Digitide Solutions Limited — Q4 FY26 earnings call

Call held 19 May 2026

Management summary

Digitide Solutions Limited reported a strong Q4 FY26, with revenue reaching INR 800 crores, driven by robust growth in Tech and Digital services and expanding international footprint. Despite a sequential decline in adjusted PAT due to one-time accounting adjustments and wage code impact, the company demonstrated strong operational cash flow and significant deal wins, positioning itself for accelerated growth in FY27 with a focus on its "3x3 Strategy" and AI-First approach.

Highlights

  • Strong revenue growth: Q4 FY26 revenue at INR 800 crores (2.5% QoQ, 9.2% YoY). Full-year FY26 revenue at INR 3,080 crores (7.1% YoY).

  • Significant shift to higher-value services: Tech and Digital revenue grew 5.8% QoQ and 27.2% YoY to INR 249 crores, now 31% of total revenue mix.

  • Expanding international presence: International revenue grew 4.3% QoQ and 16.4% YoY to INR 304 crores, reaching 38.1% of total revenue.

  • Robust deal wins: TCV bookings of INR 620 crores in Q4, marking the second consecutive quarter of 600-plus TCV, and 114 new logos added in FY26.

  • Strong cash generation: Operating cash flow of INR 145 crores in Q4, with OCF-to-EBITDA conversion of 165% for the quarter.

  • Improved working capital: DSO improved by 4 days sequentially to 75 days in Q4, a 16-day improvement from Q1 FY26 peak.

Concerns

  • Adjusted PAT for Q4 FY26 was INR 11 crores, a sequential decline from INR 24 crores in Q3 FY26, attributed to accounting-led items and one-time charges.

  • Reported PAT for Q4 FY26 was INR (-5) crores, impacted by an exceptional charge of INR 16 crores for past service cost due to new wage code implementation.

  • Full-year adjusted PAT margin was 2.3%, with year-on-year margin moderation due to demerger-related costs, new wage code impact, and targeted investments.

Key financials

2 periods

Headline

  • Revenue
    ₹800 Cr
    YoY +9.2% QoQ +2.5%
  • EBITDA
    ₹88 Cr
    YoY +6.9%
  • EBITDA Margin
    11%
  • Adjusted PAT
    ₹11 Cr
  • Reported PAT
    ₹-5 Cr
  • Operating Cash Flow
    ₹145 Cr
  • DSO
    75 days

FY26

  • Total Revenue
    ₹3,080 Cr
    YoY +7.1%
  • EBITDA
    ₹343 Cr
  • EBITDA Margin
    11.1%
  • Adjusted PAT
    ₹70 Cr
  • Adjusted PAT Margin
    2.3%
  • OCF
    ₹263 Cr

What they filed

Q1 FY27: revenue up 5.3%, net profit down 69.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ1 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue696 733 733 736 764 +10%780 +7%800 +9%775 +5%
EBITDA106 110 82 83 85 −19%88 −21%88 +7%77 −7%
Net profit55 29 -1 10 3 −95%-2 −107%-5 −260%3 −70%
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
₹1,104 Cr Total
  • BPM ₹551 Cr 49.9%
  • International ₹304 Cr 27.5%
  • Tech and Digital ₹249 Cr 22.6%

Order book

high confidence

Total value

₹2,355 Cr

as of 2026-03-31 quantified

Inflow this quarter

₹620 Cr

Execution

providing us with high revenue visibility heading into the new fiscal year.

Composition

  • New Logos (Q4) (client type)
  • New Logos (FY26) (client type)

Pipeline

deal pipeline tcv

Hyperscaler-led pipeline across AWS, GCP, and Microsoft remains healthy.

The company achieved strong sales momentum with robust TCV bookings in Q4 and FY26, adding numerous new logos and building a healthy hyperscaler-led pipeline, providing strong revenue visibility for the new fiscal year.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹105 Cr
    • Technology platforms, AI capabilities, and infrastructure scale-up on IT and leasehold assets
    FY26 CAPEX was INR 105 crores, primarily directed towards technology platforms, AI capabilities, and infrastructure scale-up on IT and leasehold assets.
  • Debt Debt disclosed
    Our credit profile remains strong. ICRA has assigned A+ stable and A1+ ratings on our bank facilities, and also reaffirmed our A1+ rating on our commercial paper, reflecting the strength of our balance sheet. This gives us flexibility to keep investing in capability building, hyperscaler-led partnerships, technology platforms, and strategic growth opportunities, including inorganic opportunities in the Tech and Digital space within our defined capital allocation framework while maintaining financial discipline.
  • Liquidity Cash ₹182 Cr Net cash position increased by INR 57 crores from Q3 FY26.
    Our balance sheet remains healthy, with strong liquidity and net cash position of INR 182 crores at the end of Quarter 4 FY26, up from INR 125 crores at the end of Q3 FY26, an increase of INR 57 crores.

