Onward Technologies Limited — Q1 FY27 earnings call

Call held 16 Jul 2026

Management summary

Onward Technologies reported a strong Q1 FY27, achieving its highest-ever quarterly revenue of INR 151.2 crore, driven by 11.5% YoY and 8.7% QoQ growth. Profitability also saw significant improvement with EBITDA up 20% QoQ to INR 18.4 crore and PAT rising 16.9% sequentially. The company secured a notable INR 33 crore contract and expanded its base of high-value customers, reinforcing its strategic focus on existing client relationships and offshore delivery.

Highlights

  • Highest ever quarterly revenue of INR 151.2 crore, marking the first time crossing the INR 150 crore milestone.

  • Strong revenue growth of 11.5% YoY and 8.7% QoQ, demonstrating robust business momentum.

  • Significant EBITDA expansion, up 20% QoQ to INR 18.4 crore, with margins improving by 113 bps sequentially to 12.3%.

  • PAT increased by 16.9% sequentially to INR 11.2 crore, reflecting improved operational efficiency.

  • Strategic deal win of INR 33 crore and an increase in high-value customers ($1M+ annual revenue from 16 to 18), indicating deeper account penetration.

Concerns

  • Subcontracting costs increased 36% YoY from INR 25 crore to INR 34 crore, attributed to macroeconomic conditions and local hiring, though management states the ratio to employee cost is down.

Key financials

  1. Revenue ₹151.2 Cr +11.5%YoY
  2. EBITDA ₹18.4 Cr +20%QoQ
  3. EBITDA Margin 12.3% +1.1%QoQ
  4. PAT ₹11.2 Cr +16.9%QoQ
  5. Subcontracting Costs ₹34 Cr +36%YoY

What they filed

Q1 FY27: revenue up 12.0%, net profit down 15.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue123 123 127 133 139 +13%135 +10%137 +8%149 +12%
EBITDA8 11 14 17 20 +150%20 +82%15 +7%18 +6%
Net profit4 6 10 13 12 +200%10 +67%10 +0%11 −15%
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.

Order book

medium confidence

Inflow this quarter

₹33 Cr

Pipeline

deal pipeline tcv

Broader and higher quality pipeline compared to a year ago.

Management indicated a strong order book with ACV for the current year already exceeding last year's revenue, supplemented by a broader and higher-quality deal pipeline.

Source: Prepared remarks

Capital allocation

high confidence
  • Buyback Announced
    Importantly, we also completed our first-ever buyback programmeme during the quarter, reinforcing our confidence in the business, our cash generation capabilities and our long-term growth outlook. As committed, the promoters did not participate in the buyback programme.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · Quarter-on-quarter and year-on-year · High confidence Double digits
    And in terms of EBITDA, we have shared before that we are confident that it will be in double digits and continue to improve quarter-on-quarter and year-on-year.

    — Jigar Mehta

  • EBITDA Margin Profitability · Going forward · Medium confidence Mid-to-high teens
    So our target of achieving the high -- mid-to-high teens EBITDA, so what will it require from our end to scale our EBITDA margin going forward?

    — Jigar Mehta

Revenue per Employee

  • Revenue per Employee Revenue per Employee · Long-term aspiration · Medium confidence INR 35 lakhs

    From INR 22 lakhs today

    to increase the revenue from current INR22 lakhs per employee to, let's say, INR35 lakhs, I think it's onsite and moving up the value chain.

    — Jigar Mehta

Vertical Growth

  • Healthcare Vertical Growth Vertical Growth · Year-on-year · High confidence 20-50%
    The way I'm looking at the healthcare business, it can grow anywhere from 20% to 50% year-on-year.

    — Jigar Mehta

Contract Type

  • Time and Material Mix Contract Type · Financial year · High confidence 80-90%
    But overall, we do believe we'll continue to be at 80% to 90% time and material at least for this financial year.

    — Jigar Mehta

Power and Thermal Management Engineering

  • Progress and Scale Power and Thermal Management Engineering · Next 3 years · Medium confidence Significant progress and scale
    And I do believe we will see significant progress and scale in this particular area, at least over the next 3 years.

    — Jigar Mehta

Market context

  • Revenue Growth Revenue · Annual basis · High confidence Double-digit
    And I continue to maintain that we are seeing a very healthy opportunity for a company of our size to continue to deliver robust double-digit revenue growth

    — Jigar Mehta

  • EBITDA Growth Profitability · Annual basis · High confidence Double-digit
    and double-digit EBITDA growth year-on-year, and we continue to focus on that.

