Ivalue Infosolutions Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

iValue Infosolutions delivered its best-ever Q2 FY26 performance, with gross sales up 37% YoY to ₹887 crores and PAT up 57% YoY to ₹29.7 crores. All four technology segments contributed to double-digit growth, with DCI growing 71% YoY in H1. Despite H1 operating cash flow being negative, the company expects it to turn positive by year-end, driven by strong operational discipline and a growing annuity business, which contributed 42.3% of H1 gross sales.

Highlights

  • Q2 FY26 was the best quarter in iValue's 18-year history, reflecting strong business model and execution excellence.

  • Gross sales for Q2 FY26 stood at ₹887 crores, a 37% increase year-on-year, and the highest ever in a single quarter.

  • All four technology segments (Cybersecurity, DCI, ILM, ALM) grew on a double-digit basis in H1 FY26.

  • Annuity business contributed 42.3% to overall gross sales in H1 FY26, growing 39% YoY.

  • Operating EBITDA for Q2 FY26 grew 44% YoY to ₹44.5 crores, and PAT grew 57% YoY to ₹29.7 crores.

  • Networking capital days marginally improved to 46 days as of September 30, 2025, with adjusted ROCE at 41.6% and ROE at 23.5%.

Concerns

  • Net operating cash flow for H1 FY26 was negative ₹30 crores, though an improvement from negative ₹60 crores in the prior year.

  • Gross margin percentage for H1 FY26 declined to 7.6% from 9.3% in H1 FY25, attributed to pricing pressures in Q1.

  • Management explicitly declined to provide specific numerical guidance for revenue, billing, PAT, or margin expansion for future quarters.

Key financials

3 periods

Headline

  • Networking Capital Days
    46 days

Q2 FY26

  • Gross Sales
    ₹887 Cr
    YoY +37%
  • Net Sales
    ₹329 Cr
    YoY +52%
  • Gross Margin
    ₹72.3 Cr
  • Gross Margin %
    —
  • Operating EBITDA
    ₹44.5 Cr
    YoY +44%
  • PAT
    ₹29.7 Cr
    YoY +57%
  • Adjusted ROCE
    41.6%
  • ROE
    23.5%

H1 FY26

  • Gross Sales
    ₹1,494 Cr
    YoY +33.6%
  • Net Sales
    ₹557 Cr
    YoY +35%
  • Gross Margin %
    7.6%
  • Operating EBITDA
    ₹60.4 Cr
    YoY +31.7%
  • PAT
    ₹40.1 Cr
    YoY +42.9%
  • PAT Margin
    2.7%
  • Net Operating Cash Flow
    ₹-30 Cr
  • Annuity Business
    ₹632 Cr
    YoY +39%
  • Annuity Business % of Gross Sales
    42.3%

What they filed

Q1 FY27: revenue down 29.3%, net profit up 50.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue211 240 255 215 313 +48%209 −13%253 −1%152 −29%
EBITDA26 24 47 10 38 +46%28 +17%48 +2%17 +70%
Net profit19 17 37 10 27 +42%15 −12%41 +11%15 +50%
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 Business (H1 FY26)YoY Growth (H1 FY26)
Cybersecurity48%29%
Data Center Infrastructure (DCI)—71%
BFSI and Government65%—

Order book

medium confidence

Pipeline

deal pipeline tcv

Order pipeline for Q3 FY26

Management discussed a robust order pipeline for the next quarter and highlighted the recurring nature of its annuity business, which forms a significant portion of gross sales.

Source: Q&A

Guidance & targets

Profitability

  • Margin and Profitability Expansion Profitability · long term · Low confidence Potential for expansion
    While over the long term, we see potential for margin and profitability expansion as we continue to scale our annuity-led and service-based revenue streams.

    — Sunil Pillai, Chairman and Managing Director

Revenue

  • Annuity Business Contribution to Gross Sales Revenue · near term · Medium confidence 40%-45%
    We would like to keep this number at anywhere between 40% to 45%, thereby we don't lose the focus on the new business as well.

