Digitide Solutions Limited — Q1 FY26

Digitide Solutions Ltd Q1 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=_YUU1RwyrOQ Published: 9 months ago

0:00 Ladies and gentlemen, good day and welcome to digitized solution Q1 FI26 earnings conference call. As a reminder, 0:08 8 seconds all participant lines for when the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should 0:18 18 seconds any during the conference call, please signal operator by pressing star then zero on attachment phone. Please note that this conference has been recorded. 0:28 28 seconds I now hand the conference over to Mr. 0:30 30 seconds Sel Paul from earns and thank you and over to you sir. 0:36 36 seconds Thank you. Good evening and welcome to the Q1 FI26 earnings call for digitiz. 0:42 42 seconds The company has published its results and has uploaded the impressive presentation on the exchanges and it's also available on the company's website www.digitide.com. 0:52 52 seconds From the company we have Mr. Guri Chahel, CEO and executive director and Mr. Suraj Prasad, the CFO, both of whom 1:00 1 minute would be anchoring the call. Before we start, a disclaimer. Some of the statements made in today's call may be looking in nature. Such forward-looking 1:08 1 minute, 8 seconds statements are subject to risks and uncertainties which would cause actual results to differ from those anticipated. Such statements are based on management's beliefs and assumptions 1:17 1 minute, 17 seconds made by information currently available to the management. Audiences are cautioned not to place undue reliance on these forward-looking statements while making the investment decisions. 1:27 1 minute, 27 seconds On that note, let me hand over the charge to Mr. Guri Chel, CEO and executive director of digital solutions. Over to you, sir. 1:36 1 minute, 36 seconds Thank you sir. A very good day to everyone and thank you for joining us 1:42 1 minute, 42 seconds for our quarter 1 call. Today I am joined by my colleague and our CFO Suet Prasad. 1:52 1 minute, 52 seconds Today's call will begin with a brief recap of our long-term strategy which we 1:59 1 minute, 59 seconds outlined during our last earnings call followed by a detailed review of 2:07 2 minutes, 7 seconds quarters financial and business performance. 2:13 2 minutes, 13 seconds We will then open the floor for your questions. 2:19 2 minutes, 19 seconds This quarter marks a bold new beginning for us. As of June 2025, we completed 2:29 2 minutes, 29 seconds our de merger from Quest Corp Limited and became an independent listed entity on 11th of June. 2:38 2 minutes, 38 seconds This move is just not a structural change. 2:43 2 minutes, 43 seconds It is a strategic leap forward to accelerate value creation, sharpen our 2:50 2 minutes, 50 seconds market focus, and build an enterprise that drives long-term 2:57 2 minutes, 57 seconds sustainable returns for all of our stakeholders. 3:02 3 minutes, 2 seconds A quick recap of our 3x3x3 strategy. 3:08 3 minutes, 8 seconds You know, our strategy is a bold road map to triple our revenues by financial 3:16 3 minutes, 16 seconds year 31. The core is simple. 3:23 3 minutes, 23 seconds Focus on three high potential verticals in each geography 3:30 3 minutes, 30 seconds powered by three integrated service lines. 3:35 3 minutes, 35 seconds This model allows us to drive scale, differentiation and profitability. 3:44 3 minutes, 44 seconds We have activated this strategy through five high impact levels and have already 3:51 3 minutes, 51 seconds made very good progress. The five levers are building an agile organization 4:00 4 minutes which means streamline streamlined structures with integrated end to end delivery teams 4:09 4 minutes, 9 seconds bringing on board experienced and domainrich leaders with proven transformation credentials. 4:22 4 minutes, 22 seconds A high performance culture fueled by innovation and continuous learning. 4:27 4 minutes, 27 seconds That's the third level. Fourth is automation and AI embedment across 4:35 4 minutes, 35 seconds service lines to boost client value and margin. And the fifth lever is 4:44 4 minutes, 44 seconds looking at a very strategic acquisition strategy and partnerships that enhance capability and market access. 4:54 4 minutes, 54 seconds Across these five, we've made significant progress and I did talk about that in our last earnings call as 5:01 5 minutes, 1 second well. In parallel, we started to reshape our portfolio last quarter. 5:10 5 minutes, 10 seconds What that means? It means exiting nonstrategic contracts, exiting low 5:18 5 minutes, 18 seconds margin contracts so that we can sharpen our focus and free up resources for high growth bets. 5:30 5 minutes, 30 seconds This realignment is on track to complete in the second quarter of this financial year and we 5:39 5 minutes, 39 seconds are already seeing some green shoots and early gains. 5:48 5 minutes, 48 seconds Now I'm going to pivot on our quarter one uh performance. 5:55 5 minutes, 55 seconds In quarter one, we continued to build momentum despite the macroeconomic turbulence and the ongoing portfolio transformation. 6:08 6 minutes, 8 seconds Consolidated revenues dropped 736 crores INR which is a 6% yearonyear 6:19 6 minutes, 19 seconds increase. Our domestic market contributed 64% of the total revenue and the international markets came in at 36%. 6:30 6 minutes, 30 seconds The EIA for the quarter stood at 83 crores which is a 11.2% 6:39 6 minutes, 39 seconds margin a modest increase over our Q4. 