    — Jigar Mehta

What to watch in Q2 FY27

Healthcare vertical growth

Next quarter / Year-on-year
Current Expected 20-50% YoY growth
Target Evidence of growth towards 20-50% YoY

Why it matters

Healthcare is a key growth vertical with high potential, and its performance will indicate successful execution in this segment.

The way I'm looking at the healthcare business, it can grow anywhere from 20% to 50% year-on-year.

Risks & concerns

  • Macroeconomic uncertainties

    medium

    Management acknowledges macroeconomic uncertainties but remains optimistic about opportunities ahead.

    Management acknowledged

  • Impact of geopolitical events on talent mobility and subcontracting costs

    medium

    Geopolitical events (e.g., war, Middle East situation) led to travel restrictions, necessitating local hires in Europe and US, contributing to increased subcontracting costs, though the ratio to employee cost has decreased.

    Management acknowledged

  • Selective client spending patterns

    low

    Customers are selective in spending, but Onward Technologies sees healthy demand in areas tied to product innovation, software-defined engineering, AI, automation, and cost optimization.

    Management acknowledged

  • Competition in the domain

    low

    Management focuses on deep relationships with existing 73 large customers, where they have master service agreements, rather than chasing new clients.

    Analyst downplayed

Q&A highlights

6 direct
Growth expectations for the Auto segment Partial
While there has been a lot of industry news about project cancellations and shutdowns, we at Onward Tech are seeing positive momentum with a few select customers in select areas, where we have specialization. So, we remain quite positive about where we are with our existing customers.

Analyst inquired about mixed industry commentary for auto, and management clarified their positive outlook based on specialized areas and existing client relationships, indicating selective growth.

Asked by Hitaindra Pradhan

Strategy for winning in a competitive domain Direct
Onward Technologies has 73 live customers today, and we are focusing only on those customers where we have existing master services agreement signed, where we have existing client relationships, where we are working in one particular design centre or office location or factory of these customers. We are not a sales organization chasing new customers.

Management articulated a clear strategy of focusing on deep relationships and expanding within existing large customers rather than aggressively pursuing new ones, highlighting their confidence in current client base.

Asked by Hitaindra Pradhan

Growth outlook for the Healthcare vertical Direct
In HCLS vertical, we don't have clients that have crossed the USD 1 million mark yet. The way I'm looking at the healthcare business, it can grow anywhere from 20% to 50% year-on-year. It's all about execution.

Management provided specific growth guidance for the healthcare vertical, indicating strong potential despite no current $1M+ clients in this segment, emphasizing execution.

Asked by Rehan Saiyyed

Evolution of ODC deals and multi-year engagements Direct
The ODC deal that we won this quarter for INR 33 crore is only a starting point. And this is just one example. There will be several large multi-year engagements and RFQs that we are participating in today and for which we are invited to compete. Our pipeline today is broader, and of much higher quality than a year ago.

Management clarified that the recent INR 33 crore ODC win is foundational and signals a broader trend of larger, higher-quality multi-year engagements, indicating future growth potential.

Asked by Rehan Saiyyed

Moderation in offshore mix and future EBITDA margins Partial
So again, to reinforce our commitment and the projections that we have shared, the number of customers with USD 1 million-plus revenue has increased this quarter. Several customers will increase onsite, several will increase offshore, and I think it's all about timing. But year-on-year, you will see an improvement across all our customers because companies in the U.S. and Europe hire companies like Onward Technologies to leverage the offshore advantage.

Analyst questioned the slight moderation in offshore mix. Management explained it as timing-related and reiterated commitment to improving offshore leverage and overall EBITDA margins through existing customer growth.

Asked by Rehan Saiyyed

Aspiration for revenue per employee and required upskilling Direct
We don't have a particular timeline, its an aspiration to move up the technology value chain. What we do have a very clear timeline for, which we have shared with everybody, is that we are confident of delivering double-digit revenue growth and bottom-line growth. ... to increase the revenue from current INR22 lakhs per employee to, let's say, INR35 lakhs, I think it's onsite and moving up the value chain.