Guidance & targets

Margin

  • EBITDA Margin Expansion Margin · by the time we exit FY27 · High confidence 100-basis point expansion
    Sustained margin expansion, powered by an optimized revenue mix, the completion of our legacy investment phase and accelerating operational leverage. We are looking at a strong 100-basis point expansion by the time we exit FY27.

    — Gurmeet Chahal

Revenue

  • Total Revenue Revenue · by FY31 · High confidence USD 1 billion (approx. INR 8,400 crores)
    We have built a resilient foundation aligned tightly with our "3x3 Strategy" to scale to USD 1 billion, or approximately INR 8,400 crores, by FY31 and we are exiting the year with powerful momentum.

    — Gurmeet Chahal

Revenue Growth

  • Organic CAGR Revenue Growth · over the period to FY31 · High confidence 14% to 15%
    So, now we have to grow at about 14% to 15% organic, which we are super confident given the wins that we have had, the traction we are seeing in the current pipeline that we have.

    — Gurmeet Chahal

Revenue Mix

  • Tech and Digital Contribution Revenue Mix · by FY31 · High confidence 40%
    Our stated goal is that by 31, our Tech and Digital should be contributing 40% and our international should be contributing 50% of the overall revenue.

    — Gurmeet Chahal

  • International Contribution Revenue Mix · by FY31 · High confidence 50%

    — Gurmeet Chahal

  • Healthcare Revenue Mix Revenue Mix · by FY31 · High confidence 12% to 15% (USD 120-150 million)
    By 2031, we believe that healthcare will be 12 to 15% of our revenue mix. So, that means we are looking at about $120 to $150 million.

    — Gurmeet Chahal

Cash Flow

  • OCF Conversion Cash Flow · Steady state · High confidence 70%
    Our normal target baseline for this is 70% conversion.

    — Suraj Prasad

Profitability

  • PAT Margin Profitability · Steady state · High confidence 2.3%
    At a steady state basis, as I mentioned, it's around 2.3% of PAT.

    — Suraj Prasad

Market context

  • Accelerated double-digit revenue growth Revenue · FY27 · High confidence Double-digit
    We are fully positioned to deliver accelerated double-digit revenue growth led by high-value Tech and Digital and international expansion.

    — Gurmeet Chahal

What to watch in Q1 FY27

EBITDA Margin Expansion

By exit Q4 FY27
Current 11% (Q4 FY26)
Target Increasing towards 12% (100 bps expansion)

Why it matters

This is a key profitability driver and management's explicit target for the next fiscal year.

Sustained margin expansion, powered by an optimized revenue mix, the completion of our legacy investment phase and accelerating operational leverage. We are looking at a strong 100-basis point expansion by the time we exit FY27.

Risks & concerns

  • Impact of new wage code compliance

    medium

    Absorbed INR 4 crores one-time impact on EBITDA and INR 16 crores exceptional charge on PAT for past service cost in Q4 FY26. Stated as a one-time, non-recurring adjustment.

    Management acknowledged

  • Macroeconomic backdrop and industry uncertainty

    medium

    Acknowledged 'macroeconomic backdrop characterized by industry uncertainty, geopolitical headwinds and cautious decision-making cycles' but stated they delivered growth with 'intense operational discipline'.

    Management acknowledged

  • High attrition and escalating talent costs in primary metros

    medium

    Management stated their 'established footprint in these emerging hubs unlocks access to highly stable, top-tier engineering talent' as a competitive advantage against this industry-wide challenge.

    Management mitigated

Q&A highlights

6 direct
Growth contribution from new vs. existing clients Direct
Of that 205 crores, about 45% came from new customers that we added in the year. As you know that the in-year revenue contribution from newer deals is less because of the ramp-up phase and the remainder came from the expansion in the existing customers.

Clarifies the drivers of revenue growth, indicating success in new client acquisition.

Asked by Gaurav

Profitability comparison between standalone Alldigi Tech and consolidated Digitide Partial
So, the corporate costs are in Digitide. Hence, the comparison that you made would not be the right comparison.

Addresses concerns about perceived lower profitability at the consolidated level by explaining the allocation of corporate overheads.

Asked by Gaurav

Sustainable Operating Cash Flow (OCF) conversion target Direct
So, this should be a reasonable target. We, in fact, had overachieved our ambitions for this year. Our normal target baseline for this is 70% conversion.

Provides clarity on the long-term cash generation capability, distinguishing it from the high Q4 figure which included catch-up.

Asked by Aditya Banerjee

Conversion of hyperscaler-led pipeline into actual revenue Direct
approximately 15% of our overall pipeline is hyperscaler-led. And then some of the growth momentum that you saw, 27% year-on-year in the Tech and Digital, is actually being contributed by the revenue that is translating from the conversion of these deals.

Highlights the direct impact of strategic partnerships on revenue growth, especially in high-value segments.

Asked by Sanjay Shah

Commercialization strategy for Pulse.nerve Direct
So, Mr. Shah, the Pulse.nerve is actually an orchestration layer. So, it should not be seen as a platform. It is an enabler for AI transformation.