6:46 6 minutes, 46 seconds Our the significant piece is that our business AITA margin expanded by almost 6:52 6 minutes, 52 seconds 200 basis points. The overall AITA held firm as we invested deliberately in 7:00 7 minutes leadership solution innovation and go to market accelerations. 7:07 7 minutes, 7 seconds We believe these investments are designed to unlock significant operating 7:13 7 minutes, 13 seconds leverage in the coming quarters. Our pat for the quarter stood at 10 cringing 7:22 7 minutes, 22 seconds 150 basis point sequential improvement even after absorbing 7:30 7 minutes, 30 seconds one-time listing related exceptional costs of about 9 crores. 7:38 7 minutes, 38 seconds Coming to the segment performance, we acted swiftly to streamline and sharpen our business mix transitioning 7:46 7 minutes, 46 seconds away from non poor and inefficient segments and contracts. 7:52 7 minutes, 52 seconds Our DPM business posted 539 crores in revenue up 6% yearon year 8:02 8 minutes, 2 seconds even given the softness in the BFSI segment. 8:08 8 minutes, 8 seconds Margin rose to 17% at 255 BPS sequential rise reflecting 8:16 8 minutes, 16 seconds disciplined execution and improved operating leverage. 8:22 8 minutes, 22 seconds Our tech and digital segment generated 197 crores in revenue growing about 1% 8:29 8 minutes, 29 seconds sequentially and 4% year on year. Steady progress even as we realign the 8:35 8 minutes, 35 seconds portfolio. The margin rose 63% basis points sequentially. 8:44 8 minutes, 44 seconds Let me now give you a view onto the sales side. We began FY26 with strong 8:51 8 minutes, 51 seconds sales momentum securing 27 new client logos including a marquee cloud transformation engagement. 9:03 9 minutes, 3 seconds These wins validate our positioning and demonstrate client confidence in our differentiated offerings. 9:11 9 minutes, 11 seconds In this quarter, we also launched 15 new AI 9:17 9 minutes, 17 seconds uh pilots underscoring our commitment to AIEL delivery. 9:24 9 minutes, 24 seconds Our con total contract value for Cubans stood at 523 crores fueling future 9:32 9 minutes, 32 seconds revenue visibility and reinforcing our market traction. 9:38 9 minutes, 38 seconds Our customer centricity continues to shine through. 9:44 9 minutes, 44 seconds Our net promoter score jumped to 71.3, 9:51 9 minutes, 51 seconds one of the highest in the industry. and a significant improvement over last year. This is a strong testament to 10:01 10 minutes, 1 second deepening client relationships and superior service delivery. On the leadership and people front, we are very 10:10 10 minutes, 10 seconds proud to be recognized as a great place to work for six year in a row. In fact, 10:18 10 minutes, 18 seconds this time our ranking improved to 1919. 10:25 10 minutes, 25 seconds You know, this is not just a badge of honor. Actually, it's a reflection of our people first philosophy, 10:35 10 minutes, 35 seconds pocket leading discip people practices and relentless investment in culture, talent and leadership. 10:46 10 minutes, 46 seconds A key area of focus for us going forward is driving margin expansion and stronger return on equity. 10:56 10 minutes, 56 seconds We remain focused on unlocking higher margins and enhancing return on equity through five strategic levers. 11:06 11 minutes, 6 seconds The first is elevating our service mix with more tech and digital offerings that scale profitability. Second is 11:13 11 minutes, 13 seconds doubling down on international expansion to capture premium pricing and diversify revenue. Third is driving operational 11:21 11 minutes, 21 seconds excellence through automation optimization and process rigor. Fourth is applying discipline deal 11:28 11 minutes, 28 seconds qualification and structured pricing to preserve margins and ensure profitable growth. And fifth is strengthening 11:36 11 minutes, 36 seconds revenue assurance and cash conversion to maximize capital efficiency. We believe these levers from a high uh conviction 11:45 11 minutes, 45 seconds blueprint for delivering sustained AIA margin expansion and long-term RO improvements ensuring we create exceptional value for our shareholders. 11:56 11 minutes, 56 seconds In summary, we enter financial year 26 with a high quality order book, 12:03 12 minutes, 3 seconds energized teams and an unmatched clarity of purpose. Our conviction is strong. 12:11 12 minutes, 11 seconds Our execution is bold and our ambition is clear. We are not just building for growth. We are building to lead. 12:22 12 minutes, 22 seconds Thanks. Thank you to our employees, clients and stakeholders for your 12:29 12 minutes, 29 seconds unwavering support. Together we will make digitide a global leader in AI first tech enabled business solutions. 12:40 12 minutes, 40 seconds With that I'll hand it over to suraj for a deeper dive into our financials. Thank you. 12:50 12 minutes, 50 seconds Thank you Git. Uh good evening everyone. 12:53 12 minutes, 53 seconds Thank you for joining this call. I'm really pleased to share our financial results for the first quarter of FI26. 