E2E Networks Limited — Q1 FY26 earnings call

Call held 22 Jul 2025

Management summary

E2E Networks reported a challenging Q1 FY26 with a 12.6% YoY revenue decline and a net loss, primarily due to delays in Chennai GPU deployment and increased OPEX from new location setup and team building. Despite this, management expressed confidence in achieving an exit MRR of ₹32-38 crores by March 2026, driven by a strong pipeline for large GPU clusters, resolution of Chennai delays, and anticipated tailwinds from the INDIAai Mission. The company continues to invest in capacity expansion, including future Blackwell GPUs, and is focused on improving utilization.

Highlights

  • Q1 FY26 Revenue dropped by 12.6% YoY to ₹36.1 crores.

  • EBITDA margin stood at 29.1% for the quarter.

  • Reported a PAT loss of ₹2.8 crores, with EPS at -₹1.39.

  • Exit Monthly Recurring Revenue (MRR) target for March 2026 is ₹32-38 crores.

  • Current GPU capacity is nearly 3,900 GPUs, with ~3,000 operational.

  • Chennai deployment of 1,024 GPU clusters delayed, expected online by end of July/early August 2025.

  • Targeting 75-90% utilization of current capacity by Q4 FY26.

  • Utilized ₹884.2 crores from preferential fundraise in Q1, with ₹383.9 crores remaining.

Concerns

  • Chennai GPU Deployment Delays

Key financials

  1. Revenue ₹36.1 Cr -12.6%YoY
  2. EBITDA Margin 29.1%
  3. PAT ₹-2.8 Cr
  4. EPS ₹-1.39
  5. CWIP ₹32.6 Cr

What they filed

Q1 FY27: revenue up 336.1%, net profit up 1566.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue48 42 33 36 44 −8%70 +67%96 +191%157 +336%
EBITDA31 25 13 11 18 −42%40 +60%58 +346%118 +973%
Net profit12 12 14 -3 -13 −208%-6 −150%6 −57%44 +1567%
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.

Guidance & targets

Revenue

  • Exit Monthly Recurring Revenue (MRR) Revenue · March 2026 · High confidence ₹32-38 crores
    We believe that we are on track to achieve an exit MRR anywhere between, say, Rs. 32 crores to Rs. 38 crores by the end of the year in March.

    — Tarun Dua, Managing Director

Capacity

  • Utilization Rate Capacity · Q4 FY26 · Medium confidence 75-90%
    Yes, anywhere between 75% to 90% utilization is what we are expecting.

    — Tarun Dua, Managing Director

  • Blackwell GPU Capacity Orders Capacity · FY26 · Medium confidence end of third quarter or last quarter
    But from a Blackwell capacity addition, we are definitely looking at either the end of third quarter or the last quarter to kind of try and get that capacity orders placed.

    — Tarun Dua, Managing Director

  • Noida GPU Capacity Capacity · future · Medium confidence up to at least 6,000 GPUs
    Noida, we will have to requisition more capacity, but I believe we should be able to get up to at least 6,000 GPUs in Noida if required, maybe even more.

    — Tarun Dua, Managing Director

  • Chennai GPU Capacity Capacity · future · Medium confidence close to 20,000 GPUs
    Chennai is a very large facility. It can host I think close to 20,000 GPUs very, very easily.

    — Tarun Dua, Managing Director

Margin

  • EBITDA Margin Margin · March 2026 · Medium confidence 65-75%
    So, broadly in line, where we feel that basically 70% to 80%, 70% to 75% kind of EBITDA should be possible. So, going out on a limb I would not go to 70%, but let's say, 65% to 75% should be doable from EBITDA margin perspective with the capacity that we are expecting to kind of convert to revenue by March exit month in the next year, in this year.

    — Nitin Jain, Chief Financial Officer

Risks & concerns

  • Chennai GPU Deployment Delays

    high

    Technical issues delayed Chennai deployment (1,024 GPU clusters), impacting Q1 revenue and expected to be resolved by end of July/early August.

    Management acknowledged

  • Software Licensing Revenue Not Materializing

    medium

    Despite L&T partnership and E2E's software capabilities, software licensing is not a major revenue driver currently, with significant revenue expected only in the next financial year.

    Analyst acknowledged

  • Margin Contraction from INDIAai Mission

    medium

    INDIAai Mission business may involve some margin contraction due to its nature as a national mission, though management expects the overall impact on company margins to be limited.

    Analyst acknowledged

  • Lumpiness of Training Workloads

    medium

    Majority of new large GPU cluster workloads are for training, which can be lumpy, leading to revenue volatility with a smaller base. Company is working to build more inference workload customers.

