Coforge Ltd — Q4 FY26

Coforge Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=B-bNAZ_W4Mo Published: 8 days ago

0:02 2 seconds Good day ladies and gentlemen and welcome to the Kofforge Limited Q4 FI26 earnings conference call. All 0:09 9 seconds participants will be in the listenon mode. We will open the floor for questions post the management's opening comments. Please note that this conference is being recorded. 0:20 20 seconds Joining us today from the Kofford leadership team are Mr. Sudhir Singh CEO, Mr. John Spate, President and 0:28 28 seconds Executive Director, Mr. Sorab Goyel, CFO, Mr. Lalit Vadva, CTO, and Mr. Vic Gupta, head of AI practice. 0:39 39 seconds Before we begin, please note that some of the statements made in today's discussion relating to the future should be construed as forward-looking 0:46 46 seconds statement and may involve risks and uncertainties. 0:50 50 seconds Please refer to the disclaimer to this effect in the company's Q4 FIR 2026 earnings press release. With that, I now hand the call to Mr. Sudhir Singh. 1:05 1 minute, 5 seconds Over to you, sir. 1:07 1 minute, 7 seconds Thank you, Ember. Good evening uh and thank you for joining us today. Please allow me to start the call off today with a quick reflection. 1:16 1 minute, 16 seconds This month marks the beginning of my 10th year at CoForge. It will also mark the 10th year since John Sorup Madan Vic and I started the turnaround of Coforge. 1:29 1 minute, 29 seconds We were a $400 million firm when we started 9 years back. We hope to close this the 10th year of our turnaround 1:37 1 minute, 37 seconds story with the firm having grown almost seven times in just 10 years. The 1:44 1 minute, 44 seconds turnaround of Kofford has been driven by an execution intensity that is uniquely our own and also by an insatiable hunger to make a mark on the industry. 1:56 1 minute, 56 seconds Today, as we look at fiscal year 27 and beyond, that execution intensity remains und. 2:04 2 minutes, 4 seconds Our hunger for growth remains unquenched. 2:08 2 minutes, 8 seconds Our margins are poised to take a big step up starting fiscal year 27. 2:14 2 minutes, 14 seconds And we believe that our growth story is not even half done. 2:19 2 minutes, 19 seconds During these last nine years, we have as a team delivered a revenue kagger over 9 years of 21.7%. 2:29 2 minutes, 29 seconds An EBIT kagger of 24.6%, a PAT kagger of 24.1%. 2:36 2 minutes, 36 seconds An EPS kagger of 22% and a free cash flow kagger of 19%. that 2:42 2 minutes, 42 seconds is over 9 years. There is no firm in our industry that can present metrics at that level for the extended 9-year period that we have. 2:53 2 minutes, 53 seconds During these 9 years, there were periods when we made contrarian contrarian bets and shared positive contrarian growth outlook even when the macros were bleak. 3:04 3 minutes, 4 seconds On calls like these, we have proved each one of those contrarian bets and backed each one of our guidance 3:13 3 minutes, 13 seconds statements and made sure they came true on the basis of our subsequent performance. 3:19 3 minutes, 19 seconds Illustratively 5 years back when COVID struck we shared that despite our material exposure to 3:27 3 minutes, 27 seconds the travel vertical we would grow smartly in that year itself at a time when our peers were projecting declines 3:35 3 minutes, 35 seconds on account of co and we did grow and handsomely at that. Again two years back 3:42 3 minutes, 42 seconds on a call like this when we acquired signity there were concerns that a publicly listed testing services firm with a 12% 3:50 3 minutes, 50 seconds ebita would kill the co forge growth story. 3:54 3 minutes, 54 seconds However 2 years later today that portfolio operates at a 19% ebita and the growth of the constituent clients 4:03 4 minutes, 3 seconds that came into cof from signity has exploded on the back of very effective cross silk. The top two clients of 4:10 4 minutes, 10 seconds Signity that offered USD 25 to 30 million revenue per year when we acquired them two years back have scaled up to $75 million per year collectively. 4:23 4 minutes, 23 seconds I say this because as you hear our commentary today and as you reflect on what we share by way of our expected 4:30 4 minutes, 30 seconds performance trajectory going ahead, we would urge you to please remember that we are the team that has delivered unfailingly 4:38 4 minutes, 38 seconds for 9 years on all plans that we we have shared with you. We have every intention of coming true on all outlook commentary 4:47 4 minutes, 47 seconds that we shared today with you on the score. 4:51 4 minutes, 51 seconds With that preamble, I shall now cover our performance for quarter 4 and fiscal year 26. 4:57 4 minutes, 57 seconds Last quarter during our quarter 3 results call, I had shared that we believed we were on course to close a very successful fiscal year 26 and that 5:05 5 minutes, 5 seconds we were headed for an exceptional fiscal year 27. 5:10 5 minutes, 10 seconds We are pleased to report that fiscal year 26 has panned out as indicated and equally importantly fiscal year 272 5:18 5 minutes, 18 seconds is poised to deliver on that promise of exceptional performance. 5:24 5 minutes, 24 seconds Moving on to the annual performance review. I'm pleased to share that FI26 was a very successful year for the firm. 5:32 5 minutes, 32 seconds The firm grew 29.2% in US dollar terms. 5:36 5 minutes, 36 seconds We signed 21 large deals through the year with 11 of them coming through in 5:43 5 minutes, 43 seconds the second half of the year. The quality of our growth was remarkable in that all our key industry units grew strongly 5:51 5 minutes, 51 seconds through the year and the growth was led by our top 10 and top 20 client relationships. 5:58 5 minutes, 58 seconds The reported ebit of the firm grew by 370 bips in FI26 over FI25. 6:05 6 minutes, 5 seconds Beyond these immediate metrics, the real highlight of Escalia 26 has been the quiet yet vital work that was done at 6:14 6 minutes, 14 seconds our back end to truly automate and AI enable our back-end processes and functions and to reshape and rightsize our delivery and GNA organizations. 6:26 6 minutes, 26 seconds That quiet effort unshared till now has now structurally reset the margin profile of CO forge for fiscal year 27 and beyond. 6:37 6 minutes, 37 seconds Coforge was always an industry leader on the revenue growth front. Yet our EBITA and EBIT numbers were middle of the 6:44 6 minutes, 44 seconds pack. Starting in FI27 that is this year itself we believe we will along with 6:51 6 minutes, 51 seconds retaining revenue growth leadership emerge as one of the highest ebita and EBIT performers across the midcap segment. 7:01 7 minutes, 1 second Moving on to the quarterly performance review. The quarterly sequential CC growth revenue growth of 2% in Q4 7:09 7 minutes, 9 seconds followed the sequential CC growth of 8% 5.9% and 4.4. 4% that we recorded between Q1 and Q3. 7:20 7 minutes, 20 seconds The quarter 4 yearon-year growth rate was 21.2% in US dollar terms. 7:26 7 minutes, 26 seconds Free cash flow to PAT for the quarter came in at 110%. Significantly ahead of our guidance of around 70% FCF on a sustained basis. 7:37 7 minutes, 37 seconds I would like to draw your attention to the fact that Q4 FI26 EBIT of the firm is 16.6% 6% while it was 12.3% in the same quarter a year back. 7:49 7 minutes, 49 seconds More detailed revenue commentary is as follows. In Q4 FI26, the firm registered a sequential revenue growth of 2% in CC 7:58 7 minutes, 58 seconds terms, 1.7% in US dollar terms and 5.2% in INR terms. For the year, as noted 8:07 8 minutes, 7 seconds earlier, we have grown 29.2% 2% in dollar terms. 8:13 8 minutes, 13 seconds Our ability to grow at this rate in a very challenging environment is driven by our ability to increase wallet share particularly across our key accounts. 8:24 8 minutes, 24 seconds An exceptional market-based industry solution solutioning and AI specialist Carter drives this by staying laser 8:31 8 minutes, 31 seconds focused on continually crafting business solution proactive deals and solutions. 8:38 8 minutes, 38 seconds 21 large deals in FI26 is reflective of the success success of that engine and that carter. 8:45 8 minutes, 45 seconds In FI26 US dollar terms, the healthcare and the high-tech vertical grew by 98%. 8:52 8 minutes, 52 seconds The travel vertical grew 62%. The BFS vertical grew 12%. 8:59 8 minutes, 59 seconds Government outside India grew 17.5%. 9:03 9 minutes, 3 seconds and other emerging verticals which include retail and manufacturing grew 27%. 