12:59 12 minutes, 59 seconds It also spent some time to outline our strategic progress since we last met and also subsequently our successful demer 13:06 13 minutes, 6 seconds and listing for the quarter. It laid a solid foundation for the start of the year reflecting a very strategic reset which we initiated and of a disciplined 13:14 13 minutes, 14 seconds approach to a sustainable growth even in this transformation. Our first quarter revenue touched 736 crores representing 13:21 13 minutes, 21 seconds a stable 4% sequential growth and a 6% year-on-year growth. This performance underscores our ability to maintain glob momentum despite challenging market 13:30 13 minutes, 30 seconds conditions and demonstrates our strength in our diversified portfolio during our ongoing transformation journey. AITA for this quarter is at an 83 crores 13:39 13 minutes, 39 seconds maintaining our margin at 11.2%. While as mentioned while the margin remains flat sequentially we particularly encouraged by the underlying improvement 13:47 13 minutes, 47 seconds in the business margins across both of our segments second digital as well as BPM. This vindicates our approach to the focus on the key businesses and also 13:55 13 minutes, 55 seconds revamped some of the non-core portfolio which we initiated last year and this also re underscores our operational excellence which means the NTS score 14:04 14 minutes, 4 seconds which we spoke about also underscores the fact that we have been able to deliver seamlessly even in this transition phase net profit for the 14:11 14 minutes, 11 seconds quarter was 10 crores a 1.3% tax margin there's a 150 basis points sequential improvement moving on to the segmental 14:19 14 minutes, 19 seconds updates starting with the BPM segment revenue was 539 crores.4% sequential growth and 6% year-on-year with a 17% 14:27 14 minutes, 27 seconds debit margin. The second margin expanded by 225 basis points which is driven primarily by the improved operating 14:34 14 minutes, 34 seconds leverage and the cost management even as we face some headwinds in our verticals and psychi etc and the continuing industry softening. Our tech digital 14:42 14 minutes, 42 seconds business generated 197 crores in revenue 7% quarteronquarter growth and 4% year-on-year. Tekken digital now 14:50 14 minutes, 50 seconds contributes 27% of our top line and fment margins is at 9.8%. 14:55 14 minutes, 55 seconds This broadb group also underscores the increase relevance of our offerings in our transformation journeys and the price price offering of second digital 15:03 15 minutes, 3 seconds ended with BPM. From a geography standpoint, our international portfolio now contributes to 36% of our revenue, 15:11 15 minutes, 11 seconds strengthening our position across all our growth markets. As good highlighted, our sales pipeline remains really healthy and a good mix of new logos and 15:18 15 minutes, 18 seconds new lines of business from our existing customers as well. I spent some time on the corporate updates. First DM, we strengthen our balance sheet that 15:27 15 minutes, 27 seconds remains to be our core focus. And as of quarter ended June, our gross debt stands at 46 crores. While on a net basis we are a net cash company at 34 15:35 15 minutes, 35 seconds crores net cash. I also want to highlight and the investors need to be aware of our working capital dynamics 15:42 15 minutes, 42 seconds within this quarter. They were expected that loaners not earning in collections due to the GST registrations and contract innovations across all of our 15:50 15 minutes, 50 seconds customer portfolio after de mer. This has resulted in a DSO increasing to 91 days during the quarter. However, what the good news is that we are already 15:58 15 minutes, 58 seconds seeing normalization and the DSO is tracking back to our historical levels. 16:02 16 minutes, 2 seconds uh strategy investments and exceptional items. Our Q100 results reflect the focus of investments in capability, people and offerings and power 16:10 16 minutes, 10 seconds transformation volume exceptional items as we've already pointed out is n is basically the additional expenses and cost towards the dum that I'm listing 16:19 16 minutes, 19 seconds which is a investment we wanted to do to partition for a long-term success. 16:24 16 minutes, 24 seconds Following our comprehensive portfolio review, we also successfully activate the exit on our select non-core and low efficient businesses. As guided earlier, 16:33 16 minutes, 33 seconds we expect this process to conclude by Q2 of F526. 16:37 16 minutes, 37 seconds In terms of long-term commitment and the focus investment, we are continuing our commitment towards long-term guidance and revenue on modern growth. Our 16:44 16 minutes, 44 seconds disability capital management supports progressive earnings per share and return on equity in the long-term basis and we still continue on the same guidance we have stated for FI31. 16:55 16 minutes, 55 seconds In closing our Q1 FI26 highlights our successful budget transition while maintaining operational stability, 17:02 17 minutes, 2 seconds improving profitability and also improving on our customer satisfaction. 17:06 17 minutes, 6 seconds to us. Therefore, it is really an entire team. Margin expansion and operational improvements will be driven by the strategic purpose to portfolio 17:15 17 minutes, 15 seconds which we uh we spoke about and this along with the cost optimization, the revenue assurance initiatives we have 17:22 17 minutes, 22 seconds pioneered now and the aled product offerings. We would continue to be on our capital allocation on the key sectors which we had guided earlier. I 17:31 17 minutes, 31 seconds thank all of you to join this call and really appreciate your all of your questions. I will hand it over to the moderator for for the questions. 17:40 17 minutes, 40 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask question may press 17:48 17 minutes, 48 seconds star N1 on the dash telephone. If you wish to remove yourself from question, you may press star N2. Participants are 17:57 17 minutes, 57 seconds requested to use sensors for asking a question. 18:01 18 minutes, 1 second Ladies and gentlemen, we'll wait for a moment while the question Q ascends. 