    Management acknowledged

Areas of evasion (2)

  • L&T's broader strategy regarding other partners
  • Precise quantification of Chennai delay's financial impact on Q1

Q&A highlights

2 direct
L&T Partnership and Software Licensing Revenue Visibility Partial
See, honestly, I was of the opinion that, the next growth driver for E2E would be software licensing play rather than the cloud infrastructure. But I do not see any revenue coming or visibility of revenue. ... Let me not comment on about how L&T is thinking. So, on our part, we are very focused on working with customers where there are synergies in terms of L&T as a data center provider...

Questions the core strategic rationale for L&T's investment and E2E's software revenue potential, which management acknowledges is not significant yet.

Asked by Sampath Nayak

MRR Growth vs. Increased Capacity and Margin Contraction Direct
My major concern is why our MRR is not increased with increased capacity? ... So, Nikhil ji, we set up a new location so two major investments that we are making, one is into our people and especially from the point of view of investing into our technology... And second major investment is that we set up a major new location in Chennai... So, both these kind of resulted in the fixed OPEX cost going up for us.

Directly addresses the current quarter's underperformance despite capacity additions, linking it to increased OPEX and deployment delays.

Asked by Nikhil Gupta

INDIAai Mission Revenue and Margin Impact Direct
Sir, in last concall, there has been one of the comment where we have been foreseeing that we will get around 10% to 20% of share of INDIAai Mission. I would just want to understand do our profit margins be impacted by this business... See, like the way we look at it, there would be some amount of margin contraction for sure, but obviously we would like to do some level of support to the INDIAai Mission...

Clarifies the potential for margin contraction from government-related business, which is a key growth driver for the company.

Asked by Nishant Joshi

2 min read 6 chapters

Detailed narrative

Q1 FY26 Performance and Challenges

E2E Networks reported a challenging Q1 FY26, with revenue dropping by 12.6% year-on-year to ₹36.1 crores. The company posted a net loss of ₹2.8 crores, resulting in a negative EPS of ₹1.39. EBITDA margin stood at 29.1%. This performance was primarily attributed to increased fixed OPEX from setting up a new major location in Chennai and building a new enterprise sales team, coupled with technical delays in the Chennai GPU deployment.

GPU Capacity and Utilization Outlook

As of the end of Q1 FY26, E2E Networks has a total GPU capacity of nearly 3,900 GPUs, with approximately 3,000 currently operational. The Chennai facility, which will add 1,024 single large GPU clusters, is expected to go online by the end of July or early August 2025. Management is targeting a utilization rate of 75% to 90% for its current capacity by Q4 FY26, which is expected to drive significant revenue growth. The current overall ARR capacity, if fully utilized, is nearly ₹500 crores, translating to an MRR capacity of ₹42-44 crores.

Financial Outlook and Exit MRR Targets

Despite the current quarter's performance, management remains confident in achieving an exit Monthly Recurring Revenue (MRR) of ₹32 crores to ₹38 crores by March 2026. This target is supported by a robust pipeline for large GPU clusters and anticipated improvements in capacity utilization. The company also expects to achieve an EBITDA margin of 65% to 75% by the exit month of March 2026, as capacity converts to revenue.

INDIAai Mission and Strategic Partnerships

E2E Networks expects tailwinds from the INDIAai Mission, anticipating increased workloads and significant revenues in the coming quarters, particularly where they are designated as L1 providers. While acknowledging potential margin contraction for this specific government business, management believes the overall impact on the company's margins will be limited. The company continues to engage with L&T, leveraging synergies as a data center and managed services provider, though software licensing revenue from this partnership is not yet material.

Capex and Future Capacity Expansion

In Q1 FY26, E2E utilized approximately ₹884.2 crores from its preferential fundraise, with ₹383.9 crores remaining. The company capitalized ₹31.1 crores of CWIP during the quarter, with a balance of ₹32.6 crores pending. E2E intends to invest in Blackwell GPUs, with orders potentially placed by Q3 or Q4 FY26. The Noida facility can host up to 6,000 GPUs, and the Chennai facility is designed to easily host up to 20,000 GPUs, providing ample room for future expansion.

Workload Dynamics and Software Strategy

The majority of E2E's new large GPU cluster workloads are currently for training, which can lead to lumpiness in revenue. To mitigate this, the company is actively working to build a customer base for inference workloads, aiming for longer-term contracts, especially on the enterprise side. While E2E has built its own cloud software platform since 2014, software licensing revenue is not a major contributor today, with most revenue derived from cloud services.

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