Onward Technologies Limited — Q3 FY26 earnings call

Call held 16 Jan 2026

Management summary

Onward Technologies delivered strong 9M FY26 results with 11.7% revenue growth and 13.9% EBITDA margin, exceeding targets. The company completed its leadership transition and invested significantly in offshore infrastructure, driving operational efficiencies like improved DSO and reduced attrition. While facing a one-time impact from performance reviews and an ongoing legal case, management remains confident in its double-digit growth and margin sustainability goals.

Highlights

  • Revenue for 9M FY26 reached INR 411.8 crores, representing 11.7% year-on-year growth, in line with guidance.

  • EBITDA margin for 9M FY26 stood at 13.9%, significantly ahead of the 11-12% annual goal.

  • The entire leadership team is now in place, transitioning the company to a professionally led, vertical-led structure.

  • Days Sales Outstanding (DSO) improved to 70 days, and attrition reduced to 14.73% by Q3 FY26 end.

  • Infrastructure in Pune, Hyderabad, and Chennai was upgraded with significant capex, enabling offshore expansion and adding hundreds of seats in Chennai.

Concerns

  • A 'one-time hit' in Q2 and Q3 resulted from a comprehensive performance review and reduction of the bottom 5% contributors.

  • An ongoing legal case with an ex-employee in the U.S. was discussed, though management expressed confidence in a favorable outcome.

Key financials

3 periods

Headline

  • DSO
    70 days
  • Attrition Rate
    14.7%
  • Headcount
    2,491 employees

Q3 FY26

  • Revenue
    ₹136.1 Cr

9M FY26

  • Revenue
    ₹411.8 Cr
    YoY +11.7%
  • EBITDA Margin
    13.9%

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

low confidence
Management indicated a significant runway for growth with existing customers, noting they are not even 1% of their customers' outsourcing budget.

Source: Inferred

Capital allocation

high confidence
  • Liquidity Cash ₹116 Cr Management's goal is to have six months of payroll cash on hand.
    We have a cash and bank reserves of INR 116 crores.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · this year · High confidence 11% to 12%
    Very honestly, for us, 11% to 12% was the goal for this year. So yes, 12% is what we are budgeting very well for, and that's sustainable.

    — Jigar Mehta

Revenue

  • Revenue Target Revenue · long-term · Medium confidence $100 million or INR 1,000 crores
    Our goal continues to remain at 90% T&M, at least until we get to $100 million or INR 1,000 crores of revenue.

    — Jigar Mehta

Headcount

  • Total Employees Headcount · by the time we get to $100 million · Medium confidence about 3,000-odd employees
    headcount-wise, I think by the time we get to $100 million, we should be about 3,000-odd employees.

    — Jigar Mehta

Market context

  • Annual Revenue Growth Revenue · next three consecutive years · High confidence double-digit
    our goal is to deliver double-digit revenue growth and double-digit EBITDA growth for the next three consecutive years.

    — Jigar Mehta

  • Annual EBITDA Growth Profitability · next three consecutive years · High confidence double-digit
    our goal is to deliver double-digit revenue growth and double-digit EBITDA growth for the next three consecutive years.

    — Jigar Mehta

What to watch in Q4 FY26

EBITDA Margin

Next quarter (Q4 FY26)
Current 13.9% (9M FY26)
Target 11-12% (sustainable target)

Why it matters

To verify if the company can sustain margins within or above its stated sustainable range, given current performance is higher.

Very honestly, for us, 11% to 12% was the goal for this year. So yes, 12% is what we are budgeting very well for, and that's sustainable.

Risks & concerns

  • Legal case with ex-employee

    medium

    An ongoing legal case with an ex-employee in the U.S. due to non-performance, management is confident in winning.

    Analyst acknowledged

  • Sustainability of current high EBITDA margins

    medium

    While 9M FY26 EBITDA margin is 13.9%, management's sustainable budgeted target for the year is 11-12%.

    Analyst acknowledged

Q&A highlights

6 direct
Differentiation against GCCs Direct
GCC is nothing but a cost center of a global multinational... They are not meant to do everything... 70% of the work is done in-house and 30% is outsourced. We come in on the 30% outsourcing side, and I think that flexibility and agility are what they always expect from suppliers.

Clarifies Onward's value proposition in the competitive IT services market, focusing on niche capabilities and agility for the outsourced portion of client work.

Asked by Madhur Rathi

Contract Mix (Time & Material vs. Outcome-based/IP-led) Direct
I personally have no plans to change the mix. I like time and material to be at 90%... until we get to $100 million or INR 1,000 crores of revenue... time and material is a great business model for us. It's very steady. It's very dependable. It's very sustainable.

Indicates management's strategic preference for a stable, predictable revenue model over potentially higher-risk, higher-reward outcome-based contracts for the foreseeable future.

