Hinduja Global Solutions Limited — Q1 FY26 earnings call

Call held 8 Aug 2025

Management summary

Hinduja Global Solutions reported mixed Q1 FY26 results with sequential revenue decline but strong year-over-year EBITDA margin expansion, driven by digital services and the Agent X AI platform. While the media business faced headwinds leading to a loss, the company is strategically focusing on AI-enabled BPM, broadband growth, and margin expansion. The balance sheet remains strong, and the company plans to invest in capabilities and acquisitions for sustainable future growth.

Highlights

  • Operating revenue reached ₹1,056.2 crores, reflecting steady progress despite macroeconomic volatility.

  • EBITDA stood at ₹159.7 crores, with strong margins of 13.5%, an increase of 169 basis points year-over-year.

  • Agent X, the proprietary AI platform, demonstrated 12% quarter-over-quarter growth in active users and delivered significant operational benefits, including 40% training optimization, 25% productivity improvements, and an 89% decrease in employee attrition.

  • CelerityX, the broadband division, saw its revenue contribution grow from 1% to 5% and is targeted to reach double digits by fiscal year-end.

  • NXTDIGITAL's ARPU improved from ₹117 last year to ₹123, driven by innovative packaging and pricing strategies.

Concerns

  • Revenue decreased sequentially to ₹1,056 crores from ₹1,161 crores in Q4 FY25 due to seasonal softness and customer ramp-downs.

  • PBT for the quarter was negative ₹26.5 crores, compared to a positive ₹103.5 crores in Q4 FY25.

  • PAT from continuing operations was negative ₹46.3 crores.

  • The media segment experienced a loss of approximately ₹38.8 crores in Q1, a significant drop from a profit of ₹30.5 crores in the previous quarter, primarily due to unbilled marketing deals and increased content costs.

  • Days Sales Outstanding (DSO) for Q1 FY26 increased to 69 days, up 9 days from the previous year.

Key financials

  1. Total Income ₹1,187.3 Cr
  2. Operating Revenue ₹1,056.2 Cr -9%QoQ
  3. EBITDA ₹159.7 Cr
  4. EBITDA Margin 13.5% +1.7%YoY
  5. PBT ₹-26.5 Cr
  6. PAT (Continuing Ops) ₹-46.3 Cr
  7. Total PAT ₹11.2 Cr
  8. Net Cash & Treasury Surplus ₹5,140 Cr
  9. DSO 69 days

What they filed

Q1 FY27: revenue down 0.6%, net profit down 700.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,087 1,064 1,161 1,056 1,091 +0%1,075 +1%1,085 −7%1,050 −1%
EBITDA34 64 142 29 26 −24%17 −73%27 −81%-34 −217%
Net profit-51 -9 -2 11 -27 +47%34 +478%-14 −600%-66 −700%
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

  • CX Operations
    54% Share of Total Revenue
  • Digital & Media Services
    46% Share of Total Revenue
  • Tech, Media & Telecom Vertical
    53% Share of Total Revenue
  • BFSI Vertical
    19% Share of Total Revenue
  • Consumer Goods & Retail Vertical
    19% Share of Total Revenue
  • Public Sector Vertical
    — Share of Total Revenue
  • Media Business
    ₹38.8 Cr Loss₹30 Cr Unbilled Marketing Deals₹7 Cr Cable Sector Revenue Decline
  • CelerityX (Broadband)
    5% Revenue Contribution
  • NXTDIGITAL ARPU
    ₹123 ARPU

Capital allocation

  • Debt Gross ₹1,186 Cr
    Moving on to the balance sheet overview on slide 21, we are maintaining a strong balance sheet with a total net worth of approximately Rs. 7,980 crores and debt of around Rs. 1,186 crores, which again reflects healthy gearing ratios.
  • M&A TekLink Acquisition · Integrated

    Part of strategic acquisitions to enhance capabilities and drive future growth.

    TekLink acquisition is growing, and we continue to plan further investments to drive future growth.

    Our TekLink acquisition is growing, and we continue to plan further investments to drive future growth and establish ourselves as a more sustainable, Al-driven company.
  • Liquidity Cash ₹5,140 Cr Net cash and treasury surplus is approximately Rs. 5,140 crores. The company holds a cash balance of Rs. 5,000 crores, which is invested in various companies and callable.
    The net cash and treasury surplus is approximately Rs. 5,140 crores.

Guidance & targets

Profitability

  • Margin Expansion Profitability · Ongoing · High confidence Prioritized over topline growth
    We have consciously decided to prioritize margin expansion over topline growth due to market changes, and this is reflected in our improved EBITDA margins in Q1.

