S A Tech Software India Ltd — Q2 FY26 earnings call

Call held 21 Nov 2025

Management summary

SA Tech Software India Limited reported flat revenue for H1 FY26, with a significant drop in EBITDA margin from 13.6% to 0.8% due to heavy investments in sales, marketing, and AI, and a 13% increase in employee costs. The company also reported a loss and negative operating cash flow for the half-year. Management expects profitability to bounce back to 7-8% EBITDA for FY26 and 12-13% for FY27, targeting INR 200 crores revenue for FY27, driven by new client additions, US business, and AI-driven efficiencies.

Highlights

  • Revenue was maintained in H1 FY26 despite unfavorable global conditions.

  • Investment in the U.S. subsidiary has started yielding results, with an expectation to add around INR 5 crores of revenue in the coming six months.

  • The India-specific leasing business has commenced operations and is generating revenue, with INR 3-4 crores of assets deployed and a good pipeline.

  • AI implementation is underway, showing early results in sales and marketing, and is expected to increase operational efficiency by 20-30%.

  • The company added eight new clients in the last six months and expects to add 24-25 new customers in FY26.

  • Management expects to bounce back to profitability and achieve positive operating cash flow in H2 FY26.

Concerns

  • EBITDA margin dropped substantially from 13.6% in H1 FY25 to 0.8% in H1 FY26.

  • Total expenses increased by 12%, primarily due to a 13% increase in employee costs, impacting profitability.

  • The company reported a loss in H1 FY26.

  • The company did not generate positive operating cash flow in H1 FY26.

  • A UK customer filed for bankruptcy, leading to the loss of that relationship and impacting numbers.

  • Non-current liability jumped from INR 2.17 crores to INR 14 crores in six months, attributed to loans for capex.

Key financials

3 periods

Headline

  • Revenue
    ₹49.61 Cr
  • Total Expenses Increase
    12%
  • Employee Cost Increase
    13%
  • Non-current Liability
    ₹14 Cr

H1 FY25

  • EBITDA Margin
    13.6%

H1 FY26

  • EBITDA Margin
    80%

What they filed

Q4 FY26: revenue up 96.9%, net profit down 25.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue32 51 49 50 63 +97%
EBITDA5 7 5 0 5 +0%
Net profit4 5 3 -1 3 −25%
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

Pipeline

qualified rfp

The company bid in 30 to 40 RFPs, many towards licensing, and 3-4 for consulting and software development. Expecting to add 13-14 clients in the next six months.

Cancellations & deferrals

  • cancelled: Lost a UK customer due to bankruptcy.
Management is maintaining its FY26 revenue target of INR 135 crores, supported by investments and 8 new clients added in H1 FY26. They expect to add 13-14 more clients in the next six months, totaling 24-25 new customers for FY26.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹12.5 Cr
    I believe it might be because of the loans. Since we have done a capex investment of INR12.5 crores in this first half.
  • Debt Debt disclosed
    • New borrowing Non-current liability jumped from INR 2.17 crores to INR 14 crores, likely due to loans for capex. ₹11.83 Cr
    No at present. We are doing it through debt right now, but we might consider it through equity fundraising or through converting it to be private equity in six to eight months of time.
  • M&A Mindpool Merger · Pending regulatory

    To achieve perfect transparency, bigger size, stronger balance sheet, and enable global scaling.

    Expected to result in a combined headcount of 690 employees (450 SA Tech, 250 Mindpool).

    As we are also in process of merger with one of the company that would also impact on the overall revenue. ... Merger process is already on. Let me update you on the entire, all the shareholders on the call on the merger thing, merger status. So, we had filed our merger application with NSE on 3rd of August. And on 1st of August, the NSE has changed the regulations wherein they can accept only three months old financial valuation. When we filed this valuation, it was based on 31st March and the board approved the valuation on 31st of July and we filed the scheme with the NSE on 3rd. So, during that three days gap, NSE changed the regulations wherein they have asked us to redo the entire valuation process with financials not more than three months old. So, we have already initiated the valuation process and we are expecting the valuation report to be out by Monday. And in the next week, there would be a board meeting for the approval of the valuation report and we will file the scheme again with the NSE.

Guidance & targets

Revenue Growth

  • FY26 Revenue Growth Revenue Growth · FY26 · Medium confidence 15-20%
    It would be around 15%, 20% growth. And for FY27, we are targeting it to be doubling it down to around INR200 crores for FY27.