18:17 18 minutes, 17 seconds The first question is from the line of Sanes Sha from KSA Security Private Limited. Please go ahead. 18:25 18 minutes, 25 seconds Good evening gentlemen. Uh gum sir thanks for wonderful explanation about the scorecard of the company and the 18:33 18 minutes, 33 seconds future guidelines what you sorted sir uh you know congratulating for score of 18:40 18 minutes, 40 seconds score I think it's very helpful for our company so my uh uh question was to just 18:48 18 minutes, 48 seconds understand about this CV uh total contract value which has fallen from 568 to 523 cr so how How how we can read that? How that can impact our company? 19:11 19 minutes, 11 seconds Hello. Guri, do you want to take that? 19:15 19 minutes, 15 seconds Oh, sorry. I think I was speaking on mute. Uh, Sanjay, thank you for your question and thank you for your kind 19:22 19 minutes, 22 seconds comments. So Sanjay uh uh the TCB in quarter 1 is at 523 versus 568. That's 19:31 19 minutes, 31 seconds that's a very marginal difference and in this industry typically the last quarter 19:38 19 minutes, 38 seconds is also uh a better quarter for bookings for obvious reasons. So I think uh the 19:45 19 minutes, 45 seconds momentum continues uh Sunday and you know there are always one or two deals that shift uh within the quarter. So I I 19:55 19 minutes, 55 seconds wouldn't read to it too much. We've had two backto-back quarters where our EN plus NN has been above 500 KES. So 20:04 20 minutes, 4 seconds that's giving us the confidence that our strategy is working uh and we we believe this momentum is going to continue. 20:15 20 minutes, 15 seconds Great. So my second question was regarding uh uh shrinking in our core business margin. We have been doing 20:23 20 minutes, 23 seconds pretty well in all digit tech but our uh core business of digit the margin has 20:29 20 minutes, 29 seconds come down uh to 11 11 and a half%. uh and and I understand you explain about the noncore business exit. So so from 20:38 20 minutes, 38 seconds from Q2 onwards or further more quarters how we see this uh rising margin and and 20:45 20 minutes, 45 seconds even topline not compromising on the top line and uh coming back to the 14 15% uh digitized margin. Yeah. 20:55 20 minutes, 55 seconds Yeah. So, so Sanjay uh you know in our last earnings call uh we we did explain 21:04 21 minutes, 4 seconds that as we set up a standalone company coming out of you know the press cor there are certain expenses that we have 21:12 21 minutes, 12 seconds to employ to create a setup a uh you know standup standalone company. Second, we've been making very deliberate 21:21 21 minutes, 21 seconds investments in leadership and beefing up our offerings. So we did say that versus 21:28 21 minutes, 28 seconds the last financial year we should expect 150 to 100 basis points dip and we had 21:37 21 minutes, 37 seconds also said that because of the restructuring of the contracts and optimization of the portfolio the first 21:45 21 minutes, 45 seconds half of the year which is quarter one and quarter two we should see some impact of that optimization and restructuring. 21:54 21 minutes, 54 seconds We are very confident that from the second half we will start to claw back and I did talk about the five levers 22:03 22 minutes, 3 seconds which we have already started to focus on. Uh so we are working on those five 22:10 22 minutes, 10 seconds fundamental parameters so that we can get to the guidance that we had given the the last quarter and and we are committed and confident about that. 22:22 22 minutes, 22 seconds Great. So my last question uh it is regarding your uh last presentation where where I saw that uh we we have a 22:30 22 minutes, 30 seconds competitive position and mode in IT BPM services. Uh can you highlight upon 22:37 22 minutes, 37 seconds competitiveness and even mode how you see that how competitive we are and what are the modes you see road ahead? Thank you. 22:45 22 minutes, 45 seconds Yeah. So, so Sanjay again I I must compliment you uh that you know you you paid attention to every word we 22:53 22 minutes, 53 seconds highlighted last time. Uh so the mode that I had referred to was in our BPM 23:01 23 minutes, 1 second business. See in our BPM business uh majority of our business is platform you 23:08 23 minutes, 8 seconds know which gives us stickiness in the contracts which gives us stickiness 23:16 23 minutes, 16 seconds or differentiation versus our competition and like I mentioned we are actually further enhancing that by 23:25 23 minutes, 25 seconds embedding AI. In fact, last time I gave the example of our collections platform 23:32 23 minutes, 32 seconds dig collect and how we are embedding AI to make it more differentiated and bring 23:40 23 minutes, 40 seconds further stickiness. The other thing that we are very consciously doing uh Sanjay 23:47 23 minutes, 47 seconds in the new contracts we are bundling technology underlying technology with the services. It enables us in two way. 23:56 23 minutes, 56 seconds one it obviously creates entry barriers for our competition but at the same time 24:03 24 minutes, 3 seconds it gives us the flexibility to execute on technology transformation more 24:10 24 minutes, 10 seconds seamlessly. So those are the modes that we are so I gave you two example the modes that we already have and how we 24:18 24 minutes, 18 seconds are strengthening them and second what kind of uh new modes we are creating. 24:25 24 minutes, 25 seconds Thank you sir. Thanks for explanation. Very helpful and good luck to you sir. Thank you sir. 24:33 24 minutes, 33 seconds Thank you. 24:35 24 minutes, 35 seconds The next question is from the line of Dil Shiri from Crown Capital. Please go ahead. 