    — Venkatesh Korla

  • Enterprise Business Performance Profitability · Coming quarter · Medium confidence Better performance
    Therefore, we anticipate better performance in the coming quarter.

    — Vynsley Fernandes

Revenue

  • Digital Services Shift Impact Revenue · Q4 this year · Medium confidence Higher margin growth effects
    We expect to observe these effects in the fourth quarter of this year.

    — Venkatesh Korla

  • CelerityX Contribution Revenue · End of this fiscal year · High confidence Well into double digits

    From 5% today

    We hope that by the end of this fiscal year, its contribution will be well into double digits as we expand the CelerityX business.

    — Vynsley Fernandes

Market Share

  • Broadband Provider Ranking Market Share · Long-term · Medium confidence Among the top five providers nationwide
    We now aim to grow broadband and remain a significant player in the market, ranking among the top five providers nationwide.

    — Vynsley Fernandes

Pricing

  • Digital Television Price Hike Pricing · September · High confidence Implemented
    The price hike is expected to occur in September.

    — Rajiv Bhargava

What to watch in Q2 FY26

CelerityX Revenue Contribution

End of this fiscal year
Current 5% of total revenues
Target Well into double digits

Why it matters

Indicates the success of the broadband expansion strategy and its impact on overall revenue mix and growth.

We hope that by the end of this fiscal year, its contribution will be well into double digits as we expand the CelerityX business.

Risks & concerns

  • Macroeconomic volatility and extended client sales cycles

    medium

    Ongoing macroeconomic volatility, extended client sales cycles, sector seasonality, and customer ramp-ups shaped Q1 performance.

    Management acknowledged

  • Decline in traditional voice and non-voice services revenue

    medium

    Traditional voice and non-voice services are expected to decline gradually as digital and AI-enabled operations contribute more.

    Management acknowledged

  • Media business headwinds and content cost increases

    medium

    The digital television segment faces challenges, including increased content costs and delays in implementing price hikes, leading to a Q1 loss.

    Management acknowledged

  • Increase in Days Sales Outstanding (DSO)

    medium

    DSO for Q1 FY'26 increased to 69 days, up 9 days from the previous year, attributed to timing issues.

    Management acknowledged

Q&A highlights

6 direct
AI Capabilities Strategy (Build, Partner, Acquire) Direct
We plan to approach this strategically. There are core components of Al that will orchestrate the experience, and we will develop our own intellectual property for those that we have been working on. Additionally, we are developing orchestration capabilities that enable seamless integration across multiple platforms, whether built internally or through external partnerships. Non-core Al capabilities, such as voice biometrics, are areas where we would collaborate with external organizations and integrate their solutions.

Clarifies HGS's strategic approach to AI development and integration, balancing in-house innovation with external partnerships for speed and competitive advantage.

Asked by Nakul Dev

Media Segment Loss and BPM Segment Decline Direct
The revenue decline you observe is mainly due to two or three factors. Firstly, we have marketing deals with broadcasters, worth Rs. 30 crores, that could not be closed in Q1. Although the work was completed, we were unable to bill them due to a lack of confirmation from the broadcaster's side. That's why the most significant part of this revenue drop is Rs. 30 crores. Additionally, in Q4, we had an excess provision of approximately Rs. 15 crores, which resulted in a further decrease in revenue during that quarter. These are the two main reasons, along with a slight revenue decline of about Rs. 7-8 crores in our cable sector.

Provides detailed reasons for the unexpected loss in the media segment and clarifies that BPM decline was due to client diversification, not customer loss.

Asked by Nakul Dev

Pricing Trends and Deal Velocity in Digital Services Direct
Currently, we are seeing more transaction-based pricing, also known as outcome-based pricing, where you build software, combine it with process management and talent, and charge a single price per transaction or outcome delivered to the customer. The demand for this is beginning to grow. Expectations exist, but not all enterprises have yet figured them out. What we are noticing is that the initial project sizes are smaller because they are primarily in a pilot phase at the moment. However, as we complete these pilots and demonstrate success to customers, demand escalates, leading to larger deals.

Explains the evolving pricing model in digital services, indicating a shift towards outcome-based pricing and a pilot-to-scale approach for new deals.

Asked by Harshal Patil

Cash Balance and Investments with Promoters Direct
Let me first clarify the factual information. The cash balances are not with the promoters. Instead, this cash is invested in various companies, and these decisions are made after careful risk assessment. There is no risk from a capital or interest rate perspective. All interest rates charged on deposits with these companies are at arm's length, generating around 6.5% in current interest rate scenarios. All investments are overseas, offering healthy returns. From a principal standpoint, these are callable investments, meaning we can call the money back at any time if our acquisition strategy is ready.

