Datamatics Glob.

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%.

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.

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.

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.

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 item^📎s, 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.

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.