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    eClerx Services

    ECLERXGood
    Services·29 Jan 2026
    Management Summary

    eClerx delivered a strong Q3 FY26 with robust revenue growth and healthy margins, maintaining its trajectory toward top-quartile industry growth. Management highlighted successful client diversification and the early-stage rollout of 'Agentic AI' solutions to drive productivity. While cautioning about potential volatility and a 'softer' Q4, the company remains confident in its medium-term outlook and maintained its 24-28% EBITDA margin guidance.

    Highlights

    7

    • Operating revenue reached $121.7 million, a sequential growth of 5.4% and 20% YoY in constant currency

    • EBITDA for the quarter stood at ₹3,075 million with a margin of 27.9%, despite a 90 bps sequential margin decline

    • Profit After Tax (PAT) was ₹1,920 million, representing a 17.5% margin and nearly 5% sequential growth

    • Deal wins (ACV) for Q3 were healthy at $45 million, with 9-month ACV already showing improvement over prior years

    • Top 10 client concentration reduced to 60%, down from 62-64% in previous quarters, indicating successful diversification

    • Board approved a 1:1 bonus issue and completed a buyback of 625,000 shares in January

    • 9M FY26 USD operating revenue grew 18.4% YoY to $346.5 million, while PAT grew 33% YoY to ₹5,168 million

    What Changed3

    vs Q4 FY26

    Guidance items5 → 4 (-1)Risks discussed5 → 3 (-2)Q&A highlights6 → 3 (-3)

    Key financials

    Single quarter

    06 metrics
    1. 01Operating Revenue10,703 Mn+22%YoY
    2. 02EBITDA Margin27.9%+1.9%YoY
    3. 03PAT1,920 Mn+33%YoY
    4. 04Deal Wins (ACV)45 Mn
    5. 05DSO78 days

    Segment breakdown

    Analytics and Automation
    10% Growth
    Financial Services
    0 positive Demand Outlook
    List

    Guidance & targets

    4
    CategoryTargetPriority
    Margin
    EBITDA Margin Band
    24% to 28%
    		High
    Revenue
    Growth vs Peers
    Top Quartile
    		High
    Revenue
    Q4 Growth Outlook
    Softer than first 3 quarters
    		Medium
    Other
    Annual Deal ACV
    Higher than FY25
    		High

    Risks & concerns

    4
    RiskSeverity

    Q4 Volatility and Seasonality

    Management explicitly warned that Q4 might be softer than the first three quarters due to inherent business volatility. — Management acknowledged

    medium

    Macroeconomic and Geopolitical Uncertainty

    Kapil Jain used the term 'cautiously optimistic' specifically due to the global geopolitical and macroeconomic environment. — Management acknowledged

    medium

    DSO Increase

    DSO moved up by 2 days to 78, though not highlighted as a major concern. — Management acknowledged

    low

    Areas of Evasion(1)

    • Specific revenue split of the Analytics business across industry segments was not provided in detail.

    Q&A highlights

    3

    “Typically, clients have this gating criteria between 15% upwards. So, all the projects that we've seen make it to production to have this kind of productivity improvement metric.”

    Confirms that AI-driven productivity gains are a prerequisite for moving pilots to production, validating the 20% target mentioned in earlier calls.

    asked by Dipesh Mehta, Emkay Global

    2 min read5 chapters

    Detailed Narrative

    01

    Robust Revenue and Margin Performance

    eClerx reported Q3 FY26 operating revenue of ₹10,703 million, up 6.5% sequentially. EBITDA margins remained strong at 27.9%, although they saw a 90 bps sequential decline primarily due to higher variable payouts (75 bps) and increased travel/marketing spend (25 bps). This was partially offset by a 30 bps improvement in delivery costs driven by higher utilization, which rose by 1.4% during the quarter.

    02

    Client Diversification and Concentration

    A significant highlight of the quarter was the reduction in top 10 client concentration to 60%, down from 62-64% in prior quarters. Management noted that growth in non-top 10 clients outpaced the top 10, driven by successful cross-selling and upselling strategies. The company is seeing steady increases in the number of $1M+, $3M+, and $5M+ customers, which they attribute to a concerted strategy to grow clients in every segment.

    03

    AI and Automation Strategy

    The company is aggressively pivoting toward 'Agentic AI' for self-healing services and trade settlement exception management. Management reported that AI pilots typically require a 15% productivity improvement 'gating criteria' before moving to production. While it is too early to quantify the long-term revenue impact, eClerx has already won deals for Agentic AI deployments and is running pilots across its client base to drive efficiency and cost takeouts.

    04

    Segmental Growth Drivers

    Growth was broad-based across industry segments, with strong performance in Hi-tech and Manufacturing & Distribution (M&D). The Financial Services segment showed modest growth but remains a key area for AI-driven operations and change projects. The 'Emerging' business segment also grew strongly, particularly in F&O and order management services, with expansion into new delivery centers like Cairo, Egypt, resonating well with clients.

    05

    Capital Allocation and Shareholder Returns

    eClerx continues to demonstrate a shareholder-friendly capital allocation policy. The company completed a buyback in January, extinguishing 625,000 shares, and the Board has approved a 1:1 bonus issue. Despite these payouts, the company maintains a healthy cash position with net operating cash flow of ₹2,536 million for the quarter and an 82% EBITDA-to-cash conversion rate.

    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.