9:10 9 minutes, 10 seconds Our key accounts drove significantly significant growth this fiscal outpacing the broader business. The top five 9:18 9 minutes, 18 seconds accounts of the firm grew 45.8% yearonear in US dollar terms and accounts ranked 6 through 10 grew at 30%. 9:29 9 minutes, 29 seconds Collectively, these 10 accounts contributed 30.8%. 8% of the total revenue and they grew at 40.4%. 9:38 9 minutes, 38 seconds We would like you to note that the top 10 clients are spread across industries. 9:43 9 minutes, 43 seconds Five are BFS clients, three are travel clients, one is an insurance client and one is a public sector client 9:52 9 minutes, 52 seconds on an annual basis. And this is information that we are sharing starting this quarter. Cofforge now has one client with revenue greater than $und00 million. 10:01 10 minutes, 1 second Three clients with revenues between $50 to $100 million. 10:06 10 minutes, 6 seconds Nine clients with revenues between 20 to $50 million. 10:10 10 minutes, 10 seconds 23 clients with revenues between 10 and $20 million. 10:14 10 minutes, 14 seconds 42 clients with revenue between 5 to 10 million. And 167 with revenue between$1 to $5 million. This client set the 10:24 10 minutes, 24 seconds addressable wallet is going to expand now that Enora integration is complete. 10:31 10 minutes, 31 seconds Order intake. Q4 was a very strong quarter, both from an order intake and a large deal closure perspective. During the quarter, we signed five large deals. 10:40 10 minutes, 40 seconds The total order intake during the quarter was 648 million US. 10:46 10 minutes, 46 seconds The executable order book, which reflects the total value of locked orders over the next 12 months, stands at a record 1.75 billion USD. 10:55 10 minutes, 55 seconds This number is 16.4% higher than at the same time last year. This number does not include the impact of framework 11:05 11 minutes, 5 seconds agreements that we have already signed and are nearly assured revenue streams for FI27 and beyond. We expect revenue 11:14 11 minutes, 14 seconds realized in FI27 from those signed framework agreements not accounted for in the signed order book to also be material. 11:22 11 minutes, 22 seconds On the people front, our total headcount at the end of Q4 stood at 35,777. 11:29 11 minutes, 29 seconds We saw net people addition of 436 during the quarter. Utilization during the quarter stood at 82 and a.5%. 11:37 11 minutes, 37 seconds And last 12 month attrition for the quarter remains one of the lowest in the industry at 10.8%. 11:43 11 minutes, 43 seconds We remain as always one of the lowest attrition firms across the industry. 11:49 11 minutes, 49 seconds With those remarks I shall now hand over the call to our CFO Mr. Sarup go. 11:54 11 minutes, 54 seconds Uh thank you Sudir. Uh I would like to begin with two accounting matters that had impact on the financials in the current quarter. Effective FI26 realized 12:03 12 minutes, 3 seconds gains and losses on cash flow hedges are reported under other income expense within uh forex gain loss. Earlier they 12:10 12 minutes, 10 seconds were adjusted to revenue. The change aligns a presentation with prior practice and isolates revenue and a bit margin from currency fluctuation. Profit 12:20 12 minutes, 20 seconds before tax and profit after tax are unchanged. All comparatives have been restated and reported revenue inhibit margins reflect this change. The second 12:29 12 minutes, 29 seconds uh accounting matter is related to reversal of defer tax liability due to signity merger. Following the effective implementation of the signity 12:37 12 minutes, 37 seconds amalgamation scheme in FY26, defer tax balances on the merged entity were reme-measured. A defer tax 12:44 12 minutes, 44 seconds liability of approximately uh 181 crores has been reversed and credit to provision for tax in Q4 FI26. 12:54 12 minutes, 54 seconds This adjustment has resulted in an ETR which is effective tax rate for the quarter of -7%. 13:01 13 minutes, 1 second Normalized effective tax rate for the quarter is 22%. 13:05 13 minutes, 5 seconds Reported effective tax tax rate for the year is 13% while the normalized effective tax rate for the year is 23%. 13:13 13 minutes, 13 seconds This is a non-cash one-time benefit. 13:16 13 minutes, 16 seconds Cash taxes paid in quarter 4 remains unchanged. Steady state effective tax rate guidance for FI27 is between 23 and 24%. 13:26 13 minutes, 26 seconds Moving to margins in FI26, IITA expanded to INR uh 30,464 million up 77% versus previous year. 13:37 13 minutes, 37 seconds IATA margins came in at 18.6% 6% compared to 14.3% a year ago. EIT margins expanded to EBIT expanded to 13:46 13 minutes, 46 seconds 23,645 million rupees up 83% versus previous year. EIT margin came in at 14.4% 13:55 13 minutes, 55 seconds as compared to 10.7% a year ago. More important to note is Q4 exit rate of EIT margins. A bit margin came in at a 14:04 14 minutes, 4 seconds record 16.6% 6% up 23 uh 31 basis point quarteron quarter driven by falling 14:12 14 minutes, 12 seconds tailwinds SGNA leverage contributing 100 basis point foreign exchange fluctuation 14:18 14 minutes, 18 seconds adding 80 bits direct cost uh reduction due to third party cost added 50 basis 14:24 14 minutes, 24 seconds point lower marketing spend added 40 basis point and lower ESOP cost added 20 14:31 14 minutes, 31 seconds basis point in the quarter this was partially offset by the pedimement related to provisions we made on account of certain doubtful debts uh which is to 14:40 14 minutes, 40 seconds the extent of 60 resistance. Moving to cash flows, uh FI26 FCF uh of USD1 135 14:49 14 minutes, 49 seconds million uh uh experience a 68% Y increase in FI25. This metric was USD 80 14:57 14 minutes, 57 seconds million. Please note that quarterly phasing of free cash flow was negative $21 million in quarter 1 to $37.5 15:06 15 minutes, 6 seconds million in quarter 2 followed by $45.7 million and $73.7 million. The Q4 FCF of 15:14 15 minutes, 14 seconds $1.73.7 million marked the highest quarterly FCF in any quarter in the past. Net cash 15:21 15 minutes, 21 seconds improved to USD 117 million from uh from dollars 93 million year one year despite 15:28 15 minutes, 28 seconds a $136 million reduction in a working capital line uh and paying dividends of $61 million. Quarter 4 FCF to PAT ratio 15:38 15 minutes, 38 seconds incorporates impact of DTL reversal resulting from the signity merger on normalized basis Q4 FCF to PAT is actually 156%. 15:49 15 minutes, 49 seconds Looking ahead, we anticipate free cash flow to PAT to be maintained at 100% from fiscal year 27 onwards in contrast to our earlier guidance of 70 to 80%. 16:01 16 minutes, 1 second In summary, fiscal year 2026 witnessed significant improvements in all the param financial parameters. Revenue grew 16:10 16 minutes, 10 seconds 36% in INR terms. AITA grew 77%, EIT 83% and PAT grew 92%. and SC of 68%. 16:19 16 minutes, 19 seconds Resulting in structural profitability and cash flow enhancements with Q4 FI26 EITA margins at 20 and a half% and EBIT 16:28 16 minutes, 28 seconds margins as 66 16.6% 6% we are confident of achieving EITA margins of 20.5% to 16:36 16 minutes, 36 seconds 21% in FI27 on consolidated basis which is including Enkora and EIT margins of 16:43 16 minutes, 43 seconds 16 1.5% to 17% on a standalone basis that is excluding Enkora and 15.5% 16:52 16 minutes, 52 seconds on consolidated basis which is including Enkora. This increase is coming largely on account of following factor factors. 17:00 17 minutes Adoption of AI at scale not just in delivery but in functions resulting in cap capping of GNA in absolute terms. 17:07 17 minutes, 7 seconds GNS synergies of 20 to 25% in the combined business uh coming because of inkora acquisition and a planned closure 17:15 17 minutes, 15 seconds of 20 mill uh $20 million low margin portfolio of India business. With this I would like to hand over the call to Sudhir Singh. 17:25 17 minutes, 25 seconds Thank you S Mr. Lalit Vadwa uh chief technology officer of CO forge who has joined us as part of the encorra merger 17:33 17 minutes, 33 seconds and I shall now share our plans around what we are doing to address the AI imperative. 17:39 17 minutes, 39 seconds These are exciting times indeed in our industry. Labor as a default has been disrupted and is being replaced by AI 17:48 17 minutes, 48 seconds native process redesign and domain specialized agents. 17:52 17 minutes, 52 seconds We are moving from a world of IT delivery to one of business orchestration. And as this happens, firms who are engineering outcomes for 18:01 18 minutes, 1 second customers are compounding while firms who continue to build ours are getting left behind. 