Management outlined an aspiration to significantly increase revenue per employee from INR 22 lakhs to INR 35 lakhs, linking it to moving up the value chain and onsite presence, which is a key driver for profitability.

Asked by Madhur Rathi

Increase in subcontracting costs and employee productivity Direct
First, if you look at from a ratio perspective, our subcontracting costs along with our employee cost, then the ratio for FY '26 has actually gone down compared to FY '25. Secondly, because of the macroeconomic conditions in terms of the war, in terms of everything happening in the Middle East, a lot of people couldn't travel for positions that we needed to fill in Europe and U.S. So, for short term, we have hired people locally in the respective markets...

Analyst raised concern about rising subcontracting costs. Management clarified that the ratio to employee cost has decreased and attributed the increase to temporary local hiring in Europe and US due to travel restrictions, indicating it's not a structural issue.

Asked by Madhur Rathi

Details and future of the INR 33 crore ODC contract Direct
This is an existing customer of Onward Technologies. This is a customer we've been supporting for the last 4-5 years. ... We participated in one of them, the first one, and that's the one we have won, which goes live. We have not even started billing yet. We will start billing from Q2. As I said, the centre only goes live in August and the full revenue will come in Q3 based on our projections. But this is only a start. In my view and based on what the customer has told us, they want to grow 5x.

Management provided extensive details on the INR 33 crore ODC deal, confirming it's with an existing client, billing starts in Q2, full revenue in Q3, and the client has ambitions to grow 5x, highlighting significant long-term potential.

Asked by Madhur Rathi

3 min read 7 chapters

Detailed narrative

Q1 FY27 Performance Highlights

Onward Technologies reported its highest-ever quarterly revenue of INR 151.2 crore, surpassing the INR 150 crore milestone for the first time. This represents a robust 11.5% year-on-year and 8.7% sequential growth. The company also saw significant profitability improvements, with EBITDA increasing 20% quarter-on-quarter to INR 18.4 crore, and EBITDA margins expanding by 113 basis points sequentially to 12.3%. Profit after tax (PAT) grew 16.9% sequentially, reaching INR 11.2 crore.

Strategic Investments and Competitive Differentiation

The company's strategic investments in digital engineering, ER&D, offshore delivery expansion, and leadership capabilities are yielding results. These investments are strengthening competitive differentiation, improving speed to value for customers, and creating a scalable platform for future growth. Onward Tech is focusing on areas like software-defined products, AI-enabled engineering, automation, digital manufacturing, and intelligent products, particularly in North America and Europe, where demand is high in data centers, AI, and energy sectors.

Client Mining and Account Penetration

Onward Technologies secured a significant INR 33 crore contract with a global power management company from North America during the quarter. The number of customers generating over $1 million in annual revenue increased from 16 to 18, reflecting deeper account penetration and stronger strategic relationships. Management believes the majority of their customers have the potential to reach $10 million per year, indicating substantial growth opportunities within their existing client base of 73 live customers.

Offshore Delivery Model and Margin Expansion

The company's offshore delivery model continues to scale, with a commitment to improving offshore leverage as a key margin driver. While the offshore mix moderated slightly this quarter, management expects year-on-year improvement as clients in the U.S. and Europe increasingly leverage offshore advantages. The target is to achieve mid-to-high teens EBITDA margins, driven by increased offshore work and mining existing accounts with larger projects.

Automotive Segment Outlook

Despite mixed commentary in the industry, Onward Technologies sees positive momentum in the automotive segment, particularly with select customers and specialized areas. The company is well-positioned in initiatives tied to product innovation, software-defined engineering, AI, automation, and cost optimization. Management expects positive growth in the auto segment for the year, focusing on existing client relationships rather than chasing new customers.

Digital AI Lab and Capacity Expansion

The digital AI lab in Chennai is fully operational with several hundred employees, and the company plans for further expansion there. The immediate focus for Q1 FY27 was opening a fourth design center in Pune, which is expected to be fully operational in August. Once Pune is established, focus will return to Chennai for further growth and investment, indicating a strategic approach to capacity building.

Order Book and Pipeline Health

The company's order book (ACV) for the current year has already surpassed last year's revenue, signaling strong future visibility. The INR 33 crore ODC deal won this quarter is considered a starting point, with billing commencing in Q2 and full revenue recognition expected in Q3. Management noted a broader and higher-quality pipeline compared to a year ago, with participation in several large multi-year engagements and RFQs.

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