    — Manoj Joshi

Revenue

  • FY27 Revenue Revenue · FY27 · High confidence INR 200 crores
    It would be around 15%, 20% growth. And for FY27, we are targeting it to be doubling it down to around INR200 crores for FY27.

    — Manoj Joshi

  • US Revenue Addition Revenue · next six months · High confidence INR 5 crores
    Our investment in the U.S. has started giving us results and we expect to add around INR5 crores of revenue in the coming next six months. So, that's a positive start for us.

    — Manoj Joshi

EBITDA Margin

  • FY26 EBITDA Margin EBITDA Margin · FY26 · High confidence 7-8%
    So for overall for FY26, it should be roughly around EBITDA of 7% to 8%. That is what we are expecting to close. And this will again bounce back to the regular profit -- EBITDA margins of 12% to 13% for FY27.

    — Manoj Joshi

  • FY27 EBITDA Margin EBITDA Margin · FY27 · High confidence 12-13%

    — Manoj Joshi

Profitability

  • H2 FY26 Profitability Profitability · H2 FY26 · High confidence Bounce back to profitability
    However, we believe that this is a short-term challenges and the impact and we should bounce back to profitability in the second half as well as for full year.

    — Bhavin Goda

New Clients

  • FY26 New Customers New Clients · FY26 · High confidence 24-25
    So, all together, we will have like 24-25 customers, what we have added in the financial year, 25-26.

    — Management

Headcount

  • Merged Entity Headcount Headcount · Medium confidence 800-1000
    And together, it should move towards 800 to 1,000 is what we are targeting.

    — Management

New Office Utilization

  • New Office 100% Utilization New Office Utilization · by March · High confidence 100%
    And we are there are a few projects that are going on when we expect that it should be 100% utilized by March.

    — Management

AI Productivity

  • AI Productivity Improvement AI Productivity · High confidence 20-30%
    Of course, we see upward productivity improvement of about 20% to 30% and, of course, as a result we will also see impact on the internal operations cost.

    — Aditya Joshi

Market context

  • H2 FY26 Operating Cash Flow Operating Cash Flow · H2 FY26 · High confidence Positive
    We are expecting to be cash flow positive in operations in second half.

    — Management

What to watch in Q3 FY26

H2 FY26 Profitability

H2 FY26
Current Loss in H1 FY26
Target Bounce back to profitability

Why it matters

Crucial for demonstrating the success of current investments and achieving full-year guidance.

However, we believe that this is a short-term challenges and the impact and we should bounce back to profitability in the second half as well as for full year.

Risks & concerns

  • Profitability dip due to investments

    high

    Profitability dipped significantly in H1 FY26 due to heavy investments in sales, marketing, and AI, and increased employee costs.

    Management acknowledged

  • Negative operating cash flow

    high

    The company did not generate positive operating cash flow in H1 FY26.

    Management acknowledged

  • Loss of a key UK customer

    medium

    A UK customer filed for bankruptcy, leading to the termination of the relationship and impacting financial performance.

    Management acknowledged

  • Merger delay due to regulatory changes

    medium

    NSE's new regulations requiring re-valuation based on recent financials have delayed the merger process with Mindpool.

    Management acknowledged

Q&A highlights

7 direct
Profitability outlook and guidance for FY26 and FY27 EBITDA margins Direct
So for overall for FY26, it should be roughly around EBITDA of 7% to 8%. That is what we are expecting to close. And this will again bounce back to the regular profit -- EBITDA margins of 12% to 13% for FY27.

This question directly addresses the significant drop in H1 FY26 profitability and provides clear forward guidance for EBITDA margins for the current and next fiscal years.

Asked by Nishita

Top line growth guidance for FY26 and FY27 Direct
It would be around 15%, 20% growth. And for FY27, we are targeting it to be doubling it down to around INR200 crores for FY27. As we are also in process of merger with one of the company that would also impact on the overall revenue.

Following flat H1 revenue, this question elicits specific growth targets and a significant revenue target for FY27, also linking it to the ongoing merger.

Asked by Nishita

Reason for the sharp increase in non-current liability and H1 FY26 capex Direct
I need to go through it. I believe it might be because of the loans. Since we have done a capex investment of INR12.5 crores in this first half.

This clarifies the cause of a significant balance sheet change and quantifies the capex for the first half, indicating investment activity.

Asked by Noel Shah

Fundraising plans (equity vs. debt) given current loss and expansion Direct
No at present. We are doing it through debt right now, but we might consider it through equity fundraising or through converting it to be private equity in six to eight months of time.