18:08 18 minutes, 8 seconds Just like the advent of cloud created downstream opportunities for tech services, AI too is creating its own set of new value pools. 18:18 18 minutes, 18 seconds As agent tech systems rise, there is a growing need for tech firms who can help clients address the following asks at 18:25 18 minutes, 25 seconds scale. One, a need for AI ready data pipelines. 18:30 18 minutes, 30 seconds Two, agent life cycle management. and three recurring high margin managed services to monitor models and govern agents. 18:39 18 minutes, 39 seconds We believe there are six modes that will define the model winning firms who will capture this massive fast growing AI opportunity. 18:50 18 minutes, 50 seconds Coforge has not just identified the modes but also built proprietary assets and differentiators to back each one of 18:58 18 minutes, 58 seconds them. Mote number one is deep domain expertise. 19:03 19 minutes, 3 seconds As firms upskill their staff on AI, the horizontal AI skills will commoditize quickly. In a world where everyone has 19:10 19 minutes, 10 seconds access to claude or GPT5, where does the value sit? We believe it sits in the domain. 19:17 19 minutes, 17 seconds Generic AI is a commodity. Applied AI is a clear differentiator. 19:22 19 minutes, 22 seconds We are driving deep specific knowledge of business context, workflows, regulations, and operating reality. With 19:31 19 minutes, 31 seconds more than 150 scaled AI engagements completed across BFS, insurance, travel and healthcare, delivering production 19:39 19 minutes, 39 seconds grade outcomes. This is an agenda we are pushing. The second mode is strong client intimacy. 19:46 19 minutes, 46 seconds AI will never commoditize relationships. 19:49 19 minutes, 49 seconds [clears throat] Trust, context, and proximity to decision makers still shape demand. 19:56 19 minutes, 56 seconds Clients value firms that understand their business and that takes time to develop and there is no better example we think of a firm that is closer to its clients than co-orges. 20:07 20 minutes, 7 seconds Mode number three reinvented delivery models are needed that orchestrate and monetize humans along with AI agents to deliver faster 20:16 20 minutes, 16 seconds and more powerful outcomes. Our hybrid AI mod squads that we announced earlier are unique delivery units comprising of 20:24 20 minutes, 24 seconds AI agents and senior AI specialists driving 40 to 50% faster time to market 20:31 20 minutes, 31 seconds for clients. Mode number four agility at scale which means being built for agility with AI first offerings. 20:39 20 minutes, 39 seconds It warrants internal adoption of agent AI and a lean talent pool to adapt to each stage of AI evolution. Mote number 20:49 20 minutes, 49 seconds five, scalable AI platform with purpose-built agents. Enterprisegrade governance. In this context, Core Forg's 20:57 20 minutes, 57 seconds one AI platform is a composable enterprisegrade agentic AI platform with 100 plus domain specific solutions and 75 plus horizontal capabilities. 21:09 21 minutes, 9 seconds And finally, mode number six, an AI enabled workforce with specialized engineers, forward deployed engineers, 21:17 21 minutes, 17 seconds and an agile management team. We have more than 30,000 AI enabled trained 21:24 21 minutes, 24 seconds workforce members, more than 11,000 data and AI practitioners, more than 600 plus advanced AI practitioners, all created 21:33 21 minutes, 33 seconds using significant investments in AI upskilling. 21:37 21 minutes, 37 seconds These assets have enabled us to move quickly to capture emerging opportunities across five growth vectors 21:44 21 minutes, 44 seconds or value foods. Opportunity number one, mod squad monetization. 21:50 21 minutes, 50 seconds It helps redefine how clients buy from us. These are hybrid delivery pods that are priced on outcomes, not ours. 21:57 21 minutes, 57 seconds Opportunity number two, upstream advisory. 22:01 22 minutes, 1 second Part of this is helping clients, enterprises plan multimodal AI strategy across LLM providers and AI tools 22:09 22 minutes, 9 seconds without a vendor lock in. Opportunity number three, brownfield modernization, accelerating legacy modernization via 22:17 22 minutes, 17 seconds proprietary platforms such as co-forges code inside AI that are delivering more than $40 million plus in client savings as we speak. 22:27 22 minutes, 27 seconds Opportunity number four is AIEL engineering transformation. This warrants improving productivity and 22:34 22 minutes, 34 seconds quality while lowering costs and in our case is backed by co-forges multi-layer knowledge graphs, pre-built agents and 22:42 22 minutes, 42 seconds enterprisegrade governance. And finally, opportunity number five is the agentic AI platform related opportunity. Out 22:50 22 minutes, 50 seconds here we redeploying engineers from routine work to agentic AI orchestration. This is the highest margin and the most strategically valuable work. 23:00 23 minutes Finally, we are eating our own cooking by embedding AI across both the SDLC and our internal operations. 23:08 23 minutes, 8 seconds On the SDLC front, AI is deeply embedded into how we build and deliver. We are driving 25 to 35% productivity uplift in 23:16 23 minutes, 16 seconds development, 40 to 60% in code generation, and up to 10 times faster modernization timelines. internal operations and sorup talked about this. 23:27 23 minutes, 27 seconds We are always client zero for our AI interventions. We are using AI to drive 40 to 60% lower effort spent on 23:34 23 minutes, 34 seconds financial analysis and 30 to 40% lower screening cost per recruitment. 23:40 23 minutes, 40 seconds The market is clearly recognizing our momentum on AI. We have received over 25 AI recognitions from leading analyst firms including seven leader positions 23:49 23 minutes, 49 seconds from firms such as Everest, HFS, Constellation Research, ISG and Aasant. 23:56 23 minutes, 56 seconds With that I will now hand over to our CTO Mr. Lalit Wadada to provide further nuances of how we understand and are approaching the AI opportunity. 24:05 24 minutes, 5 seconds Sudep thank you very much. 24:08 24 minutes, 8 seconds Most enterprise AI pilots never uh reach production. Uh the gap is not just the model, it is the surrounding 24:14 24 minutes, 14 seconds architecture and the way the work gets delivered. Pilots run in controlled conditions that mask the structural 24:21 24 minutes, 21 seconds issues production really exposes. We have closed this gap with two things built together. Number one, a reference 24:28 24 minutes, 28 seconds architecture designed for production grade behavior and number two a delivery model that leads with business outcomes. 24:36 24 minutes, 36 seconds Our reference architecture enforces deterministic guard rails around probabilistic LLM outputs solving the 24:44 24 minutes, 44 seconds two failure modes that trap clients in pilots hallucinated domain logic and lost agent coherence in longunning processes. 24:54 24 minutes, 54 seconds This architecture the reference architecture has three layers. The top layer is called the business architecture layer and it consists of 25:02 25 minutes, 2 seconds business goals, high impact use cases and organizational change management or the OCM led operating model redesign. 25:11 25 minutes, 11 seconds The middle layer is the decisioning engine or the decisioning atlas which is our differentiated property proprietary 25:19 25 minutes, 19 seconds asset that enforces domain specific reasoning chains with ontologies encoding business entities. a knowledge 25:26 25 minutes, 26 seconds graph mapping cross system compliance hierarchies and a temporal context that maintains state coherence across 25:34 25 minutes, 34 seconds multi-step agentic workflows and then finally the bottom layer is a composable AI backbone swappable with hyperscalers 25:42 25 minutes, 42 seconds compute or a sovereign air AI cloud or any model provider it also contains an AI gateway used for model routing model 25:52 25 minutes, 52 seconds context protocol that's called as MCP gateway token ops and the ability to do canary releases in AI deployments. 26:02 26 minutes, 2 seconds We have operationalized this reference architecture with our proprietary AI mod squads and the forward deployed engineers also called as the FTEEs. 26:11 26 minutes, 11 seconds In mod squads, we implement agent harnesses for longunning durable agents. 