24:44 24 minutes, 44 seconds Hello. Uh good evening. So I hope I'm audible. Hello. Yes, you are all. 24:50 24 minutes, 50 seconds Yeah. Hi. Hi. Uh firstly sir congratulations on a great performance. 24:54 24 minutes, 54 seconds Uh so just wanted to know like uh I wanted to know our overall way of our growth like I think we want to go 3x 25:02 25 minutes, 2 seconds FI31. So FI26 I think could be a year of consolidation where you know we just deemers and you know we are just you 25:10 25 minutes, 10 seconds know being restructuring a lot of our business but how do we see everything going FY27 like u you know so what kind 25:19 25 minutes, 19 seconds of growth can we expect next year I'm assuming this year will be a very flattish year compared to last year so just wanted to you know gather your 25:27 25 minutes, 27 seconds thoughts on it sir so so that's a great question uh So in 25:34 25 minutes, 34 seconds the current financial year I I don't believe we'll be flat. We will definitely be in the upper upper 25:41 25 minutes, 41 seconds quartile of the industry growth. Now coming to the long term you know if you look at our historical data organically we have grown at about 13 to 14% kagger. 25:55 25 minutes, 55 seconds So we believe to be a billiond dollar enterprise our organic growth should be 26:02 26 minutes, 2 seconds in the 16 to 17% kagger and then the incremental 150 to 200 26:09 26 minutes, 9 seconds million uh to the billion dollar will come through a acquisition that we plan 26:16 26 minutes, 16 seconds to do you know so to summarize three things I don't expect FI 26 to be 26:24 26 minutes, 24 seconds flagged In fact this quarter also we've grown 6% year on year. So we will definitely by the time we end the year we will be in the upper quadrant of the 26:33 26 minutes, 33 seconds industry growth. Number one. Number two looking forward our organic growth should be in the 16 to 17 ballpark and 26:42 26 minutes, 42 seconds then we will get the incremental 2 to 3% uh through the acquisitions and we are not waiting for the acquisitions in the 26:51 26 minutes, 51 seconds third or fourth year. We have actually started working on that journey as we speak. 26:58 26 minutes, 58 seconds Okay. Okay. That helps a lot sir. Uh so uh and so like if you mean to say like 27:06 27 minutes, 6 seconds we'll be on the upper quarter that would be around 11 12% or how would we look at it sir? 27:11 27 minutes, 11 seconds So we definitely want to end the year in double digit close. You're absolutely right. 27:17 27 minutes, 17 seconds Oh okay. Okay. Okay. That's really fair sir. And so we if you're going to target 11 to 12% growth. So I understand you're 27:24 27 minutes, 24 seconds saying ITA can be impacted the 150 basis points but uh with a higher you know operating leverage and maybe a lesser 27:32 27 minutes, 32 seconds you know these exceptional costs. So overall you can have like kind of better pat margins going forward because like 27:39 27 minutes, 39 seconds H2 can be significantly better in terms of margins in terms compared to H1. Would that also track? 27:47 27 minutes, 47 seconds Yes question. So, so we expect our margins to start climbing from the 27:54 27 minutes, 54 seconds second half of this year and um I mean of course higher revenue is one of the 28:01 28 minutes, 1 second levels and I did talk of the other four levels which were going to execute and that's why I said we are both committed 28:10 28 minutes, 10 seconds and confident of a margin extension in the second half of the year. 28:16 28 minutes, 16 seconds Oh okay. Okay. Okay. Fair enough. And I just wanted to understand like how is the macro environment right now like 28:23 28 minutes, 23 seconds even like in the both domestic and export market like is it uh you know very favorable in terms of demand or are we having to fight for every contract 28:31 28 minutes, 31 seconds what's the competitive intensity any kind of color on how you know uh the businesses are going would be really helpful sir 28:40 28 minutes, 40 seconds so uh you know in our context you will have to look through two lenses you you 28:47 28 minutes, 47 seconds know uh since 64% of our revenues come from India so there will be an India lens and then there will be a North 28:56 28 minutes, 56 seconds America lens see from the India lens perspective the market is still strong there has been a little bit of a 29:03 29 minutes, 3 seconds softness in the financial services however we believe that you know things 29:10 29 minutes, 10 seconds will start uh to pick up there u and and we've not seen a really big impact act 29:17 29 minutes, 17 seconds in our domestic uh business. On the international side where majority of our tech and digital business comes from the 29:25 29 minutes, 25 seconds international market despite the optimization that we are doing in our portfolio, we have still clocked both 29:32 29 minutes, 32 seconds sequential and yearon-year growth. And the reason we've been able to do that is we've been very clearly focused on the 29:39 29 minutes, 39 seconds industry segments that are growing faster than than the overall industry. 