Onward Technolog

Onward Technologies has completed the transition to a new leadership structure, with the entire leadership team now in place, including three vertical heads. The Managing Director, Jigar Mehta, plans to step back from day-to-day operations to focus on long-term strategy and client engagement. This shift aims to move the company from a promoter-driven to a professionally led, vertical-led organization, with an Analyst Day planned soon in Mumbai to introduce the new leaders.

For the nine months ended December 31, 2025, Onward Technologies reported a revenue of INR 411.8 crores, marking an 11.7% year-on-year growth, which is in line with their guidance. The EBITDA margin for the same period reached 13.9%, significantly exceeding the initial target of 11-12%. Q3 FY26 revenue stood at INR 136.1 crores, maintaining levels close to Q2 despite typical seasonal furloughs, which were effectively budgeted for.

The company has made substantial capital expenditure investments in India to bolster its offshore expansion capabilities. Infrastructure upgrades were carried out in Pune, Chennai, Bangalore, and Hyderabad. Pune and Hyderabad facilities are now operating at full capacity, and the Chennai facility has added several hundred new seats, providing ample bandwidth for future growth. The majority of new offshore headcount additions in 2026 are expected to be in Chennai.

Onward Technologies operates across three key verticals: IEHM, Transportation & Mobility (T&M), and HCLS. The IEHM vertical focuses on delivery-led growth, with an emphasis on digital and AI services and expansion into Europe. The T&M vertical aims for double-digit growth by securing large OEM clients in Europe and the U.S., with a long-term plan to transition work offshore for margin expansion. The HCLS vertical, though relatively new, is expected to be a significant growth driver over the next one to three years.

The company's EBITDA margin for the first nine months of FY26 reached 13.9%, surpassing the targeted 11-12%. This outperformance is primarily attributed to the successful execution of offshore engagements. Management considers the 11-12% EBITDA margin sustainable and aims for consistent double-digit annual revenue and EBITDA growth year-on-year for 2026 and 2027, with any margin above the target considered a bonus.

Onward Technologies maintains a healthy liquidity position with INR 116 crores in cash and bank reserves. While the company has a history of paying dividends for 10 consecutive years and is considering buyback options, its primary focus for capital allocation is on long-term sustainable growth and strategic acquisitions. Management is actively evaluating M&A opportunities, particularly for competitors serving existing clients, but has not yet identified a perfect fit.

The company has shown improved operational efficiency, with attrition reducing to 14.73% and Days Sales Outstanding (DSO) improving to 70 days. A comprehensive performance review in Q2 and Q3 led to a reduction of the bottom 5% contributors, which, while a one-time^📎 hit, is seen as a necessary step for a fresh start. Headcount stands at 2,491 employees, with a target to reach approximately 3,000 employees as revenue approaches $100 million.

Onward Technologies is currently involved in a legal case with an ex-employee in the U.S., which includes an ex parte order and frozen cash. Management states the dispute pertains to an ex-employee who left due to non-performance. The company is following the legal process, has strong supporting documentation, and is confident in its position, noting that it has never faced such a legal case before.