26:17 26 minutes, 17 seconds The harness or the scaffolding has a Ralph loop with planner, generator, and evaluator agents all tied together with 26:26 26 minutes, 26 seconds warrants or contracts and anti-enancy or adversarial patterns by design to ensure 26:33 26 minutes, 33 seconds that agents do not go off the rails. A governance protocol for human in the loop checkpoints is implemented with 26:40 26 minutes, 40 seconds templates, registration, versioning and life cycle management of the 11 sorry 110 agent arch types that we have. Now 26:49 26 minutes, 49 seconds let me contextualize the above two key ingredients with brief case studies of systems in production. Number one, for a 26:57 26 minutes, 57 seconds large tier one bank, we executed an AIE cobalt to Java 21 Quus modernization of 27:05 27 minutes, 5 seconds a module with 11,000 lines of mainframe Cobalt code, which also had copybooks, VSAM, and the similar dependencies in half the time that the client gave us. 27:17 27 minutes, 17 seconds are highly specialized decomposition agents reverse engineered legacy structure legacy logic and the intent 27:25 27 minutes, 25 seconds directly from the source artifacts. A forward deployed engineer pot which consisted of one senior FDE and two 27:33 27 minutes, 33 seconds junior consultants along with the coding agents generated production grade code into a hexagonal architecture with 27:42 27 minutes, 42 seconds non-blocking reactive IO JWT authentication open telemetry distributed tracing and container native deployment. 27:51 27 minutes, 51 seconds In the second example, a large group insurance benefits provider deployed architecture on Azure with trust AI 28:00 28 minutes enforcing responsible AI guardrails at inference time. Model garden abstracting multi LLM routing and enterprise 28:08 28 minutes, 8 seconds retrieval augmented generation or rack services orchestrating retrieval across multiple vector databases using a 28:16 28 minutes, 16 seconds combination of EM25 algorithm and the semantic search. The platform enforces governance as code, automated security 28:24 28 minutes, 24 seconds policies, token level PHOPS and operational kill switches across LLM access, agent orchestration, vector databases and CI/CD pipelines. 28:36 28 minutes, 36 seconds Combination of PHOPS, governance and increased throughput resulted in productivity benefits of 40% and velocity gains of 50%. 28:46 28 minutes, 46 seconds So to summarize, the path from pilot to production runs through architecture and delivery, not through model selection. 28:53 28 minutes, 53 seconds The three- layer reference architecture and the mod squad delivery model that you just heard of are the two key ingredients that close the pilot to the 29:02 29 minutes, 2 seconds production gap and both of now are now proven in production at enterprise scale. With that back to you Sudir. 29:10 29 minutes, 10 seconds Thank you Lal. uh and the final section the outlook section ladies uh gentlemen and before we do that before we share our outlook we would like to offer our 29:18 29 minutes, 18 seconds views around the recent commentary around our industry we believe that the true cost of AI code is an important concept to be understood 29:26 29 minutes, 26 seconds in the context of the evolving AI landscape the deflationary argument assumes code generation is the entire job it is not 29:36 29 minutes, 36 seconds AI generated code is cheap to build but it is expensive to own. It is expensive to secure and it is expensive to maintain. 29:46 29 minutes, 46 seconds Just like cloud migration, agent AI will create a massive managed services layer. 29:51 29 minutes, 51 seconds And once these systems are in production, someone has to monitor the models, retrain the agents and ensure 29:58 29 minutes, 58 seconds governance. That is a recurring high margin revenue stream for firms that can seize it. 30:06 30 minutes, 6 seconds For Core Forge, the demand tailwind is structural and pure. 30:11 30 minutes, 11 seconds We were built for agility. We have no bloated delivery pyramid to manage. 30:18 30 minutes, 18 seconds Every AI advancement accelerates our growth. We are positioned for the near-term modernization search. We are 30:27 30 minutes, 27 seconds positioned for the medium-term agentic deployment wave and finally for the long-term expansion of the global 30:34 30 minutes, 34 seconds technology market. All three phases, ladies, gentlemen, play to our strengths. 30:41 30 minutes, 41 seconds We shall lean on our exceptional record of creating value through acquisitions which in turn rides on an execution 30:47 30 minutes, 47 seconds intensity that is uniquely our own. SLK is an example. Signity is an example. in 30:55 30 minutes, 55 seconds Kora will be the defining example. We plan to compound on our success focusing on four key priorities. Number one, 31:02 31 minutes, 2 seconds building pipeline momentum in AI transformations across our top verticals. 31:08 31 minutes, 8 seconds Number two, expanding our AI client base rapidly through both hunting and farming. Number three, scaling vertical 31:15 31 minutes, 15 seconds agentic workflows in verticals like banking, insurance, and airlines. 31:21 31 minutes, 21 seconds And number finally, number four, continuing to invest in talent, growing our specialized pool of FDs while upskilling 100% of our workforce in AI. 31:31 31 minutes, 31 seconds To conclude, fiscal year 27 is shaping up to be an exceptional year for Core Forge despite the significant AIdriven flux. 31:40 31 minutes, 40 seconds We believe revenue growth will be robust. 31:44 31 minutes, 44 seconds We are confident of achieving an IBATA margin of 20.5% to 21% in fiscal year 27 on a consolidated basis. 31:56 31 minutes, 56 seconds EBIT margins are expected to be in the range of 16.5 to 17% on a standalone 32:02 32 minutes, 2 seconds basis and 15.5% on a consolidated basis. We believe FCF to PAT metrics going forward will be 100% plus. 32:14 32 minutes, 14 seconds That concludes our prepared remarks. Thank you very much sir. 32:23 32 minutes, 23 seconds Ladies and gentlemen, we will now begin the question and answer session. 32:28 32 minutes, 28 seconds Anyone who wishes to ask a question may click on the raise hand icon from the participant tab on your screen. 32:35 32 minutes, 35 seconds We request participants to restrict to two questions and return to the queue for more questions. To rejoin the queue, you may click on the raise hand icon again. 32:45 32 minutes, 45 seconds We will wait for a moment while the question queue assembles. 32:49 32 minutes, 49 seconds We take the first question from Abhishek of Motilal Usual. Please go ahead. 32:56 32 minutes, 56 seconds Hi team, am I audible? Yes sir. 32:59 32 minutes, 59 seconds Yeah. Hi Sud and team congrats on a on a good quarter. Uh so a couple of questions uh firstly uh if I apply a conservative uh 33:08 33 minutes, 8 seconds revenue conversion multiple to your uh 12-month forward uh you know order book um it does point to a very kind of you 33:16 33 minutes, 16 seconds know punchy FI27 growth guidance uh to start with. On top of that you've mentioned that uh there's still a few sort of you know deals that are kind of 33:25 33 minutes, 25 seconds waiting to be incorporated into it. So just trying to understand uh does the previous conversion relationship hold um and how does that play with you know the 33:34 33 minutes, 34 seconds current geopolitical market or or sort of you know the whole AI anxiety around it and uh can we build in that growth rate which kind of implies almost an 18 33:41 33 minutes, 41 seconds 19% organic growth ramp for FI27. Now that's the first question. Uh the second question is uh sorry Abishek Abishek can you hear us? 33:51 33 minutes, 51 seconds Yeah. Yeah. 33:51 33 minutes, 51 seconds Yeah. Yeah, why don't you repeat your question? There was some issue with the internet, so we were not able to hear you. Uh, okay. Uh, am I audible now? 33:59 33 minutes, 59 seconds Yeah. Yeah, you are. Yeah. 34:01 34 minutes, 1 second Yeah. Yeah. So, I'm saying uh if I were to apply a conservative uh you know revenue conversion multiple to your 12-month forward uh executable order 34:09 34 minutes, 9 seconds book uh I arrive at a very very punchy FI27 growth number of almost 18 19%. uh 34:16 34 minutes, 16 seconds so trying to understand sort of you know does the does the previous sort of you know 1.3 1.4 four multiple to your 12-month order book still hold should we 34:25 34 minutes, 25 seconds assume a higher conversion rate lower conversion rate depending on the global macros or the AI deflation etc etc so that's the first question the second 34:34 34 minutes, 34 seconds question is uh sort of you know how much of the ebit margin sort of upgrade uh is is kind of down to sort of you know AI 34:42 34 minutes, 42 seconds usage internally uh and how much of it is down to let's say pricing and sort of you know getting into more identified solutions that can lead to um um better 34:51 34 minutes, 