Summary
Digitide Solutions Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026, 10:00 AM IST
Event Participants
Executives 3 Gurmeet Chahal (CEO), Rajesh Lachhani (Head, IR and M&A), Suraj Prasad (CFO)
Analysts 5 Alekh Dalal, Anukool, Gaurav, Jyoti Singh, Madhur Rati, Manthan Patel, Sanjay Shah
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Consolidated) | ₹780 crores | +6.5% YoY; Fourth consecutive quarter of forward momentum despite soft macro. |
| Tech & Digital Revenue | ₹236 crores | +19% YoY; Now accounts for 30.2% of total revenue mix (+30 bps QoQ). |
| BPM Revenue | ₹545 crores | +2% YoY/QoQ; Growth driven by BFSI and platform-led services. |
| International Revenue | ₹292 crores | +11% YoY; Represents 37.4% of total revenue (+20 bps QoQ). |
| EBITDA | ₹88 crores | +3% QoQ; Margins improved by 7 bps QoQ due to operating leverage and better mix. |
| Adjusted PAT | ₹24 crores | Hit 3-quarter high; +43% QoQ when excluding exceptional items. |
| Exceptional Items | ₹25.4 crores | One-off loss related to new Labour Code (gratuity and leave encashment). |
| TCV (Bookings) | ₹662 crores | +20% QoQ; Record high bookings for the company in a single quarter. |
| DSO | 79 days | Improved from 83 days in Q2 and 91 days in Q1; target is further stabilization. |
| Net Cash | ₹125 crores | Up from ₹113 crores in Q2; robust liquidity for inorganic pursuits. |
| Headcount | ~16,500 (implied) | Headcount decreased by ~400 while revenue rose; revenue per employee +1.5%. |
Geographic & Segment Commentary
- Tech & Digital: This segment is the primary growth engine, surging 19% YoY to reach 30.2% of the mix. Management is shifting away from low-margin onsite T&M contracts toward offshore-heavy managed services and AI-led transformations via partnerships with AWS, Microsoft, and GCP.
- International: Revenue grew 11% YoY, providing premium pricing and geographic de-risking. It now accounts for 37.4% of total revenue, with management targeting further expansion to drive margin accretion.
- BPM (Business Process Management): Remains the largest segment at ₹545 crores with healthy 15.4% EBITDA margins. The focus is on embedding AI into domestic BPM to offset pricing pressure in BFSI and transitioning from FTE-based to outcome-based contracts.
Company-Specific & Strategic Commentary
- 3x3x3 Strategy: Management reiterated the roadmap to triple revenues to $1 billion by FY31, supported by five pillars: leadership, talent, architecture, offerings, and M&A.
- AI Native Leadership: Deployed Agentic AI into SmartPay and DigiLoan platforms, handling 3.6 million automated transactions this quarter. 6,000 employees have been re-skilled through the AI Learning Academy.
- Hyper-scaler Partnerships: Achieved a “triple threat” status by adding GCP to existing AWS and Microsoft partnerships. Earned Microsoft Solution Partner designation for Data and AI.
- Inorganic Growth: Actively seeking targets in five cohorts: digital engineering, data analytics, AI, and HRO. Acquisition strategy targets ~$200 million of the $650 million long-term revenue gap.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | Double-digit growth for FY27 | Driven by record Q3 TCV of ₹662 crores and strong sales engine. |
| EBITDA Margin | +200-300 bps expansion by FY31 | To be achieved through tech-mix shift, offshore leverage, and AI automation. |
| DSO / Working Capital | Continued stabilization in Q4 | Normalized billing post-demerger and improved collection rigor. |
| Organic/Inorganic Split | 2/3 Organic, 1/3 Inorganic | Strategy to add $650M revenue by FY31; targets 2-3 acquisitions. |
Risks & Constraints
| Risk | Context |
|---|---|
| BFSI Vertical Pressure | Clients are optimizing costs and vendor spend; Digitide is mitigating this by embedding AI and shifting to outcome-based models. |
| Regulatory Changes | The current quarter was impacted by a ₹25.4 crore exceptional charge due to the new Labour Code; future regulatory shifts remain a watch-point. |
| AI Cannibalization | While currently seen as an opportunity, there is an inherent risk of AI reducing billable human headcount in non-platform BPM services (~25% of business). |
Q&A Highlights
Deal Conversions & Pipeline
- Question: How does the ₹662 crore TCV convert to revenue? (Sanjay Shah)
- Answer: Typically, 60-70% of the Annual Contract Value (ACV) materializes in the following financial year. Current bookings are heavily biased toward Tech & Digital (Gurmeet Chahal).
Margin Levers
- Question: What are the structural levers for the 200-300 bps margin expansion? (Jyoti Singh)
- Answer: (1) Product mix shift to Tech & Digital, (2) Geographic shift to International/Offshore, and (3) AI-led operational optimization (Gurmeet Chahal).
Alldigi vs. Digitide Differential
- Question: Why does Alldigi have 30% margins while Digitide is ~10%? (Gaurav)
- Answer: Alldigi houses the platform-led payroll business, which is non-linear and high-margin. The rest of Digitide includes domestic BPM, which is more labor-intensive but currently being “tech-enabled” to improve margins (Gurmeet Chahal).
AI Impact
- Question: Is AI cannibalizing the core business? (Alekh Dalal)
- Answer: AI is currently accretive. 60% of BPM is platform-linked. The 25% of CX business requires human empathy (BFSI, Healthcare), making it less susceptible to pure replacement. We use 15,000 AI agents to complement humans (Gurmeet Chahal).
Key Takeaway
Digitide Solutions delivered a resilient Q3 FY26, marked by record TCV bookings of ₹662 crores and a significant 19% YoY growth in its Tech & Digital segment. The company successfully navigated a volatile macro environment, achieving a 6.5% YoY revenue increase to ₹780 crores while improving DSO to 79 days and generating 105% EBITDA-to-cash conversion. Despite a one-time ₹25.4 crore impact from the new Labour Code, adjusted profitability remains strong. Strategically, the firm has transitioned into an “AI-native” provider, with 30% of revenue now derived from high-margin digital services and a workforce of 6,000 AI-trained employees. Management confirmed a strong exit for FY26 and guided for double-digit revenue growth in FY27, supported by a healthy ₹125 crore net cash position for upcoming M&A. The focus remains on the “3x3x3” strategy to reach $1 billion in revenue by FY31 through margin-accretive international expansion and platform-led organic growth.
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