29:45 29 minutes, 45 seconds Number one. Number two, our offerings, you know, which are a bit differentiated. To give you an example, 29:54 29 minutes, 54 seconds you know, in the insurance, the PNC space, you know, our our strategy is 30:02 30 minutes, 2 seconds based on the two product offering that we have one in the data space and second an end toend platform. have as insurance 30:12 30 minutes, 12 seconds companies want to get more on the AI bandwagon, they have to get their 30:19 30 minutes, 19 seconds underlying data structures in place that is helping us. So because we are focused 30:26 30 minutes, 26 seconds on on industries that are growing faster and service clients that are growing faster, we've been able to hold steady 30:36 30 minutes, 36 seconds and actually grow despite you know some of the headwinds which have impacted the business of RPS. 30:44 30 minutes, 44 seconds Oh okay. Okay. That that's great to know sir. Uh yeah that's it from my side. All the best sir. Thank you so much. 30:51 30 minutes, 51 seconds Thank you Jan. Thank you. 30:55 30 minutes, 55 seconds The next question is from the line of Joti Singh from Aryan Capital Markets Limited. Please go ahead. 31:03 31 minutes, 3 seconds Yeah, thank you for the opportunity. 31:07 31 minutes, 7 seconds Like I I track all sides. So apart from digitide I also wanted to know uh some 31:13 31 minutes, 13 seconds of the uh overall view and guidance if you can give and uh for the digit I just 31:20 31 minutes, 20 seconds wanted to understand that uh 44% of revenue from BFS and insurance so how are you derisking vertical concentration 31:30 31 minutes, 30 seconds amid macro uncertainty in financial services and also if you can share more on the AWS transformation deal it size 31:38 31 minutes, 38 seconds and it group and duration does this indicate a shift toward larger and multi-year digital transformation mandates? 31:46 31 minutes, 46 seconds Yeah. So Ji first of all thank you for your uh questions. So you had two questions. One is how are we derisking 31:55 31 minutes, 55 seconds the concentration in financial services and insurance and second you wanted to know about the AWS transformation deal 32:02 32 minutes, 2 seconds and and is it that a sign of the times to come? Okay. uh on the BFSI you know 32:09 32 minutes, 9 seconds look uh the banking financial services and insurance is the biggest spend in 32:15 32 minutes, 15 seconds the industry you know I mean that that size of that market makes it very very attractive 32:24 32 minutes, 24 seconds uh power um d-risking is from three perspectives one is geography 32:32 32 minutes, 32 seconds second is uh the platform embedment And third is the kind of services that 32:41 32 minutes, 41 seconds we are creating a fresh you know so look u um because we've got exposure to a 32:49 32 minutes, 49 seconds large exposure to both India and US so our revenues are not dependent on on one 32:58 32 minutes, 58 seconds economy and what's happening there so that's why you know last couple of years if you see our growth has being uh where 33:07 33 minutes, 7 seconds it has been that's so there is a bit of a geography diversification there. 33:12 33 minutes, 12 seconds Second is uh like in the banking and financial services a significant part of 33:19 33 minutes, 19 seconds our business is collections which is platform driven you know so which again gives us insulation stickiness like like 33:27 33 minutes, 27 seconds I explained and we are further enhancing that third is because we are so laser focused on data analytics and AI and 33:37 33 minutes, 37 seconds that is a service line which is going across and the financial services, insurance, banking is always an early 33:45 33 minutes, 45 seconds adopter of technology. So that is again helping us you know uh tide over the 33:52 33 minutes, 52 seconds challenges that the overall segment softness uh uh brings with it. So those are the three ways we are doing it. Now 34:00 34 minutes coming to your second question uh look as we our stated goal is to grow 34:08 34 minutes, 8 seconds our tech and digital business to 40% of our overall revenues you know uh by FYI 34:14 34 minutes, 14 seconds 31 in that one of the big bets we are taking is application and infrastructure 34:21 34 minutes, 21 seconds modernization and that's where the AWS you know story fits in so hypers scale this application and infrastructure modernization will be hyperscaler. 34:34 34 minutes, 34 seconds The deal the deal that we have picked up is a multi-year three-year deal. In that deal, we are actually helping them 34:43 34 minutes, 43 seconds migrate, modernize, you know, and we will also manage uh the assets on an ongoing 34:52 34 minutes, 52 seconds basis. So, yes, from that regard, it's a truly transformational deal. 34:59 34 minutes, 59 seconds It's a testament to the investments that we have made in our leadership both on the sales and the operation side. And in 35:09 35 minutes, 9 seconds fact, as I look into our pipeline today, we have several other hyperscaler 35:17 35 minutes, 17 seconds leads. So yes, we will see more and more hyperscaler be. we will see more larger 35:27 35 minutes, 27 seconds transformational multi-year deals. Uh J. Okay. Thank you so much. 35:37 35 minutes, 37 seconds Thank you. 35:39 35 minutes, 39 seconds The next question is from the line of Gita Chin from 7 is famous. Please go ahead. 35:47 35 minutes, 47 seconds Hello. Hello. I didn't get your name. Yes. 35:53 35 minutes, 53 seconds Yes. This is Garvita from seven islands CMS. I have one question. Uh apart from 9 crores of one time cost which we have 36:01 36 minutes, 1 second incurred because of D modul is there any oneoff cost in the expenses because I can see that in the unallocated corporate expenses the there is a huge 36:10 36 minutes, 10 seconds jump. So could you explain that please? 