Clarifies the role of a key proprietary tool, distinguishing it from a direct revenue-generating platform, while also mentioning other IP assets.

Asked by Sanjay Shah

Guidance for EBIT vs. EBITDA and reasons for Q4 margin flatness Partial
So, look at it in two parts. First of all, the operating margin improvements in both the segments as we guided are improving. Of course, there has been additional element of cost coming by way of the wage code.

Addresses analyst's concern about margin trajectory and provides context for one-time impacts affecting reported PAT.

Asked by Arvind Dureja

Breakdown of finance costs and their nature Direct
our finance costs for a quarter, if you look at the last quarter, we had an overall cost of around INR 15 crores, of which around INR 12 crores are coming from my IndAS financing cost... The balance is a mix of two, roughly around 90% of that would be coming from our working capital lines.

Provides transparency into the components of finance costs, clarifying that most are related to working capital and IndAS accounting rather than corporate debt.

Asked by Gaurav

Location of rent expenses in financial statements Direct
The leases are amortized over the lease term. And they reflect in two line items, one as depreciation, and one as financing cost.

Explains how lease-related expenses are accounted for under IndAS 116, clarifying their impact on depreciation and finance costs.

Asked by Gaurav

3 min read 7 chapters

Detailed narrative

Strong Q4 FY26 Performance and Full-Year Highlights

Digitide Solutions Limited reported a robust Q4 FY26, with revenues reaching INR 800 crores, marking a 2.5% sequential growth and 9.2% year-on-year expansion. For the full fiscal year FY26, total revenue stood at INR 3,080 crores, growing 7.1% year-on-year. The company demonstrated consistent measurable progression across key operational and revenue parameters, despite a challenging macroeconomic backdrop.

Accelerated Shift to AI-First Tech and Digital Services

The company's strategic pivot towards AI-First Tech and Digital services is yielding significant results. Tech and Digital revenues climbed 5.8% quarter-on-quarter and 27.2% year-on-year to INR 249 crores in Q4, now accounting for 31% of the total revenue mix. For the full year, Tech and Digital contributed nearly 30% of FY26 revenues, an expansion of 280 basis points over the previous year, validating the transition to higher-value, technology-led services.

Robust Sales Momentum and Expanding International Footprint

Digitide's commercial engine showed strong momentum with TCV bookings of INR 620 crores in Q4, marking the second consecutive quarter of 600-plus TCV, providing high revenue visibility. The company added 29 new logos in Q4, including eight international clients, and 114 new logos for the full year. The international footprint expanded 4.3% sequentially and 16.4% year-on-year to INR 304 crores, increasing the international mix to 38.1% of revenue in Q4 and 37.3% for FY26.

Operational Discipline and Talent Advantage

Despite absorbing a one-time INR 4 crores impact from wage code compliance in Q4, operational profitability did not compress, with EBITDA at INR 88 crores (11% margin). The company emphasized its 'Great Place to Work' certification for the seventh consecutive year and its ranking among 'India's Best Places, Best Workplaces in Health and Wellness 2026'. Its established footprint in Tier-2 and Tier-3 hubs provides access to stable, top-tier engineering talent, mitigating risks of high attrition and escalating talent costs in primary metros.

Strong Cash Conversion and Healthy Balance Sheet

The company achieved a robust cash conversion with INR 145 crores in operating cash flow during Q4, translating to an OCF-to-EBITDA conversion of 165%. For the full year, OCF stood at INR 263 crores, representing a 76.5% conversion of FY26 EBITDA. DSO improved by 4 days sequentially to 75 days in Q4, a significant 16-day improvement from the peak of 91 days in Q1 FY26. The balance sheet remains healthy with a net cash position of INR 182 crores at Q4 FY26 end, up from INR 125 crores in Q3 FY26.

FY27 Outlook and Strategic Growth Pillars

Digitide is confident in delivering accelerated double-digit revenue growth in FY27, driven by high-value Tech and Digital services and international expansion. The company targets a 100-basis point EBITDA margin expansion by the exit of FY27. Strategic pillars include scaled AI monetization, velocity in deal closures through global alliances, and industrializing advanced upskilling programs to build an agile AI workforce. The long-term vision is to scale to USD 1 billion (approx. INR 8,400 crores) by FY31, with Tech and Digital contributing 40% and international 50% of total revenue.

Impact of One-Time Charges and Accounting Adjustments

Adjusted PAT for Q4 FY26 stood at INR 11 crores, a sequential decline from INR 24 crores in Q3 FY26, primarily due to accounting-led items. Reported PAT for Q4 was INR (-5) crores, impacted by an exceptional charge of INR 16 crores for past service cost related to the new wage code. Additionally, INR 4 crores in depreciation was accelerated due to rationalization of residual value policy. For the full year, adjusted PAT was INR 70 crores, with a margin of 2.3%, reflecting demerger-related costs and strategic investments.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Information Technology earnings calls