiences segment, however, remained soft, with revenue at ₹66.7 crores (up 3.2% QoQ) and an EBIT margin of 9.6%, primarily due to two clients transitioning work to their captive centers. Management expects Digital Experiences to pick up from Q1 FY27 as new logos with healthier margins come online.

Strategic Focus on AI and Digital Transformation

Datamatics is making significant investments in enterprise AI, committing approximately ₹40-50 crores annually to transformation technologies. The company is rolling out Google Gemini Enterprise internally to empower employees and build intelligent agents, aiming to improve productivity and drive innovation. They have also developed industry-specific AI solutions for insurance, banking, and logistics. While clients are still in the testing phase, with concerns about data security, management notes a waning hesitation and increasing openness to AI adoption, expecting revenue flow from these initiatives in the coming quarters.

Nine-Month Financial Performance

For the nine months ended December 2025, Datamatics reported a revenue of ₹1,467.9 crores, a 19.7% YoY growth. EBITDA for the period was ₹261 crores, up 68.7% YoY, with an EBITDA margin of 17.8% (up 516 bps YoY). EBIT stood at ₹199.6 crores, a 57.6% YoY increase, and an EBIT margin of 13.6% (up 327 bps YoY). PAT after non-controlling interest was ₹150 crores, a 6.3% YoY decline, primarily due to the ₹40.2 crores exceptional charge in Q3 FY26. Excluding exceptional items, profit before tax grew strongly by 39.8% YoY. The company maintained a healthy balance sheet with net cash and investment net of debt at ₹540.2 crores and a DSO of 55 days.

Outlook and Growth Drivers

Management projects high single-digit growth for FY27, excluding potential M&A. The pipeline is described as fairly strong with a slight uptick, despite ongoing political uncertainties in the U.S. market. The company's strategy focuses on growing existing customer relationships across key geographies (U.S., Europe, India, Middle East) and cross-selling capabilities, as demonstrated by the successful integration and performance of past acquisitions like TNQ and Dextara. The cyclicality of the business has reduced due to non-cyclical growth and acquisitions, leading to more stable performance.

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