    — Swaroop Muvvala, Chief Financial Officer

Growth

  • Growth Rate vs Industry Average Growth · next 2-3 years · Medium confidence 500-600 bps faster than industry
    Historically, our track record has been to grow at least 500 bps to 600 bps more than or faster than the industry average... we believe that we will be able to grow faster than the market, point number one.

    — Swaroop Muvvala, Chief Financial Officer

Seasonality

  • H2 vs H1 Performance (Gross Sales) Seasonality · FY26 · High confidence 60% of gross sales in H2
    In terms of gross sales it is around 40:60 and in terms of EBITDA it is around 35:65.

    — Swaroop Muvvala, Chief Financial Officer

  • H2 vs H1 Performance (EBITDA) Seasonality · FY26 · High confidence 65% of EBITDA in H2

    — Swaroop Muvvala, Chief Financial Officer

What to watch in Q3 FY26

Net Operating Cash Flow

by March 2026
Current Negative ₹30 crores (H1 FY26)
Target Positive cash flow

Why it matters

Turning cash flow positive is a key indicator of financial health and operational efficiency, especially after a negative H1.

Historically, this has been the trend where at the end of Q2 you will see a negative cash flow but the collections and the business everything improves in the Q2. Thereby, by March you see a positive cash flow.

Risks & concerns

  • AI-powered cyber-attacks

    medium

    72% of organizations faced AI-powered cyber-attacks, highlighting the evolving threat landscape and the need for AI-driven security solutions.

    Management acknowledged

  • Pricing pressures and currency depreciation

    medium

    Pricing pressures in Q1, exacerbated by dollar appreciation and rupee depreciation, impacted gross margins, though recovery was seen in Q2.

    Management acknowledged

  • Competition from large distributors

    low

    Management acknowledges the presence of large distributors but asserts its differentiation through specialization in four tech segments, value-added services, and technical expertise.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Quantification of commercial pursuits/pipeline Direct
The entire order pipeline which we are working on currently would be in the range of around Rs. 2,500 crores which we are working in Q3 of '26.

Provides a forward-looking indicator of potential business, though it's a pipeline for the next quarter, not a signed order book for the current one.

Asked by Baidik Sarkar

Comparison of current pipeline to previous year Partial
One thing I can say is there is a growth as compared to the last year, but how much is the growth quantified? I honestly don't have an exact number or a ballpark number at this stage. I can get back to you.

Analyst sought a relative measure of pipeline growth, but management could not provide a specific number, indicating a lack of historical comparison data readily available.

Asked by Baidik Sarkar

Operating cash flow trajectory and year-end target Direct
net operating cash flow for the period ending 30th September 2025 is negative Rs 30 crores. But this is a significant improvement as compared to the previous year... by March you see a positive cash flow.

Addresses a key concern about cash flow, providing a clear target for positive cash flow by year-end, which is a critical financial health indicator.

Asked by Lakshminarayanan

Gross margin decline in H1 FY26 and recovery outlook Direct
pricing pressures in Q1 especially with the dollar continuously appreciating and rupee depreciating some part in the ecosystem had to take it. We were able to recover from that very strongly in Q2... We believe that this trend will continue or this momentum of positive uptick will continue in Q3 and Q4.

Explains the reason for H1 margin compression and provides a positive outlook for margin recovery in the upcoming quarters, which is crucial for profitability.

Asked by Balaji

Operating leverage and its impact on bottom line Direct
we have done decent amount of investment to cover our revenue requirement or gross sale requirements for at least 12 to 18 months and more. And hence we don't see any substantial increase in investments from our side our expenditure from our side in the next 18 to 24 months per se. This will help in generating an operating leverage which can flow down to the bottomline very much.

Management clarifies how past investments and controlled future expenditure will lead to operating leverage, driving profitability growth without significant new capital outlay.

