Hinduja Global Solutions Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

Hinduja Global Solutions reported a mixed Q2 FY26, with operating revenue growing 3.3% QoQ to INR 1,091 crore and EBITDA margins at 12.9%. While the company continued to post negative PBT and PAT, losses significantly narrowed both QoQ and YoY, driven by operational efficiencies and cost management. Strategic focus on 'Intelligent Experiences' and digital transformation is yielding results, with 62% of the pipeline now digital-focused and a target of mid-20s EBITDA margins within five years, despite ongoing challenges in the media business.

Highlights

  • Q2 Operating Revenue of INR 1,091 crore (USD 125.8 million), showing 3.3% QoQ growth.

  • Q2 EBITDA margins at 12.9%, with Total EBITDA up 2% YoY to INR 158 crore.

  • Profit Before Tax (PBT) losses narrowed significantly to negative INR 14.1 crore in Q2, from negative INR 26.5 crore in Q1 and negative INR 40.7 crore YoY.

  • Closed 35 new client contracts in H1 FY26, and 62% of the current pipeline is now focused on digital services and operations, up from 30% a year ago.

  • AgentX deployment has led to a sustained improvement of around 30% in gross margins for BPM clients.

Concerns

  • Q2 Profit Before Tax (PBT) remained negative at INR 14.1 crore.

  • Q2 Profit After Tax (PAT) from continuing operations was negative INR 27 crore.

  • Q2 operating revenue growth was a marginal 0.4% on a year-on-year basis.

  • The media business continues to face challenges from OTT, free dish, and free television services, contributing to ongoing losses.

Key financials

  1. Operating Revenue ₹1,091 Cr +0.4%YoY
  2. Total EBITDA ₹158 Cr +2%YoY
  3. EBITDA Margin 12.9%
  4. Profit Before Tax (PBT) ₹-14.1 Cr
  5. Profit After Tax (PAT) ₹-27 Cr
  6. Days Sales Outstanding (DSO) 61 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

SegmentShare of Total RevenueRevenue
CX Operations (Revenue by Source)55%₹672.6 Cr
Digital and Media Services (Revenue by Source)45%₹550.3 Cr
Tech, Media, Telecom (Revenue by Vertical)52%₹635.9 Cr
Consumer Goods & Retail (Revenue by Vertical)20%₹244.6 Cr
BFSI (Revenue by Vertical)19%₹232.35 Cr
Health & Life Sciences (Revenue by Vertical)5%—

Capital allocation

high confidence
  • Debt Gross ₹1,254 Cr
    Total Net Worth of around INR 8,098.5 crore and debt of INR 1,254 crore, resulting in healthy gearing ratios.
  • Liquidity Cash ₹6,575 Cr The company maintains a strong liquidity position and ensures adequate working capital to support ongoing initiatives. Net cash and treasury surplus is around INR 5,321.3 crore.
    Regarding cash flows and cash, I can reassure you that we are maintaining a strong liquidity position and ensuring adequate working capital to support ongoing initiatives, as discussed in detail by both Vyns and Venk. This resilience underpins our ability to invest in growth while safeguarding financial stability. ... With gross treasury plus cash at INR 6,575 crore and minimum debt, what near-term capital allocation decisions and infrastructure rollout are likely in the next quarter?

Guidance & targets

Margin

  • EBITDA Margin Margin · next five years · High confidence mid-20s
    With these acceleration efforts driving the business, we expect the EBITDA margin to reach the mid-20s over the next five years.

    — Venkatesh Korla

Revenue Growth

  • Growth from existing customers Revenue Growth · ongoing · High confidence 80-90%
    Additionally, with the acceleration of new logos and sales, we anticipate more sustained growth, as 80% to 90% of growth typically comes from existing customers.

    — Venkatesh Korla

Revenue Mix

  • Digital vs. BPM Revenue Share Revenue Mix · this year (FY26) · High confidence close to 50%
    From a revenue mix standpoint, this year we were expected to get close to 50% of revenue from digital versus BPM, and we are starting to see that. We are pretty close - it is around (+/-1%) for this year, based on the trajectory we are projecting.