51 seconds pricing so to speak. Um uh and uh and and lastly uh you know very curious despite sort of you know on on the hedge 35:00 35 minutes front on the hedgebook reclassification side sort of what prompted that change and you know any any sort of you know guidance on that will be helpful. Thank you. 35:10 35 minutes, 10 seconds All right. Uh thank you for the question Abhishek. Uh I'm going to request sort of to take the hedge question towards the end. uh as far as revenue is 35:17 35 minutes, 17 seconds concerned Abhishek u last year when we started off the year we we had indicated that we would deliver robust growth the intent always is to grow as much as is 35:25 35 minutes, 25 seconds possible and that's how we landed up at 29.2% 2% USD growth. This year again the intent is to deliver a robust growth but 35:33 35 minutes, 33 seconds the intent is equally not to classify that or to offer hard numbers around it which which you all know. Uh the 35:40 35 minutes, 40 seconds environment is challenging and yet the confidence is high that we should be able to deliver industryleading growth and I'll leave it there. As far as the 35:48 35 minutes, 48 seconds EBIT is concerned we believe the EBIT reset in quarter 4 has been a structural reset. It has come off the back of the automation and AIEL interventions. 35:59 35 minutes, 59 seconds Second, it has come largely off the back of a deeply held conviction that in an 36:05 36 minutes, 5 seconds AI infused era, our GNA costs have in absolute terms to be held constant and it is AI based interventions that are 36:14 36 minutes, 14 seconds allowing us to do it. Sorup number three. 36:17 36 minutes, 17 seconds Yeah. So, Abishek on the hedge front uh we were anyways working with our auditors. I think we thought it it is better to do it towards the year end 36:26 36 minutes, 26 seconds wherein you look at this change and so that at least the reporting gets aligned more to market peers and uh it was more 36:34 36 minutes, 34 seconds around that rather than anything else and uh just to mention that the if you add back the hedge losses against to 36:41 36 minutes, 41 seconds revenue in the current quarter uh the debit margins were 15.2% as against our guide was 15%. did better off than even 36:50 36 minutes, 50 seconds even if the hedge losses were being reported uh where they were being reported earlier. So the improvement that has come on the margins in the 36:58 36 minutes, 58 seconds current quarter is operational and that's why we believe that going forward we'll be able to not only uh sustain but 37:05 37 minutes, 5 seconds a kind of improve on u in 27 thank you so much and all the best. 37:14 37 minutes, 14 seconds Thank you. We take the next question from Sulab Goa of Morgan Stanley. Please go ahead. Hi. Uh am I audible? 37:23 37 minutes, 23 seconds Yeah. 37:24 37 minutes, 24 seconds Yeah. Thanks for taking my question and uh uh thanks for the detailed presentation. So I I just had a couple 37:32 37 minutes, 32 seconds of questions. So first is on the revenue growth. So last year uh when we entered the last year, we had a tailwind of the 37:40 37 minutes, 40 seconds mega deal which we had won in uh the month of March. uh and this year given that we do not have a tailwind of that 37:48 37 minutes, 48 seconds level u uh you know how should we expect the growth to pan out uh particularly from a perspective of the cadence given 37:55 37 minutes, 55 seconds that uh 1 was quite strong last year versus the 2. So how do you think about uh not from a number perspective from a 38:03 38 minutes, 3 seconds cadence perspective how do you expect the 1 versus 2 in this year and if you could also provide some color on the framework agreements that you talked 38:10 38 minutes, 10 seconds about are they different versus the usual uh and then I have a second question after that right uh you're absolutely right about 38:19 38 minutes, 19 seconds your observation around the fact that we had the $ 1.56 billion tailwind that we had this year we believe the tailwind comes from framework agreements that we 38:28 38 minutes, 28 seconds have signed and not recognized ized under the order executable that we've shared with you. These are agreements 38:35 38 minutes, 35 seconds where the MSA does not spell out a specific amount and hence we do not add that to the order executable number. 38:42 38 minutes, 42 seconds We've already signed a material framework engagement. We think we will in reasonably short order sign bigger 38:50 38 minutes, 50 seconds framework agreements. The pipeline closure there is in its near final stages. So that's that's how we see 38:58 38 minutes, 58 seconds this. A lot of our confidence around revenue growth also comes not just from order executable but how balanced the portfolio is at this point in time. 39:07 39 minutes, 7 seconds Whether it is travel, whether it is healthcare, whether it is banking, insurance, uh we feel good about all of them. So 39:15 39 minutes, 15 seconds we're not hitching our wagon to one uh I mean to one star. The entire constellation seems to be moving in the right direction from from our point of view. 39:25 39 minutes, 25 seconds Any other questions? 39:27 39 minutes, 27 seconds Understood. Uh thanks. Uh just second question for Sorup on the uh free cash flow. So Sorup just trying to understand this change of 60 to 70% going to 100%. 39:39 39 minutes, 39 seconds Uh what are the specific drivers to that? I'm sorry if I missed that earlier. 39:43 39 minutes, 43 seconds No. So uh see uh we had uh earlier uh last year mentioned that we'll start and this was starting end of quarter 1 or 39:51 39 minutes, 51 seconds beginning of quarter two when we said we'll maintain 70 to 80% FCF to PAT. But I guess the rigor that we have brought in within the organization in terms of 39:59 39 minutes, 59 seconds the way uh collections are being followed, the way uh payables are being managed and the way contracts are being 40:06 40 minutes, 6 seconds structured. We believe that 100% is the bare minimum FCF2 PAD will deliver in FI27 along with the significant step up 40:16 40 minutes, 16 seconds in the profitability that we mentioned in our prepaid remarks. 40:20 40 minutes, 20 seconds Okay. Okay. Understood. Thanks AB and thanks for taking my question. 40:25 40 minutes, 25 seconds Thank you. We take our next question from Vibhor Singh of Noama Equities. Please go ahead. 40:34 40 minutes, 34 seconds Yeah. Hi. Uh thanks for taking my question and congrats Sudhi Sorab and team for the solid performance again. Uh 40:41 40 minutes, 41 seconds couple of questions from my side. uh Sudh on the uh entire AI opportunity you mentioned about the fact that while the 40:48 40 minutes, 48 seconds AI code might be easy it might be cheaper to write but it is much more expensive uh to maintain and implement uh uh and basically uh overall integrate 40:58 40 minutes, 58 seconds into the system of the existing companies. So from a broad broader industry point of view I know coach has been the the growth leader and will probably continue to be but from an 41:06 41 minutes, 6 seconds industry perspective do you believe that this AI opportunity will actually lead to an overall expansion for the industry also so let's say the IT Indian IT 41:15 41 minutes, 15 seconds industry today is around $250 billion uh will we actually see this much bigger than what 250 billion today is let's say two or three or four years down the line 41:24 41 minutes, 24 seconds and a related question to that is if you go back to the last cycle which was the digital and the cloud cycle large part of that was act of that 41:32 41 minutes, 32 seconds opportunity was initially captured by the tier one players because the tier 2 players were quite small at that point of time. Do you believe that in this 41:40 41 minutes, 40 seconds cycle because those mid-tier players in which we basically classify ourselves and our peers as well because we now reached a size and the capabilities and 41:48 41 minutes, 48 seconds all do you believe the winners or let's say the beneficiaries of the this cycle would actually be different than what they were in the last cycle. 