Provides insight into the company's capital strategy for funding growth and managing its financial position, including potential future equity dilution.

Asked by Noel Shah

Status of the merger with Mindpool and impact of NSE's new regulations Direct
NSE changed the regulations wherein they have asked us to redo the entire valuation process with financials not more than three months old. So, we have already initiated the valuation process and we are expecting the valuation report to be out by Monday. And in the next week, there would be a board meeting for the approval of the valuation report and we will file the scheme again with the NSE.

This provides a detailed update on a critical strategic event (merger) and explains the regulatory hurdles and revised timeline, which is crucial for investors tracking the deal.

Asked by Harsh

Impact of internal AI deployment on productivity and cost reduction Direct
Of course, we see upward productivity improvement of about 20% to 30% and, of course, as a result we will also see impact on the internal operations cost.

Quantifies the expected benefits from AI investments, which is a key strategic focus and a driver for future margin improvement.

Asked by Akshay

Sustainability of GCC margins amidst increasing competition Direct
until like we are serving for the customers from U.S. and U.K. I don't see any challenges because all the companies are here to like ensure like they are having decent margins.

Addresses a sector-specific concern about margin pressure in GCC operations and management's strategy to maintain profitability by focusing on long-term client relationships in developed markets.

Asked by Akshay

Why H1 FY26 growth was not as guided and the impact on operating margin Partial
We lost one of our U.K. customers sometime back and it was all of a sudden that they filed for the bankruptcy probably in the U.K. So, because of that, we had to close that relationship right there?

This question challenges management on a significant deviation from prior growth guidance and elicits a specific reason (lost UK client) for the underperformance, which is a key risk factor.

Asked by Rishabh Tripathi

3 min read 6 chapters

Detailed narrative

H1 FY26 Performance and Profitability Challenges

SA Tech Software India Limited reported flat revenue for the first half of FY26, which stood at INR 49.61 crores. Despite maintaining revenue, the company experienced a significant decline in profitability, with EBITDA margin dropping from 13.6% in H1 FY25 to 0.8% in H1 FY26. This compression was primarily driven by a 12% increase in total expenses, notably a 13% rise in employee costs, as the company heavily invested in sales, marketing, and AI initiatives. Consequently, the company reported a loss and negative operating cash flow for the period.

Strategic Investments and Future Outlook

Management emphasized that the profitability dip is a short-term challenge resulting from strategic investments aimed at future growth. These investments include strengthening the sales and marketing teams, expanding in the U.S. and U.K. markets, and building in-house AI capabilities. The company expects to bounce back to profitability in H2 FY26, targeting an EBITDA margin of 7-8% for the full FY26 and 12-13% for FY27. They also project a 15-20% revenue growth for FY26 and aim for INR 200 crores in revenue by FY27, partly driven by the ongoing merger.

Client Acquisition and Pipeline Development

In H1 FY26, SA Tech added eight new clients and expects to secure 13-14 more in the next six months, aiming for a total of 24-25 new customers for the full fiscal year. The company is actively pursuing opportunities in the GCC sector, particularly with new entities establishing operations in India, and is engaged in 30-40 RFP bids, including 3-4 for consulting and software development. A new project from a UK client was also secured, contributing to future revenue and profitability.

AI Integration and Operational Efficiency

SA Tech has significantly invested in AI, deploying AI agents in sales and marketing to improve client outreach and developing an in-house tool for automated RFP responses, reducing proposal generation time from weeks to hours. AI is also being used by the software development team for AI-based coding and by HR for screening and validating talent. These initiatives are expected to lead to a 20-30% improvement in employee productivity and a reduction in internal operational costs, ultimately boosting profit margins.

Merger Update and Regulatory Hurdles

The proposed merger with Mindpool is progressing but has encountered a delay due to new regulations from the National Stock Exchange (NSE). The NSE now requires financial valuations to be based on data no older than three months, necessitating a re-valuation process. The company expects the new valuation report shortly, followed by a board meeting for approval and re-filing the scheme with the NSE. Management hopes the swap ratio will remain consistent with previous valuations, anticipating a combined headcount of 800-1000 employees post-merger.

Capital Allocation and Funding Plans

In the first half of FY26, SA Tech made a capex investment of INR 12.5 crores, which contributed to a jump in non-current liabilities from INR 2.17 crores to INR 14 crores. This investment includes the acquisition of a larger office for INR 15 crores, which was inaugurated in November and is expected to be 100% utilized by March. The company is currently funding its expansion through debt but is considering equity fundraising or converting debt to private equity within the next six to eight months.

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