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    DIGITIDE

    DIGITIDE
    Information Technology·8 Aug 2025
    Management Summary

    Digitide Solutions reported a solid Q1 FY26 with consolidated revenues of INR 736 crores, up 6% YoY, and an EBITDA margin of 11.2%. Despite one-time de-merger costs and macroeconomic turbulence, the company achieved a PAT of INR 10 crores, a 150 bps sequential improvement. Strategic portfolio realignment is underway, with strong sales momentum and a focus on AI-led delivery and margin expansion expected in H2 FY26.

    Highlights

    6

    • Consolidated revenues grew 6% year-on-year to INR 736 crores.

    • Overall EBITDA margin held firm at 11.2% despite investments, with business EBITDA margin expanding by 203 basis points.

    • PAT improved sequentially by 150 basis points to INR 10 crores, even after absorbing INR 9 crores in exceptional costs.

    • BPM segment EBITDA margin rose by 255 basis points to 17%, reflecting disciplined execution.

    • Secured 27 new client logos and a marquee cloud transformation engagement, with Q1 TCV at INR 523 crores.

    • Net Promoter Score (NPS) jumped to 71.3, one of the highest in the industry.

    Concerns

    3

    • Temporary slowdowns in billing and collections led to DSO increasing to 91 days.

    • INR 9 crores in one-time listing-related exceptional costs impacted PAT.

    • Anticipated 100-150 basis points dip in overall margin compared to the last financial year due to standalone setup costs and investments.

    Key financials

    Single quarter

    06 metrics
    1. 01Consolidated Revenue₹736 Cr+6%YoY
    2. 02EBITDA₹83 Cr
    3. 03EBITDA Margin11.2%
    4. 04PAT₹10 Cr
    5. 05PAT Margin1.3%

    Segment breakdown

    • BPM₹539 Cr73.2%
    • Tech & Digital₹197 Cr26.8%
    Donut· Share of Revenue

    Order Book

    high confidence

    Total Value

    ₹ 523 crores

    as of 2025-06-30

    quantified

    Inflow this qtr

    ₹ 523 crores

    "Management believes the momentum in TCV continues, noting that the previous quarter (Q4) is typically stronger for bookings, and that two consecutive quarters have seen TCV above INR 500 crores."

    Source:
    Prepared remarks

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Debt

    Gross ₹46 crores

    Liquidity

    Liquidity disclosed

    The company is in a net cash position of INR 34 crores as of quarter-ended June 2025.

    Guidance & targets

    10
    CategoryTargetPriority
    Revenue
    Revenue Growth
    triple our revenues
    		High
    Revenue
    Organic Growth CAGR
    16% to 17%
    		High
    Revenue
    Acquisition-led Growth
    2% to 3%
    		High
    Revenue
    FY26 Growth
    double-digit growth
    		High
    Margin
    Margin Trajectory
    start climbing
    		High
    Margin
    Overall Margin Dip vs Last FY
    100 to 150 basis points dip
    		High
    Business Mix
    Tech & Digital Revenue Share
    40%
    		High
    Business Mix
    International vs Domestic Revenue Share
    50%-50%
    		High
    Working Capital
    DSO Improvement
    5% to 7% improvement
    		High
    Profitability
    OCF to EBITDA Conversion Ratio
    around 60%
    		High

    DSO Improvement

    Next quarter onwards, by FY26 end
    Current91 days
    TargetTracking back to historical levels, 5-7% improvement by FY26 end

    Why it matters

    DSO increased this quarter due to de-merger related issues; its normalization is key for working capital efficiency.

    However, the good news is that we are already seeing normalization, and the DSO is tracking back to our historical levels. ... So are we sticking with the same guidance that by the end of FY '26, DSO will be better? ... So from next quarter, you should see the improvement already showing.