36:15 36 minutes, 15 seconds So thank you. Yes you are right. We did have a 9 crore one by um because of the demo merger which sued talk about that. 36:27 36 minutes, 27 seconds Other than that there is not a significant expense. I mean other than obviously like I said you know we've 36:34 36 minutes, 34 seconds been very consciously making investments in uh beefing up our leadership 36:41 36 minutes, 41 seconds enhancing our offerings and also some of the uh you know other investments we are making on the operations uh side. Yeah. 36:53 36 minutes, 53 seconds Oh, if you want to please. 36:56 36 minutes, 56 seconds Yes, maybe what alluded to. So, there are one timers which are primarily related to the listing and the merger 37:03 37 minutes, 3 seconds per se. But the remaining expenses are increased mostly due to the normal group which we had already guided to which is the independent list entity cost. So 37:12 37 minutes, 12 seconds this uh also you need to uh keep in mind the entire transformation of enterprise stack the tech stack the offerings all 37:20 37 minutes, 20 seconds of the investments are there what you see in the corporate uh expenses going up is all towards leadership capabilities and market points there's 37:27 37 minutes, 27 seconds no one time invest these are direct investments so you will look forward to getting the benefits very soon 37:35 37 minutes, 35 seconds all right I get it thank you so much that's all I want to ask thank Thank you. 37:46 37 minutes, 46 seconds Thank you. 37:49 37 minutes, 49 seconds The next question is from the line of Ark Daramshi from RN Capital. Please go ahead. 37:58 37 minutes, 58 seconds Hi. Uh good evening. Thanks for the opportunity. Am I audible? 38:05 38 minutes, 5 seconds Yes, Sit, you are audible. Please go ahead. 38:08 38 minutes, 8 seconds Yeah. So I had two questions. One is the uh segment a beta margin expansion that 38:14 38 minutes, 14 seconds we have seen. Um can you just tell us uh what are the key drivers uh for the 100 38:22 38 minutes, 22 seconds basis plus expansion across BPM and 60 basis expansion across tech and digital and uh what is the steady state margin 38:31 38 minutes, 31 seconds which is going to be sustainable for both the verticals. And my second question is uh 38:38 38 minutes, 38 seconds uh the uh DSO that we told that have increased to 91 days. Uh in last year also we told that we are putting I mean 38:46 38 minutes, 46 seconds we are going to ensure that we kind of streamline that and there will be 5 to 7% improvement by the end of FY 26. So 38:55 38 minutes, 55 seconds are we sticking with the same guidance that by by the end of FY 26 DSO will be uh better uh or do we see there is some 39:04 39 minutes, 4 seconds more pain left and we may see uh DSO days further worsening or how is that? 39:12 39 minutes, 12 seconds Yeah, you want to take that uh thanks for your questions. So Ankit 39:20 39 minutes, 20 seconds on the first one uh the margin expansion in the segments 39:26 39 minutes, 26 seconds is uh attributed to the operational rigor that our teams have been driving 39:35 39 minutes, 35 seconds you know and a very uh focused approach on driving cost 39:41 39 minutes, 41 seconds efficiency. So that's what you see on the DSO you know in this quarter uh it's 39:49 39 minutes, 49 seconds an exception and the reason it's an exception is as we went from um part of 39:55 39 minutes, 55 seconds quest to an independent listed company we had to moate all our contracts while 40:03 40 minutes, 3 seconds we have been extremely diligent about contract ownation and we had a task 40:11 40 minutes, 11 seconds force set up for that however some of the processes for example GST registration re-registration in states 40:19 40 minutes, 19 seconds some customers have to mandatorily do a contract review so those things have actually had an impact so we believe 40:28 40 minutes, 28 seconds this is a one-time impact because of the contractations from the long-term we are committed to 40:36 40 minutes, 36 seconds be driving improvement in our DSM so from next quarter You should see the movement already shown. 40:47 40 minutes, 47 seconds Okay. Uh thank you. And uh what will be the steady state margins which we are eyeing for both the verticals 40:54 40 minutes, 54 seconds uh for BPM? Would it be in the range of somewhere around 20 20 to 22% uh kind of an margin? 41:04 41 minutes, 4 seconds So overall maybe uh I can take that go ahead. 41:08 41 minutes, 8 seconds Yeah. So uh Anit so we have uh given an overall guidance for the long-term 531 as well as the near-term guidance for 41:16 41 minutes, 16 seconds the current year. So in uh in this current year what we had also mentioned in the last call was that where we have these investments pretty much two 41:25 41 minutes, 25 seconds activities are happening in the first half of the year. One is the deep investment in people capabilities and offerings and also the onetime cost towards the new listed entity and so on. 41:35 41 minutes, 35 seconds And third is towards our margin improvement plan from second half of year. So as we spoke earlier also the segment margins will follow industry 41:44 41 minutes, 44 seconds trend in the exact separate lines of business we expect to be back to the same levels from next year onwards but this year from the second half itself we 41:53 41 minutes, 53 seconds are already seeing that margin up happening. I wouldn't want to give a specific guidance of the number of margin margin for each of the segment 42:00 42 minutes but at an overall less there the margin out 100 to 150 basis point overall margin which is including the corporate 42:09 42 minutes, 9 seconds investments as well as the onetime cost of a listed company so thereafter it should be a margin up and you know expect any slowness in that given the 42:18 42 minutes, 18 seconds fact that one of the levers which kit also spoke about is having a high amount of focus on the international market as 42:25 42 minutes, 25 seconds well as the second digit market. Both of these are the from the current levels but we'll have to wait for a couple of quarters. There is from Q3 onwards you will start seeing that uptick. 