STYL

Seshaasai Technologies reported a robust sequential performance in Q2 FY26, with total revenue reaching INR352 crores, a 13% increase quarter-on-quarter. EBITDA for the quarter stood at INR95 crores, translating to an EBITDA margin of 26.9%, which improved by 336 basis points sequentially and 9 basis points year-on-year. The PAT margin for Q2 FY26 was 16.3%. For the first half of FY26, total revenue was INR663 crores, a 12% year-on-year decline, with EBITDA at INR169 crores (25.3% margin) and PAT at INR94 crores (down 10.5% year-on-year).

The Payment Solutions vertical contributed 51% to Q2 FY26 revenue, down from 67.5% in H1 FY25, primarily due to industry-wide factors. These include lower PMJDY card issuance (13.2 million in H1 FY26 against an estimated 38 million for FY26), a rise in inactive PMJDY accounts to 26%, and moderation in new card issuances due to stress in unsecured retail lending. Despite these headwinds, management expects H2 FY26 to be stronger, with the payment business projected to be a 'tad better' year-on-year, driven by seasonal pickup and new project initiatives including metal cards and eco-friendly variants.

IoT Solutions emerged as the fastest-growing vertical, contributing 11% to Q2 FY26 revenue. In H1 FY26, this segment witnessed a strong 31% growth, with revenue increasing to INR65.4 crores from INR50 crores in the same period last year. The growth was fueled by wallet share gains in renewable segments and new customer additions. The company anticipates further acceleration in H2 FY26 with the commencement of SIM card supplies to telecom operators and expects IoT to become a 'dominant part' of its revenue contribution in the next 3-5 years, supported by ongoing investments in next-generation technologies like BLE and sensor-based RFID.

The Communication and Fulfillment vertical contributed 38% to Q2 FY26 revenue. This segment serves BFSI, government, and enterprise clients with end-to-end customer communication management and identity services. Management noted this vertical has been an important growth driver in H1 FY26, supported by rising demand for personalized and compliant communications. The proprietary logistics management platform, eTaTrak, remains a key differentiator, providing real-time tracking and control over dispatches and deliveries.

As of September 30, 2025, the company maintained a strong balance sheet with approximately INR564 crores in cash, including IPO proceeds. Post-IPO, Seshaasai repaid INR300 crores of debt in October 2025, which is expected to result in interest cost savings from Q3 FY26 onwards. The company has a capex plan of INR200 crores spread over 18 months, primarily for expanding existing infrastructure and capacities, with INR42 crores of assets already added in H1 FY26.

The gross margin saw a significant improvement to almost 46% in Q2 FY26, attributed to a favorable product mix, operational efficiencies, volume growth, and procurement initiatives. These initiatives included better vendor terms, reduced import costs, improved paper prices, and in-house manufacturing of IoT inlays. While H2 FY26 revenue is expected to increase, management anticipates that margin profiles will 'remain the same percentage range' as H1, with absolute numbers increasing due to higher volumes.

Seshaasai is actively exploring international opportunities, with products approved in certain African geographies and ongoing global RFPs for high-end metal cards. While a Middle East project was put on hold due to geopolitical reasons, the company's strategy focuses on leveraging its 'Make in India' manufacturing capabilities for high-end products. The immediate priority remains deepening market penetration and increasing market share in the domestic IoT and payments verticals, with future international expansion to be evaluated based on global response and market conditions.