    How to verify

    key_financials.metrics[label='DSO']

    Risks & concerns

    6
    RiskSeverity

    Macroeconomic turbulence

    The company continued to build momentum despite macroeconomic turbulence. — Management acknowledged

    medium

    Ongoing portfolio transformation

    Building momentum despite the ongoing portfolio transformation. — Management acknowledged

    medium

    Softness in BFSI segment

    Even given the softness in the BFSI segment, BPM margins rose. — Management acknowledged

    medium

    Temporary slowdowns in billing and collections

    Due to new GST registrations and contract innovations after de-merger, leading to DSO increase to 91 days. — Management acknowledged

    medium

    One-time de-merger and listing costs

    INR 9 crores in exceptional costs impacted PAT, with some spillover expected in Q2. — Management acknowledged

    low

    Impact of restructuring and optimization on H1 FY26

    The first half of the year (Q1 and Q2) will see some impact of optimization and restructuring. — Management acknowledged

    medium

    Q&A highlights

    8

    “So, Sanjay, the TCV in Q1 is at 523 versus 568 that's a very marginal difference. And in this industry, typically, the last quarter is also a better quarter for bookings for obvious reasons. So, I think the momentum continues, Sanjay.”

    Analyst questioned a sequential dip in TCV, and management clarified it as a marginal difference, attributing it to Q4 typically being a stronger booking quarter and maintaining confidence in continued momentum.

    asked by Sanjay Shah

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY26 Performance Overview Post De-merger

    Digitide Solutions reported consolidated revenues of INR 736 crores for Q1 FY26, marking a 6% year-on-year increase and a 0.4% sequential growth. The company's EBITDA stood at INR 83 crores, achieving an 11.2% margin, which remained flat sequentially. Despite this, the business EBITDA margin expanded by 203 basis points. PAT for the quarter was INR 10 crores, showing a 150 basis point sequential improvement, even after absorbing INR 9 crores in one-time📎 listing-related exceptional costs.

    02

    Strategic Portfolio Realignment and Market Focus

    The company completed its de-merger from Quess Corp Ltd. in June 2025, becoming an independent listed entity. This move is part of a strategic leap to accelerate value creation and sharpen market focus. Digitide is actively reshaping its portfolio by exiting non-strategic and low-margin contracts, a process expected to conclude by Q2 FY26. This realignment is already showing early gains and is crucial for achieving the long-term goal of tripling revenues by FY31.

    03

    Segmental Performance: BPM and Tech & Digital

    The BPM business generated INR 539 crores in revenue, growing 6% year-on-year and 0.4% sequentially. Its EBITDA margin improved significantly by 255 basis points to 17%, driven by disciplined execution. The Tech & Digital segment contributed INR 197 crores in revenue, growing 4% year-on-year and 0.7% sequentially, with its EBITDA margin rising by 63 basis points to 9.8%. The company aims to grow its tech and digital business to 40% of overall revenues by FY31.

    04

    Sales Momentum and Client Wins

    Digitide started FY26 with strong sales momentum, securing 27 new client logos, including a significant cloud transformation engagement. The total contract value (TCV) for Q1 stood at INR 523 crores, providing future revenue visibility. The company also launched 15 new AI-led pilots, underscoring its commitment to AI-led delivery. The Net Promoter Score (NPS) jumped to 71.3, reflecting strong client relationships.

    05

    Working Capital and Balance Sheet

    The company strengthened its balance sheet post de-merger, reporting gross debt of INR 46 crores and a net cash position of INR 34 crores as of June 2025. However, the Days Sales Outstanding (DSO) increased to 91 days during the quarter due to temporary slowdowns in billing and collections related to new GST registrations and contract innovations. Management expects DSO to normalize and show a 5-7% improvement by the end of FY26.

    06

    Strategic Investments and Margin Outlook

    Digitide made deliberate investments in leadership, solution development, innovation, and go-to-market accelerations, which are designed to unlock significant operating leverage. While overall EBITDA margin remained flat sequentially, the company anticipates margins to start climbing from the second half of the year. This improvement will be driven by higher revenue, operational efficiency, and a focus on higher-end work from international geographies.

    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.