    — Venkatesh Korla

Top-line Growth

  • Top-line growth Top-line Growth · by FY'27 · High confidence more pronounced, significant improvement
    By FY'27, we expect top-line growth to be more pronounced, with significant improvement.

    — Venkatesh Korla

Margin Improvement

  • Margin improvements Margin Improvement · in FY'27 · High confidence show results
    In addition, the margin improvements we are implementing now through the end of FY'26 will begin to show results in FY'27.

    — Venkatesh Korla

EBITDA Margin

  • EBITDA Margin Target EBITDA Margin · long-term · High confidence 20%+
    The 20%+ EBITDA margin target is based on both top-line growth and operational efficiency improvements.

    — Venkatesh Korla

What to watch in Q3 FY26

AgentX deployment in UK and Asia-Pacific

this year (FY26)
Current Primarily in North America, moving to UK and Asia-Pacific
Target Progress on deployment and client adoption in new regions

Why it matters

Successful international deployment of AgentX is key to expanding its margin-enhancing benefits globally.

We have been able to reach 20 clients, primarily in North America. We are now moving on to deploy in the UK and the Asia-Pacific regions as well. That is the project for this year.

Risks & concerns

  • Negative Profitability

    high

    Despite narrowing, PBT and PAT remain negative for the quarter and half-year, indicating the need for continued operational improvements to achieve profitability.

    Management acknowledged

  • Challenges in Media Business

    medium

    The media business continues to face challenges from OTT, free dish, and free television services, contributing to ongoing losses.

    Management acknowledged

  • Stagnant Top-line Growth

    medium

    The company expects only moderate top-line growth for the current year (FY26) as it prioritizes efficiency and sales team reorganization.

    Analyst acknowledged

Q&A highlights

6 direct
AgentX adoption and impact on gross margins Direct
With AgentX deployed, we have seen sustained improvement in gross margins. In fact, it delivers an uplift of around 30% in gross margins.

Highlights the tangible financial benefits of the company's AI-led transformation initiatives, specifically AgentX, on profitability.

Asked by Mandira

Evolution of revenue mix towards digital services Direct
Approximately 62% of the current pipeline, which is expected to convert into actual business over the next year, is in digital and consulting services. This reflects significant growth, especially considering that a year ago, only around 30% of our pipeline was in digital services.

Demonstrates the successful strategic shift towards higher-margin digital services and the accelerating momentum in this area, indicating future revenue quality improvement.

Asked by Mandira

HGS architecture redesign for AI transformation and pricing models Direct
As we go through this exercise, our pricing models will evolve into outcome-based pricing, charging per transaction or per outcome with customers to create a sustained revenue base. Our margin profile for these projects will be much higher than typical labor-arbitrage levered margin models, as scalability is much greater and comes with a higher margin.

Outlines the company's long-term vision for AI integration, shifting to outcome-based pricing, which is expected to drive higher margins and greater scalability compared to traditional models.

Asked by Mandira

Leveraging BPM capabilities for media business and cybersecurity services Direct
We have created a centralized SOC that now services over 20,000 endpoints for some of our customers. We plan to expand this and offer it as an additional service alongside the business broadband capability offered through the media division, enabling us to provide endpoint security and alert business customers to any threats they may face.

Reveals the synergy between the BPM and media divisions, particularly in cross-selling cybersecurity and SOC services, which can enhance stickiness with enterprise clients and create new revenue streams.

Asked by Smita Mehta

Narrowing of PAT losses and the role of FOREX gains Partial
FOREX gains are not the only factor contributing to narrowing the losses. They are certainly a factor, but not the sole reason. ... The second aspect, apart from FOREX gains, involves operational efficiency levers and prudent cash planning, which are part of our five-year strategy.

Addresses an analyst's concern about the quality of loss reduction, clarifying that while FOREX gains played a role, operational efficiencies and strategic cost management were also significant contributors.

Asked by Ranga Prasad

Top-line growth strategy in conjunction with margin improvement Direct
For the current year, we expect top-line growth, but not significant. It will be relatively moderate because we have rebuilt and reorganized the sales team and are focusing on improving efficiency and making the team more effective. One objective is to avoid scaling an inefficient operation. The priority is to make it efficient first and then scale. By FY'27, we expect top-line growth to be more pronounced, with significant improvement.

