Summary
eClerx Services Limited - Q3 FY26 Earnings Call Summary Thursday, January 29, 2026, 4:00 PM IST
Event Participants
Executives 2 Kapil Jain (MD & Group CEO), Srinivasan Nadadhur (CFO)
Analysts 8 Dipesh Mehta, Girish Pai, Manik Taneja, Pulkit Chawla, Rahul Jain, Sandeep Shah, S. Ramesh, Vamshi Krishna
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Operating Revenue (USD) | $121.7 million | +5.4% QoQ, +20% YoY (CC); driven by Hi-tech, M&D, and Emerging businesses. |
| Operating Revenue (INR) | ₹1,070.3 crores | +6.5% QoQ, +22% YoY; reflects strong volume growth and favorable currency. |
| EBITDA | ₹307.5 crores | +3.1% QoQ; +190 bps improvement YoY but -90 bps QoQ due to variable payouts. |
| EBITDA Margin | 27.9% | -90 bps QoQ; impacted by S&D variable payouts and travel, offset by 30 bps utilization gains. |
| Profit After Tax (PAT) | ₹192.0 crores | +5.0% QoQ, +33% YoY (9M); Margin at 17.5% showing steady profitability. |
| Deal Wins (ACV) | $45 million | Healthy quarterly intake; management expects FY26 total ACV to exceed FY25. |
| Top 10 Concentration | 60% | Down from 62-64% range; reflects faster growth in non-top 10 client base. |
| Utilization | ~75% (est.) | +1.4% QoQ; improvement led to 30 bps delivery cost savings. |
| DSO | 78 days | +2 days QoQ; minor increase in collection cycle. |
Geographic & Segment Commentary
- Financial Services: Continued growth in Front & Office (F&O) subsegments and emerging businesses. Focus remains on trade life cycle (change side) and Agentic AI pilots for KYC/compliance and exception management.
- Hi-tech and M&D (Manufacturing & Distribution): Strong growth in Q3 driven by transformation programs and new wins. Hi-tech clients are focusing on self-healing services via Agentic AI, while M&D is seeing demand in DataOps.
- Fashion and Luxury: Seasonal recovery in Q3 from Q2 lows. Industry outlook for 2026 remains cautious with projected low single-digit growth as the sector bottom-outs.
- CMT (Communication, Media, and Telecom): Strategic expansion into Egypt (Cairo) is resonating, with multiple existing clients signing up for delivery from this center.
Company-Specific & Strategic Commentary
- Agentic AI & Automation: eClerx is deploying its “Roboworx CogniFlows” platform; currently running pilots across all clients with production-grade productivity gains of 15%+.
- Adobe Partnership: Elevated to Gold status in the Adobe Solution Partner Program (Americas), enhancing credibility in the MarTech ecosystem.
- Capital Allocation: Completed a buyback of 625,000 shares in Jan 2026 and the Board approved a 1:1 bonus issue pending shareholder approval.
- Delivery Expansion: Added 400 new seats in Chandigarh and planning further investments in Peru and Mohali (Q4/Q1) to support demand.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | Top Quartile of Peers | Management maintains long-term goal of outperforming peer median despite potential Q4 softness. |
| EBITDA Margin | 24% to 28% | Range maintained; management will continue investing in sales, tech, and AI capabilities. |
| Q4 FY26 Outlook | Softer than Q1-Q3 | Normalizing from high growth base; cautious optimism due to macro/geopolitical volatility. |
| FY26 Deal ACV | Higher than FY25 | Based on robust pipeline and year-to-date performance totaling $126M over 9 months. |
Risks & Constraints
| Risk | Context |
|---|---|
| Macroeconomic Volatility | Geopolitical tensions and US macro uncertainty lead management to use “cautiously optimistic” language despite strong current demand. |
| Sales Concentration | While Top 10 concentration is declining (now 60%), the company remains dependent on a high-value core client base in volatile sectors like Retail. |
| Hedging Losses | Current spot rates vs. hedge book may lead to elevated non-cash losses in near terms; however, CFO ruled out changing the “programmatic” strategy. |
Q&A Highlights
BFSI Segment Outlook
- Question: What is the outlook for BFSI subsegments, specifically CLC vs TLC? (Vamshi Krishna)
- Answer: CLC (Client Life Cycle/KYC) sees strong demand for cost-takeout via Agentic AI. TLC (Trade Life Cycle) is seeing more “change” related opportunities. (Kapil Jain)
AI Cannibalization
- Question: Is Agentic AI leading to revenue cannibalization of existing FTE-based work? (Sandeep Shah)
- Answer: Pilots haven’t shown cannibalization yet. It acts as a force multiplier and opens buying centers outside current perimeters. (Kapil Jain)
Margin Drivers
- Question: What led to the sequential margin decline and what are the levers going forward? (Pulkit Chawla)
- Answer: 75 bps of the decline was due to higher variable payouts/bonuses following strong performance, and 25 bps from travel/marketing. Stability will come from operating leverage. (Srinivasan Nadadhur)
Growth Strategy
- Question: Is there a gear shift planned in the strategy as you are 2 years into a 4-year plan? (Rahul Jain)
- Answer: Current strategy of cross-selling MarTech and moving into mid-tier Finance & Accounting is working. No major refresh needed for another 12-18 months. (Kapil Jain)
Key Takeaway
eClerx delivered a robust Q3 FY26, with USD revenues growing 5.4% QoQ to $121.7 million and 9-month PAT up 33% YoY. The quarter was characterized by successful diversification, evidenced by Top 10 client concentration dropping to 60% and strong traction in Hi-tech and Manufacturing segments. Strategically, the company is pivoting toward “Agentic AI” through its Roboworx platform, seeking 15%+ productivity gains to defend margins while investing heavily in sales and new delivery centers in Egypt and India. While management flagged a potentially softer Q4 due to a high base and macro volatility, they reaffirmed guidance to remain in the top quartile of peer growth with EBITDA margins sustained between 24-28%. The 1:1 bonus issue and share buyback completion signal strong capital confidence as the company enters the final year of its current strategic cycle.
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