41:57 41 minutes, 57 seconds So the AI opportunity that we see is multiffold and I'm going to request the head of our AI practice Mr. Vic to Gupta also to add on to what I chime in with. 42:07 42 minutes, 7 seconds As we've said we are seeing immediately a very very significant near-term modernization surge using AI technologies that is real that is now. 42:16 42 minutes, 16 seconds There is one that is building up very strongly which is the whole agent deployment wave. Firms that ride those waves are firms that will continue to do 42:24 42 minutes, 24 seconds well. It's difficult for me to talk about whether the Indian IT industry will do well or not. But the tech services industry perforce has to do 42:32 42 minutes, 32 seconds well. There is a clear need for AI ready data pipelines. There is clear need for service providers that can do agent life 42:40 42 minutes, 40 seconds cycle management. There is a clear need for service players that can do recurring high managed high margin managed services to monitor models and 42:48 42 minutes, 48 seconds to govern agents. Vic uh would you like to add more color to AI demand? 42:53 42 minutes, 53 seconds Sure. Thanks. Um I think if you look at the ecosystem we find at least in our client base there's a lot of application 43:00 43 minutes entanglement lot of opportunities around brownfield migrations of the applications to modernized systems and to agentic 43:09 43 minutes, 9 seconds systems I think no fortune 1000 company has uh no integration problems every one 43:17 43 minutes, 17 seconds of them has an integration problem they need to identify their workflows but they need to integ integrate with their 43:24 43 minutes, 24 seconds existing systems, existing system of records, systems of engagement and systems of interaction. 43:33 43 minutes, 33 seconds We also feel that responsible or governance of AI is a non-negotiable for regulated industries which we operate 43:41 43 minutes, 41 seconds in. Each one of them offers us as a value pool that brings us closer to our clients and delivers value to them. 43:51 43 minutes, 51 seconds We feel for us we are faster to execute nimble to change and as mentioned 43:59 43 minutes, 59 seconds earlier client intimacy is an important aspect for our mood. With that we feel that there is great opportunities 44:08 44 minutes, 8 seconds around the brownfield modernization and migration and agentic areas. Back to you 44:16 44 minutes, 16 seconds uh thank you for the question. Uh do you have anything else for us? Yeah, just one more question from you and then I'll probably have one couple of bookkeeping for sort of uh uh from a near-term 44:25 44 minutes, 25 seconds perspective Sud just wanted to pick your brain that travel vertical has been a very strong force for us and given the Gulf War that is going on right now 44:32 44 minutes, 32 seconds given where crude is do you foresee a headwind in that vertical in the immediate future have any client conversations started around that that 44:40 44 minutes, 40 seconds the airlines specifically have started a couple started talking about pulling temporarily pulling back their tax spends or anything on that any color on 44:47 44 minutes, 47 seconds that would be really helpful At this point in time uh vivor from our perspective the travel vertical continues even in the short term to do 44:56 44 minutes, 56 seconds really well. We saw a press report yesterday which talked about the impact of spirit airlines on co forge. We just want to reiterate the the impact is 45:05 45 minutes, 5 seconds negligible to none. The budgeted revenue from that airline was about 10 bips for 45:11 45 minutes, 11 seconds fiscal year 27. So that near-term the travel business is on the up and up. the Sorup talked about earlier uh in in his 45:20 45 minutes, 20 seconds commentary about the fact that there is a low margin portfolio in India that we will discontinue immediately and the 45:28 45 minutes, 28 seconds negative impact of that will flow into Q1 despite that that's a significant portfolio we expect to be flattish in Q1 45:35 45 minutes, 35 seconds and to be on a very fast growth trajectory from Q2 onwards but travel healthare banking insurance sector 45:43 45 minutes, 43 seconds public sector and even high-tech the new vertical we've started should do extremely well in FI27. 45:52 45 minutes, 52 seconds Got it. Got it. Just one or two bookkeeping questions for Sorup. Sort of since Sudhir mentioned about that uh uh basically discontinuing the India 46:00 46 minutes business operation. Could you quantify what would be the uh basically amount of that business which we are intending to discontinue from Q1? 46:08 46 minutes, 8 seconds So it should have a impact of roughly 15 to 20 million in pass through in quarter one itself. 46:16 46 minutes, 16 seconds Got it. Got it. So our revenue for Q1 from whatever we're expecting should be down by $15$20 million because of this uh discontinuation of business operation 46:23 46 minutes, 23 seconds because of India business. But the other deals that we had signed in the current year and the order book that we have 46:30 46 minutes, 30 seconds will still make up for it and probably uh nullify the impact of this downfall. 46:37 46 minutes, 37 seconds Got it. But uh netn net we are expecting a flattish quarter next next quarter. Is that Yes. 46:42 46 minutes, 42 seconds on a Q1Q basis. on a Q on Q basis on a reported on a reported front on a reported front got it got it just last question from my side you there's a 46:51 46 minutes, 51 seconds 150 basis point of margin gap that we are talking about in FI27 between our standalone and our console margin yes that I would assume will be because of 46:59 46 minutes, 59 seconds the amotization of theora you're absolutely right it's because of amotization otherwise 47:07 47 minutes, 7 seconds uh we feel very good about hitting maybe 16 and a half to 17 odd% a bit margins If there was no amotization 47:15 47 minutes, 15 seconds and what is the amortization that we looking at on an annual basis in terms of absolute dollar or ruby amount? Uh roughly $40 million a year. 47:22 47 minutes, 22 seconds Roughly $4 million. Uh great. Thank you so much for taking my questions and wish you all the best. Thanks. 47:29 47 minutes, 29 seconds Thank you. We take the next question from Deep Ma of MK Global. Please go ahead. 47:35 47 minutes, 35 seconds Uh thanks for the opportunity. A couple of question. First just want to understand what would be the hedge losses cities in OCI uh considering the 47:42 47 minutes, 42 seconds way we now change the accounting practice if you can provide some sense on it. What will be the OCI number? 47:48 47 minutes, 48 seconds So uh second yeah sorry so so number one uh the OCI won't change I think it's just that the hedge loss in 47:56 47 minutes, 56 seconds the other income will be 164 crores which is already there as part of fact sheet. No, I understand. But what is the number? I understand it will 48:03 48 minutes, 3 seconds 164 crores. 164 K. Sorry, 164 crores for the year, 70 crores for the quarter. 48:10 48 minutes, 10 seconds No, my question is what is the balance sheet number considering the whatever hedge position we might be having at the end of the quarter? 48:16 48 minutes, 16 seconds Uh I'll come back to you on that. I'll come back to you on that. 48:19 48 minutes, 19 seconds Okay. Uh the second question which I want the framework agreement how one should understand that to convert into order book in coming quarters whether it 48:27 48 minutes, 27 seconds will be very gradual conversion which will not have a much impact on order book or you expect some of it to be relatively large deal kind of thing if 48:34 48 minutes, 34 seconds you can give some sense how it is different than usual and whether this is something different than let's say 12 18 months kind of the way deal used to get 48:43 48 minutes, 43 seconds structured because I'm not very clear on that part and second question on the BFS BFS relative atively remain uh softer 48:52 48 minutes, 52 seconds than let's say company average in 26 even in quarter 4 it is relatively uh softer if you can provide some sense how 48:59 48 minutes, 59 seconds one should expect BFS growth trajectory and what are the puts and take in terms of some of the demand driver playing out there I'm going to request our president Mr. 49:08 49 minutes, 8 seconds John Spade to address the framework question because that demand comes from the UK public sector and that's a business that he shares. 49:15 49 minutes, 15 seconds Thank you Sadia. Yes, it's um it's not your atypical um framework deal in the news say this is a typical way that the 49:23 49 minutes, 23 seconds UK public sector business works. Um you'll have seen in the press that we were awarded in uh Q a Q4 $150 plus 49:32 49 minutes, 32 seconds million dollar deal in the UK public sector. It's in it's in the press. uh that was a sole award to co-forge 49:40 49 minutes, 40 seconds structured over five years and the expected run rate as a base is sort of four to five million per quarter 49:48 49 minutes, 48 seconds and it's and it's basically well what happens during the during the quarter is it's multiple um um TSRs or S so against 49:57 49 minutes, 57 seconds that award purely to co-forge as far as the BFS question is concerned 50:04 50 minutes, 4 seconds um uh we see structural demand drivers uh ahead of us. Uh BFS in our case came 50:12 50 minutes, 12 seconds in at 12%, in relative terms it was low but I guess by in absolute terms that was still a solid performance in a year 50:19 50 minutes, 19 seconds like this. We expect performance around BFS to improve in FI27 or FI26. 