Asked by Madhur Rathi

Inorganic Growth / Acquisitions Partial
Ever since PE Convergent came in, we've always looked at acquisitions very seriously, so we continue to remain open. The best acquisition for us... would be where we are buying out or getting an opportunity to acquire a competitor who is already serving our existing customers... We haven't found the perfect blend yet, but we continue to engage with them.

Provides insight into the company's M&A strategy, focusing on strategic fit (existing clients/competitors) rather than just revenue scale, but signals no immediate deals.

Asked by Dhruvin Doshi

Sustainability of EBITDA Margins Direct
Very honestly, for us, 11% to 12% was the goal for this year. So yes, 12% is what we are budgeting very well for, and that's sustainable. Everything else on top of that depends on how well our teams execute the strategy.

Clarifies the company's sustainable margin target (11-12%) despite achieving higher (13.9% for 9M), managing investor expectations for future profitability.

Asked by Dhruvin Doshi

Growth Constraints for a Small Company Direct
Can we grow faster than that? Absolutely, we can grow faster. There are no limitations. I think it's all about executing towards where we need to get to. And execution, for us, is more about building delivery capabilities, and everything needs to move into a mature cycle.

Addresses concerns about growth pace, emphasizing execution and capability building as key drivers rather than external limitations, highlighting the engineering nature of the business.

Asked by Sarvesh Gupta

Ex-employee Legal Case Partial
I don't think, it's a case of an ex-employee who left on his own due to non-performance... We're just following the legal process... We've hired the best lawyers to defend us, and we have all the supporting documentation with us... I believe, we should win as we have followed the right process.

Provides management's confident stance on an ongoing legal matter, reassuring investors about the company's position and process, though unable to quantify potential impact.

Asked by Prasenjit Paul

Top Client Concentration and Wallet Share Direct
what are the top 25 clients? Top 25 clients is not a fixed set of 25 companies that exist the same every year. For us, or any other services company, the top 25 clients can change every year... We do budgeting with customers last quarter... you have meetings with all 70 customers.

Explains the dynamic nature of top clients and the continuous engagement process to manage client relationships and identify growth opportunities.

Asked by Harsh Chaurasia

Export vs. India Business Mix Direct
The GCC business... was supposed to remain flat... started to grow much faster. As a result, we actually grew our GCC business with them... all our businesses started growing again... it's really about all three geographies growing at the same time, and if that happens, I think all three will grow even faster.

Clarifies the shift in geographic revenue mix, attributing it to unexpected growth in GCC business, indicating broader growth across all regions rather than a specific strategic pivot.

Asked by Madhur Rathi

2 min read 6 chapters

Detailed narrative

Q3 FY26 and 9M FY26 Performance Overview

Onward Technologies reported a strong 9M FY26 with revenue of INR 411.8 crores, marking an 11.7% year-on-year growth, aligning with guidance. The EBITDA margin for the nine-month period reached 13.9%, significantly exceeding the annual goal of 11-12%. Q3 FY26 revenue stood at INR 136.1 crores, close to Q2 levels, despite typical seasonal furloughs, indicating effective budgeting and preparedness.

Strategic Vision and Leadership Transition

The company is transitioning from a promoter-driven to a professionally led, vertical-led leadership structure, with the entire leadership team now in place, including three vertical heads. This move aims to support the goal of double-digit revenue and EBITDA growth for the next three consecutive years (2026-2028). An Analyst Day is planned soon to introduce the new leaders and strategy.

Operational Efficiency and Talent Management

Onward Technologies has shown improved operational efficiency, with Days Sales Outstanding (DSO) reducing to 70 days by the end of Q3 FY26 and attrition rate decreasing to 14.73%. The company undertook a performance review, leading to a reduction of the bottom 5% contributors, which resulted in a 'one-time hit' in Q2 and Q3. Significant capex investments were made to upgrade infrastructure in Pune, Hyderabad, and Chennai, with Chennai now adding hundreds of seats to support offshore expansion.

Geographic and Vertical Growth Focus

The company's growth strategy focuses on delivery-led expansion in its three verticals: IEHM (Industrial Engineering, Heavy Machinery), Transportation & Mobility, and HCLS (Healthcare & Life Sciences). IEHM is focused on scaling existing North American relationships and expanding into Europe. The Transportation & Mobility vertical aims to build a strong organization in Europe and the U.S., transitioning work offshore for margin expansion. HCLS is a newer vertical with significant growth potential.

Capital Allocation and Future Outlook

Onward Technologies maintains a healthy liquidity position with cash and bank reserves of INR 116 crores. While open to strategic acquisitions that align with existing client bases, no immediate deals are pending. The company aims to reach $100 million or INR 1,000 crores in revenue, maintaining a 90% Time & Material contract mix for its stability and dependability.

Legal Matter Update

The company is currently involved in a legal case with an ex-employee in the U.S. Management expressed confidence in winning the case, stating that all due processes were followed and documentation supports their position. The ex-employee's lawyers have reportedly quit, and management believes there will be no material negative impact.

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