Addresses a significant investor concern regarding the company's large cash balance and its deployment, clarifying that funds are invested safely and are callable for strategic acquisitions.

Asked by Isaac

Broadband ARPU Trends and Subscriber Growth Direct
You're right about ARPU. As you may recall, a few years ago, our ARPUs were around Rs. 140. Last year, we removed lower ARPU customers and focused on what we call a launch ARPU. For us, Rs. 170+ is a strong ARPU considering operational costs, bandwidth, and other factors. What will increase ARPUs even more, Neha, is the additional layers you add on top. What do I mean by that? I mean OTT, IPTV, for example.

Explains the strategy for ARPU growth in the broadband segment, focusing on value-added services like OTT and IPTV rather than just basic connectivity.

Asked by Neha Verma

Shareholder Returns (Dividend/Buyback) Direct
The last time we received proceeds from the sale of our healthcare division, we used approximately Rs. 1,020 crores to buy back shares, which was a tax-efficient strategy at the time. However, with the current tax scenarios, a buyback no longer appears to be the best way to return value to shareholders. Additionally, we used those funds for some acquisitions. ... Given the future outlook, we believe it's essential to ensure the company has enough cash available to invest in its transformation. We need to focus on both the Al space and acquiring capabilities, as well as investing in employees through reskilling and growth.

Clarifies the company's current stance on shareholder returns, indicating a preference for strategic investments and acquisitions over buybacks due to tax efficiency and growth priorities.

Asked by Neha Verma

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview

Hinduja Global Solutions reported a total income of ₹1,187.3 crores and operating revenue of ₹1,056.2 crores for Q1 FY26. EBITDA stood at ₹159.7 crores, with a strong margin of 13.5%, marking a 169 basis points year-over-year expansion. However, revenue saw a sequential decline from ₹1,161 crores in Q4 FY25, and PBT was negative ₹26.5 crores, with PAT from continuing operations at negative ₹46.3 crores. Despite mixed results, the company believes it is laying a solid foundation for sustainable growth.

Strategic Shift to Intelligent Experiences and AI Focus

HGS is reinventing itself as an 'Intelligent Experiences' company, aiming to be a trusted partner for global business transformation. The company's 5-year business transformation plan, approved by the board, focuses on shifting revenue towards more digital and AI-enabled operations to increase margins through automation and value-added services. This involves co-creating frictionless, intelligent experiences and leveraging AI agents to scale effectively, boosting efficiency and quality.

Agentic AI Platform (Agent X) Performance and Benefits

The proprietary Agentic AI enterprise platform, Agent X, has been rolled out to 20 BPM clients across North America, reaching approximately 5,000 active users, showing a 12% quarter-over-quarter growth. Agent X users experienced approximately 40% training optimization, 25% productivity improvements, 30% cost reductions, and an 89% decrease in employee attrition. Businesses using Agent X saw at least an 8% improvement in CSAT/NPS and an 87% increase in cross-selling gains.

Media Business Dynamics and Broadband Growth

The media business faced headwinds, resulting in a Q1 loss of approximately ₹38.8 crores, compared to a profit of ₹30.5 crores in the previous quarter. This was primarily due to ₹30 crores in unbilled marketing deals and a ₹7-8 crore decline in the cable sector. Content costs increased, but a price hike is expected in September to compensate. The broadband segment, particularly CelerityX, is a key growth driver, with its revenue contribution increasing from 1% to 5% and targeted to reach double digits by fiscal year-end. NXTDIGITAL's ARPU increased from ₹117 to ₹123, driven by innovative packaging.

Financial Health and Capital Allocation Strategy

The company maintains a strong balance sheet with a total net worth of approximately ₹7,980 crores and debt of ₹1,186 crores, resulting in a net cash and treasury surplus of ₹5,140 crores. Management clarified that the cash balance is invested in various callable companies, not with promoters, ensuring no risk. Regarding shareholder returns, a buyback is currently not considered the most tax-efficient method, with the focus shifting to strategic acquisitions and investments in AI capabilities, reskilling, and infrastructure expansion (e.g., South Africa and Bengaluru) to drive future growth.

Market Focus and Sales Model Transformation

HGS is refining its sector focus to target banking, financial services, insurance, retail, consumer products, healthcare, and the UK public sector, with a special emphasis on mid-market enterprises. The sales model is transforming into a consultative, client-centric approach to foster deeper relationships and unlock new revenue streams beyond traditional service contracts. The company is investing in vertical processes and tailored task offerings, primarily centered around AI agents, to deliver scalable, industry-specific solutions.

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