50:29 50 minutes, 29 seconds Thank you. We move to our next question from Ravi Menon of Access Capital. Please go ahead. 50:38 50 minutes, 38 seconds Hi, thanks for the opportunity. U questions. Uh so you know while appreciate the uh long-term bullish commentary on AI demand u and thanks for 50:46 50 minutes, 46 seconds the really detailed remarks on that. uh do you understand if there will be some near-term uh you know hindrance especially in the product engineering 50:54 50 minutes, 54 seconds side probably more with encodor than for the co forge portfolio but there some of the uh smaller let's say uh SAS 51:03 51 minutes, 3 seconds companies perhaps would we see some revenue headwind near term uh even if uh you know being really early to the game 51:11 51 minutes, 11 seconds in adopting AI uh for coding we will win market share that offsets it longer term but near-term could we see some pressures. 51:20 51 minutes, 20 seconds Uh Ravi, uh thanks for the question. Uh the answer is no. Uh the high-tech business of Enora that we've taken over is under uh under a new leader based out 51:28 51 minutes, 28 seconds of the out of a new office that we were planning for and have already established and is functioning. We expect the high-tech business which is 51:36 51 minutes, 36 seconds where this was most likely to starting Q1 itself start growing and grow handsomely through the fiscal year 27. 51:45 51 minutes, 45 seconds Great. Thanks so much for that sir. uh the FCF conversion you know the rough math indicates that AIDA to uh 51:52 51 minutes, 52 seconds conversion would be about 60% uh or north of that given you're saying more than 100% conversion right that's uh 51:59 51 minutes, 59 seconds that's pretty good but uh still a little uh lower than I'd say you know the best in-class right uh what do you think we 52:06 52 minutes, 6 seconds need to do to move towards best-in-class so uh Ravi I think it's a it's a it's a step up that we're doing from where we 52:14 52 minutes, 14 seconds were whether it is margins or free cash flow and I guess it's the uh investments that we have been making in our client 52:23 52 minutes, 23 seconds relationships and in our business because of which in the past whatever investments we made uh one can see 52:30 52 minutes, 30 seconds results uh in whether it's profitability and cash flow I think another couple of more years and then you can see that this will start moving towards 110 120 52:39 52 minutes, 39 seconds odd percent. But I guess it's a gradual move that we're making from not focusing on FCF2 PAT to giving a guidance of 70 52:46 52 minutes, 46 seconds 80 delivering onto that to moving to 100% and then we look at how next year goes by and probably then start upping it up. 52:53 52 minutes, 53 seconds Thanks so much. And one uh one question on the EO side how much should that be uh next year as a proportion of overall 53:02 53 minutes, 2 seconds compensation or as a proportion of uh uh revenue? 53:06 53 minutes, 6 seconds I it will stay where it is. is I mean 8.9% is where it will stay. It's not uh it's not going to go up or it's not 53:16 53 minutes, 16 seconds significantly going to go down. I think ESOP cost we' already mentioned uh that u when we signed up when we when the new 53:24 53 minutes, 24 seconds plan was rolled out we were close to 2 odd percent and it's come down gradually and will stay where it is 7.8 odd%. 53:30 53 minutes, 30 seconds Right. So you're not advising that to move up even with new leaders from Anora being on No, we're not expecting that to go up. Oh yeah. question. 53:39 53 minutes, 39 seconds Thank you Rai. 53:41 53 minutes, 41 seconds Thank you. Next question is from Sep Sha of Eurities. Please go ahead. 53:48 53 minutes, 48 seconds Thanks. Thanks for the opportunity and congrats on a good execution. Uh just Sudep wanted to understand relating to 53:55 53 minutes, 55 seconds workflow deal framework deal from the UK government. So is it fair to assume the potential which we may consider in our 54:05 54 minutes, 5 seconds budget being 150 million uh TCV with pri year what John spade has disclosed and that 4 to6 million additional revenue may start flowing from one Q itself. 54:18 54 minutes, 18 seconds Yeah it the the revenue as John said is going to start flowing from quarter 1 itself. Uh we believe the potential the 54:25 54 minutes, 25 seconds 150 million deal is already signed John. Yeah, that's awarded. But John uh John has strong conviction and I'll let you speak about the future as well. More deals in the pipeline. 54:35 54 minutes, 35 seconds Yeah, we're I mean we're very well placed in the in the UK uh public sector space. Uh we've had significant 54:42 54 minutes, 42 seconds successes in engagements um you've seen one in Scotland re um not long ago. It was been in the press uh about the roll 54:50 54 minutes, 50 seconds out for the 111 services there. Um so our reputation across the public sector 54:56 54 minutes, 56 seconds is um very high and we have a number of uh opportunities at the moment many of 55:03 55 minutes, 3 seconds them in the 10 plus 10 to 100 million uh size. 55:07 55 minutes, 7 seconds So that's only one that yeah so that 150 million is signed and um and there are others that we think are locked and 55:15 55 minutes, 15 seconds loaded and we will uh be awarded those as well in addition to what's signed. 55:19 55 minutes, 19 seconds Yeah. And this would be again in UK public sector. Yes. 55:25 55 minutes, 25 seconds I mean as I said earlier John as John is confirmed in UK public sector plus the momentum across every vertical at this 55:33 55 minutes, 33 seconds point in time healthcare which as you saw grew 98% travel where these secular 55:40 55 minutes, 40 seconds tailwinds around one order one offer uh airport reconstruction as retail malls are secular tailwinds. they will not fade away despite what is happening. 55:51 55 minutes, 51 seconds Banking insurance is very very strong. 55:55 55 minutes, 55 seconds So sir are you trying to say framework deal would be not just restricted to UK it could be in other sectors also. 56:02 56 minutes, 2 seconds No framework deals only come from UK public sector in our case. 56:07 56 minutes, 7 seconds Okay. And just some clarity uh there is uh uh this is for Saurab the capeex 56:14 56 minutes, 14 seconds looks like there is a inflow in the cash flow statement. What has led to that? 56:20 56 minutes, 20 seconds And second the discontinued business 15 to 20 million run rate is on the quarterly basis or on a yearly basis. 56:31 56 minutes, 31 seconds So two parts. So one uh the the uh cash flow uh positive inflow that you have seen is because of the part of the 56:39 56 minutes, 39 seconds assets which were pertaining to the uh AI data center that we had built up in quarter 1. So part of those assets have 56:48 56 minutes, 48 seconds been sold uh they've been bought back by the client. So because of which there is a immediate inflow that has come to us 56:55 56 minutes, 55 seconds during the quarter. Uh I didn't get the second part of the question. the India discontinued business 15 20 million is 57:04 57 minutes, 4 seconds it a quarterly run rate or a yearly run rate it so it it was the it was the quarterly run rate for last couple of quarters and 57:12 57 minutes, 12 seconds uh we're now going to close that and not sign up such deals and which this 57:18 57 minutes, 18 seconds business had generated uh 40 $45 million last year out of which 40 million came in over last two quarters 57:26 57 minutes, 26 seconds and we can afford to do that just to make sure that we offer further color on this. We can afford to do that given the confidence that we have in our revenue 57:34 57 minutes, 34 seconds pipeline right now. And second, the fact that we think we will structurally and permanently reset the margin to the 57:41 57 minutes, 41 seconds levels that Sorup talked about. If we were stressed on revenues, if we were not confident of the material materiality 57:50 57 minutes, 50 seconds and uh if we weren't convinced around revenue pipeline, we could not have pulled the trigger. But we have because every business is firing. We feel very 57:58 57 minutes, 58 seconds good about revenue growth in FI27 and also because this would be another lever to make sure that what a business that 58:06 58 minutes, 6 seconds delivered 14.4% reported EBI bit in FI26 will on a standalone basis jump to 16 1.5 to 17%. 