Asked by Darshil Jhaveri

Sustainable long-term growth rate Partial
our RHP prospectus clearly tells that these are poised to grow at around 15% to 16%. Historically, our track record has been to grow at least 500 bps to 600 bps more than or faster than the industry average... we believe that we will be able to grow faster than the market.

Analyst probed for a specific long-term growth rate, and management reiterated their historical outperformance and belief in growing faster than the 15-16% industry average, implying a 20-22% growth rate.

Asked by Darshil Jhaveri

Protection of margins against marketplace distributors Direct
We as a company have always find a niche for ourselves by focusing on only four technology segments not broad basing us going to commodity based segments... created knowledge as a barrier for someone to come and eat our wallet share.

Management explains its competitive strategy of specialization and value-added services in niche technology segments to differentiate itself from broader distributors and protect margins.

Asked by Srinivasan

Guidance on margin expansion Evasive
We have an external IR and they have advised us not to give any guidance.

Management explicitly declined to provide specific numerical guidance on margin expansion, despite earlier qualitative commentary about long-term potential, leaving investors without a clear quantitative target.

Asked by Kunal Ochiramani

2 min read 6 chapters

Detailed narrative

Record-Breaking Q2 FY26 Performance

iValue Infosolutions achieved its best-ever quarter in its 18-year history, with Q2 FY26 gross sales reaching ₹887 crores, marking a 37% year-on-year increase. Net sales for the quarter also saw significant growth, rising 52% year-on-year to ₹329 crores. This strong performance contributed to H1 FY26 gross sales of ₹1,494 crores (up 33.6% YoY) and net sales of ₹557 crores (up 35% YoY), reflecting robust momentum across all business segments.

Profitability and Efficiency Gains

The company demonstrated strong profitability, with Q2 FY26 operating EBITDA at ₹44.5 crores, a 44% year-on-year growth, and PAT at ₹29.7 crores, a 57% year-on-year increase. For H1 FY26, operating EBITDA stood at ₹60.4 crores (up 31.7% YoY) and PAT at ₹40.1 crores (up 42.9% YoY). Operational discipline led to a marginal improvement in networking capital days to 46 days and significant increases in adjusted ROCE to 41.6% and ROE to 23.5% in Q2 FY26.

Strategic Focus on AI and Digital Transformation

iValue is strategically positioned to capitalize on the evolving technology landscape, particularly in AI. The company highlighted the massive investment in Data Center Infrastructure, with India's capacity projected to grow from 1,200 megawatts to 8,000 megawatts by 2030, creating multi-billion dollar opportunities. The cybersecurity market in India, currently $3.3 billion, is expected to reach $20 billion by 2032 due to AI adoption, presenting significant growth avenues for iValue.

Annuity Business and Client Engagement Model

The annuity business remains a cornerstone of iValue's model, contributing 42.3% of overall gross sales in H1 FY26 and growing 39% year-on-year. Management aims to maintain this contribution in the 40-45% range. The company primarily engages with end-customers through system integrators, with over 85% of dollar amount and 90% of transaction count flowing through SIs, fostering long-standing relationships and recurring demand patterns.

Segmental Growth and Vertical Performance

All four technology segments—Cybersecurity, Information Lifecycle Management, Data Center Infrastructure (DCI), and Application Lifecycle Management—experienced double-digit growth in H1 FY26. Cybersecurity, which accounts for 48% of the total business, grew 29% YoY, while DCI saw a 71% YoY growth. BFSI and government verticals were significant growth drivers in Q2 and H1, collectively contributing approximately 65% of the total business, and are expected to continue this momentum.

Operating Leverage and Cost Management

Management emphasized that operating leverage will be a key driver for future profitability. They noted that expenses, including manpower and administrative costs, are not expected to grow at the same pace as gross sales, creating room for margin expansion. A one-time cost of approximately ₹4 crores related to an annual event in the previous year was eliminated by changing its format, contributing to cost savings and sustainable expense management.

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