Orient Tech.

Orient Technologies reported a challenging Q3 FY26 with revenue from operations declining 4.17% year-on-year to Rs. 198.23 crores, compared to Rs. 206.85 crores in Q3 FY25. The company recorded an EBITDA of Rs. 3.02 crores and a net loss of Rs. 14.96 crores for the quarter. This performance was primarily impacted by global semiconductor shortages, supply chain disruptions affecting hardware availability and pricing, and the loss of a large telecom client, which led to temporary margin pressure.

For the nine-month period ended FY26, the company demonstrated stronger growth, with revenue increasing by 18.10% year-on-year to Rs. 683.60 crores, up from Rs. 578.85 crores in nine months FY25. EBITDA for 9M FY26 stood at Rs. 42.31 crores, with profit before exceptional item^📎s and tax at Rs. 31.90 crores. The profit after tax for the nine-month period was Rs. 9.24 crores, translating to an EPS of Rs. 2.02.

During the quarter, Orient Technologies secured multiple new contracts across government, pharma, utilities, and digital commerce. A key win was a three-year managed services contract from Digital India Corporation, valued at Rs. 15 crores quarterly, contributing Rs. 60 crores annually, reinforcing the company's presence in mission-critical government projects. Other wins included a Rs. 2.65 crore order for data center storage and infrastructure upgrades for a leading pharma client, a similar-sized contract for a power utility, and a Rs. 2.8 crore SD-WAN contract with an additional Rs. 6 crore for full network deployment in quick commerce.

The company inaugurated a new service delivery center in Navi Mumbai, Turbhe, to enhance its 24x7 monitoring, cybersecurity, cloud, and managed services capabilities. Management expects this center to achieve 100% utilization within the next 24 to 36 months as enterprise contracts and managed services migrations complete. This initiative is part of a broader strategy to increase the share of annuity-style managed services revenue.

In terms of segment mix for Q3 FY26, BFSI was the largest contributor at 27.39%, followed by mid-market and others (including healthcare, manufacturing, infrastructure, real estate, logistics, and education) at 31.78%. Government and PSUs contributed 19.19%, while ITES accounted for 19.17%. The telecommunication segment represented 2.47% of the revenue mix.

Management indicated that the global semiconductor challenge is expected to persist throughout FY27. This shortage is exacerbated by the significant demand for GPUs and related components (RAMs, disks) driven by the AI boom, leading to increased prices. While acknowledging the challenges, the company views AI as a substantial opportunity for growth in infrastructure sales, managed services, and cybersecurity, for which they are actively preparing.

Q3 FY26 experienced significant margin pressure due to the necessity of executing existing contracts at previously agreed prices, despite increases from OEMs. Management expressed optimism that this margin pressure will ease in the coming year (FY27) as customers become more accepting of new pricing structures and current fixed-price contracts conclude. The company aims to maintain strong customer relationships while navigating these pricing challenges.