58:15 58 minutes, 15 seconds Yeah. Yeah. Got it. And just the last question uh SU on the minority interest in this quarter there is a quantum decline. Is it fair to assume we have 58:24 58 minutes, 24 seconds already taken 100% stake uh effective F526 end on the minority while charge on the P&L still reflects a bigger charge? 58:35 58 minutes, 35 seconds So is it fair to assume this entry could have happened at the end of the financial year which is 31st March 2026. 58:44 58 minutes, 44 seconds So uh going forward you will see that uh minority interest will come down from 53 54 kores in a in in one quarter to 58:53 58 minutes, 53 seconds almost like 9 odd kores. So the the reduction in minority interest is yet to happen. It will happen from quarter 1 59:01 59 minutes, 1 second onwards because the uh share allotment is happening. The record date of for the share allotment is 16th of May and hence 59:10 59 minutes, 10 seconds uh the the minority interest is being carried in the PNL up till that time. 59:16 59 minutes, 16 seconds Okay. But uh in 31st March it shows 143 cr versus 31st December 2025 it shows upwards of 2,000 cr. 59:26 59 minutes, 26 seconds We are looking at that in the balance sheet. If you look at the P&L, the minority interest is 539 because the DTL reversal has happened because the defer 59:34 59 minutes, 34 seconds tax liability reversal has happened. If you look at the P&L, the minority interest is 54 crores in quarter 4 which 59:41 59 minutes, 41 seconds will come down to 9 o which will give uh upside from a profit after tax perspective. But the number of shares will also go up uh when the allotment of 59:50 59 minutes, 50 seconds shares to signity shareholders will happen. But that will still give you an upside on the EPS front. That is more to come in next quarter. 59:56 59 minutes, 56 seconds Okay. So effective merger entry will happen from one Q. Yeah. Okay. Thanks. All the best. 1:00:03 1 hour, 3 seconds Thank you. We take our next question from Kavaljit Saluja of Kotuk Securities. Please go ahead. 1:00:12 1 hour, 12 seconds Hey. Hi. Uh you know great to see uh the margin focus and the free cash. So guidance. Uh just a few question uh just two to three questions. Uh the first 1:00:21 1 hour, 21 seconds question is for Sudh. Uh so when I look at the banking vertical the revenues of that vertical are stuck in that $120 to 1:00:28 1 hour, 28 seconds $123 million range now for five quarters now anecdotally from the market we keep on hearing about uh some of the clients 1:00:37 1 hour, 37 seconds uh in that uh banking set uh expanding their captives. So anything that is uh kind of hurting that uh you know 1:00:44 1 hour, 44 seconds portfolio of business which in fact used to be quite a big growth driver for you uh what what's uh slowed down our growth 1:00:52 1 hour, 52 seconds to only 12% for the current year Kawjet was a fact that uh one of our top three banking clients did not grow this year. 1:01:02 1 hour, 1 minute, 2 seconds uh that client account has now been transferred over to John's personal stewardship and we feel far more 1:01:10 1 hour, 1 minute, 10 seconds positive about it. It has nothing uh in our mind to do with the GCC movement. 1:01:16 1 hour, 1 minute, 16 seconds It's more to do with uh with uh a client specific issue that we had and we believe we've addressed but John would 1:01:22 1 hour, 1 minute, 22 seconds you like to address uh growth prospects of that client? 1:01:26 1 hour, 1 minute, 26 seconds Thank thank you sir. Um yeah, it's um we've completely refactored how we're that clients, how we're we're engaging. 1:01:34 1 hour, 1 minute, 34 seconds We've got a a brand new team and what we're also recognizing is that we have to disrupt 1:01:41 1 hour, 1 minute, 41 seconds in that in in in that account was we've got a large footprint and we're actually using our AI capabilities to actually 1:01:49 1 hour, 1 minute, 49 seconds completely transform how we engage, how we run and on the back of that we expect significant growth of the network. Well, it was one single large client specific 1:01:58 1 hour, 1 minute, 58 seconds issue. Kavaljit, it's reversed. So next year FI27 banking, you should see better numbers. Got that? Uh that's encouraging to hear. 1:02:06 1 hour, 2 minutes, 6 seconds The second question is on durability of margins. So it's great to see consolidated a bit margin going up to 1:02:13 1 hour, 2 minutes, 13 seconds 15%. Uh any thoughts on durability of it? And the context of this is when I look at the numbers uh let's say certain 1:02:22 1 hour, 2 minutes, 22 seconds numbers like uh sales and marketing headcount those dipped uh sharply. So I'm just trying to uh think through that 1:02:30 1 hour, 2 minutes, 30 seconds you know is this guidance uh Rajie for FI27 or there's a greater runway that you have uh in mind. We should be able 1:02:39 1 hour, 2 minutes, 39 seconds to improve FI28 over FI27. Obviously, not by this quantum but at least incrementally. Kawji, the 1:02:48 1 hour, 2 minutes, 48 seconds threshold that we've shared for FI27 will be the minimum that should be expected from us starting FI28 onwards. 1:02:55 1 hour, 2 minutes, 55 seconds Got that. Uh the third question is for sort of sort of I see a big decline in hedges for the quarter 1:03:04 1 hour, 3 minutes, 4 seconds uh you know on a sequential basis. is I think it's down materially. So anything uh you know in terms of a policy change that you have been able to push through? 1:03:13 1 hour, 3 minutes, 13 seconds Yeah. So we have taken a dollar loan of $550 million uh Kljit and it's gives us natural hedge and that loan has been 1:03:21 1 hour, 3 minutes, 21 seconds taken in India. So it is just to make sure that the uh cash flows and the balance sheet is aligned to the 1:03:29 1 hour, 3 minutes, 29 seconds liability that we have in the balance sheet and we're moving towards the balance sheet hedges and that is why you see a decline in the cash flow hedges. 1:03:38 1 hour, 3 minutes, 38 seconds Okay. I couldn't fully get that. Maybe I'll ask you separately. But sure, but you know sort of just on that let's 1:03:45 1 hour, 3 minutes, 45 seconds say loan point in itself US $550 million of loans is actually good the the headline interest rate is 4.5% but do you intend 1:03:54 1 hour, 3 minutes, 54 seconds to hedge that given that uh rupee has been on a depreciation spree and without that it might end up causing uh some 1:04:02 1 hour, 4 minutes, 2 seconds burn on your P&L in the process. So uh k that's where we get the natural hedge because our receivables are in dollars in India 1:04:10 1 hour, 4 minutes, 10 seconds and that's why the number of hedges have gone on because of a natural hedge because receivables are in dollars the payable is in dollars and that's why the number of hedges have gone on purely 1:04:18 1 hour, 4 minutes, 18 seconds because of a natural hedge that we've got right and final question for you s when I look at your P&L or when I look at the cash the hedges again the average rate 1:04:26 1 hour, 4 minutes, 26 seconds is 90 for $300 million just back revenue calculation at the current spot rate means that you are having a hedge is 1:04:34 1 hour, 4 minutes, 34 seconds also around 140 to 150 crores at this spot. Is that a correct assessment right now? 1:04:39 1 hour, 4 minutes, 39 seconds That is the correct assessment. That's the correct that's the mark to market and I guess uh one or more one or two quarters more there'll be losses and 1:04:47 1 hour, 4 minutes, 47 seconds then uh I think third quarter it starts tapering off and that's where we are. Yeah, you're right. Okay, cool. Thanks. All the best. 1:04:56 1 hour, 4 minutes, 56 seconds Thanks. 1:04:57 1 hour, 4 minutes, 57 seconds Thank you. Uh we take that as the last question for today. I now hand the call back to Mr. Sudhir Singh for closing comments. 1:05:05 1 hour, 5 minutes, 5 seconds Thank you Emma. Uh thank you ladies uh gentlemen uh for your time uh for your interest and for the insights that you've shared with us. As we said at the 1:05:13 1 hour, 5 minutes, 13 seconds outset, these are exciting times. These are heady times and we look forward to staying in touch and to delivering on the outlook that we've shared with you today. Thank you once again. 1:05:25 1 hour, 5 minutes, 25 seconds Thank you members of the management. Um on behalf of Poor Limited, that concludes today's call. Thank you for joining us. You may now click on the 1:05:33 1 hour, 5 minutes, 33 seconds leave icon to exit the meeting. Thank you for your participation. 1:05:37 1 hour, 5 minutes, 37 seconds [clears throat]