Clarifies the company's near-term strategy of prioritizing efficiency and margin improvement over aggressive top-line growth, with a clear expectation for more pronounced growth from FY27 onwards as the foundation is strengthened.

Asked by Ranga Prasad

Capital allocation for growth initiatives and potential acquisitions Direct
we are looking for certain strategic partnerships, and we are also looking for any plan or potential acquisition target that will help us grow our business and acquire new capabilities. As and when we get any opportunities, we will definitely invest cash on that.

Indicates the company's proactive stance on utilizing its strong liquidity position (gross treasury plus cash at INR 6,575 crore) for strategic growth through partnerships and M&A, signaling future expansion plans.

Asked by Rohit Patil

3 min read 6 chapters

Detailed narrative

Strategic Vision: Intelligent Experiences and Digital Transformation

Hinduja Global Solutions has articulated a new vision centered on 'Intelligent Experiences,' combining intelligent interactions with intelligent operations, augmented by AI and human talent. This strategy aims to position HGS as a trusted partner for clients, driving global business transformation. The company is focusing on future-focused service offerings, growth-oriented sales and marketing, and a performance-driven team culture to achieve this vision. This strategic pivot is reflected in the pipeline, with 62% now leaning towards digital services and operations, a significant increase from 30% a year ago.

Q2 FY26 Financial Performance and Loss Narrowing

For Q2 FY26, Hinduja Global reported a total income of INR 1,222.9 crore (USD 141 million) and operating revenue of INR 1,091 crore (USD 125.8 million), representing a 3.3% QoQ growth and 0.4% YoY growth. Total EBITDA stood at INR 158 crore (USD 18.2 million) with margins of 12.9%. While Profit Before Tax (PBT) remained negative at INR 14.1 crore and Profit After Tax (PAT) at negative INR 27 crore, these losses significantly narrowed compared to previous quarters (Q1 PBT: negative INR 26.5 crore; Q2 FY25 PBT: negative INR 40.7 crore), driven by operational efficiencies and disciplined cost management.

Advanced AI-Driven Solutions and Margin Impact

HGS is actively developing and deploying AI-driven solutions such as Cloud FinOps Navigator, Anti-Money Laundering Lens, and Interaction Intelligence. The Anti-Money Laundering Lens has reduced false positives by 60% and increased team throughput by 3x for a BFSI client. Interaction Intelligence has reduced agent proficiency time from 10-12 weeks to 2-3 weeks, leading to margin improvements of over 30%. The company's AgentX deployment has also resulted in a sustained uplift of around 30% in gross margins for BPM clients, with plans to deploy in the UK and Asia-Pacific regions this year.

Media Business Resilience and Growth Drivers

Despite facing headwinds from OTT and free television services, the digital media business demonstrated strong performance in Q2. Key drivers include an accelerated, sales-oriented approach to wired broadband, expanding into Tier-3 and Tier-4 markets. The company launched One IPTV in September, offering 650 TV channels over the internet, now available in 100 cities and expanding to 12 more. CelerityX, the enterprise business division, added prestigious logos and delivered over 3,000 high-speed broadband links in the last six months, contributing to top-line improvement and margin enhancement through cost optimization.

Organizational Restructuring and Efficiency Initiatives

HGS is simplifying its organizational structure by dividing its BPM operations across 9 countries into three regional leadership roles (Americas, UK/Europe/Africa, Asia-Pac), reducing individual leadership positions. The company is also implementing AI-based tooling to support management, aiming for greater efficiency and scalability without incremental General & Administrative (G&A) costs. These initiatives are part of a broader effort to drive performance, agility, and adaptability across the organization.

Capital Allocation and Liquidity for Strategic Growth

The company maintains a strong liquidity position with a total net worth of INR 8,098.5 crore, debt of INR 1,254 crore, and a net cash and treasury surplus of INR 5,321.3 crore. Gross treasury plus cash stands at INR 6,575 crore. Management confirmed that this strong liquidity ensures adequate working capital and supports ongoing initiatives. HGS is actively seeking strategic partnerships and potential acquisition targets to invest cash and acquire new capabilities, aligning with its goal to accelerate growth in high-potential segments.

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