42:35 42 minutes, 35 seconds Got it. Thank you. 42:39 42 minutes, 39 seconds Thank you. I remind all the participants you may press star in to ask question. 42:47 42 minutes, 47 seconds The next question is from the line of Zaki Abaz Maser an individual investor. Please go ahead. 42:57 42 minutes, 57 seconds Uh good evening and thanks for the uh opportunity. Uh as I remember sir last 43:03 43 minutes, 3 seconds time we had in the last call um uh you had said that you'll end the year at 43:10 43 minutes, 10 seconds around 12 12ish to 14ish% um decrease in your um overall growth. U now we are in 43:19 43 minutes, 19 seconds the in the in the midst of the second quarter also. Do you see this happening sir? I mean would you be fairly confident that you will close the year 43:28 43 minutes, 28 seconds uh at whatever guidance you gave in the first quarter considering the international scenario. 43:36 43 minutes, 36 seconds Uh so thank you for your question sir I didn't get your name sir 43:43 43 minutes, 43 seconds sorry a k i zaki z a k i zaki mas okay thank you thank you Mr. Exactly. 43:51 43 minutes, 51 seconds So, uh I mean I think um one of the earlier touchprint had also 43:57 43 minutes, 57 seconds asked this question. Um um look u we are as I said by the time we exit the year 44:05 44 minutes, 5 seconds we will be in the upper uh quartile of the industry growth early double digits. 44:12 44 minutes, 12 seconds uh we see that logability based on both the momentum in the sales that we have had and the pipeline that we have today 44:22 44 minutes, 22 seconds you know uh to your point on the macroeconomic of course we don't have a 44:29 44 minutes, 29 seconds control on that but from from what we know today we are we are fairly 44:35 44 minutes, 35 seconds confident that we will uh be in that uh uh cohort of growth 44:43 44 minutes, 43 seconds Fantastic. And um coming to my next question sir, we do almost twothird of our business in India. Uh and which is 44:53 44 minutes, 53 seconds of course currently a much more stabilizer business. So would wouldn't you want to continue this 23 India 45:01 45 minutes, 1 second versus one/ird international business because maybe India gives a better stability to your companies. 45:10 45 minutes, 10 seconds more thoughts on this. 45:13 45 minutes, 13 seconds So absolutely 64% of our business comes from India and that's why I said there is in our inherent business model there 45:22 45 minutes, 22 seconds is a risk diversification because of the geography and the Indian economy continues to do well. So we we are 45:30 45 minutes, 30 seconds that's why we we are very very confident that you know that we will be able uh to 45:37 45 minutes, 37 seconds grow at the level that we've uh planned for. Having said that, uh 36% of our 45:44 45 minutes, 44 seconds revenues come from the international markets and the macroeconomic pressures there have been 45:52 45 minutes, 52 seconds little more stronger as we all know. But given given the industries that we operate in and the service lines that we 46:01 46 minutes, 1 second are focused in, we've been able to absorb you know u those inefficiencies. 46:08 46 minutes, 8 seconds Um and that's that's again is giving us the confident and that's why last quarter we made that commitment that by 46:16 46 minutes, 16 seconds the year end and then again I re that that as we are exiting the year we will be in the upper quarters. 46:25 46 minutes, 25 seconds No sir uh what I meant to ask is last last call you said that in the longer term you would want 50% of your business 46:32 46 minutes, 32 seconds to come from international market. Uh so would would you stand by that or would you feel that maybe twothirds out of India is a better model to work on? 46:45 46 minutes, 45 seconds Okay. Okay. Sorry I misunderstood your question. U look yes in the long term we 46:52 46 minutes, 52 seconds we made we gave two uh guidances. One we said 40% of our business will be tech 47:00 47 minutes and digital which is 26% today 37% today and second is we said that our 47:08 47 minutes, 8 seconds international and the domestic business will be 50/50 right 47:15 47 minutes, 15 seconds so we still stand by that uh as we have to expand our margins the 47:24 47 minutes, 24 seconds margin expansion will come from higher end work from international geographies where we get premium. Even in that you 47:34 47 minutes, 34 seconds know our domestic business will be growing. Our domest we are not defocusing on our domestic business 47:42 47 minutes, 42 seconds our domestic business will continue to grow. It's it's an area of focus for us today. It will continue to be so. It's 47:52 47 minutes, 52 seconds just that our international business we expect it to grow a little faster. So that's what we have you know planned for Mr. 48:03 48 minutes, 3 seconds Thank you sir and best wishes to you and the team sir. Thank you. 48:09 48 minutes, 9 seconds Thank you. A reminder to all the participants you may press star and one to ask question. 48:17 48 minutes, 17 seconds The next question is from the line of Diniri from Crown Capital. Please go ahead. 48:25 48 minutes, 25 seconds Hello. Thank you so much for allowing me another question sir. Uh so just wanted to know like uh all our exceptional 48:32 48 minutes, 32 seconds one-off items have been done in this quarter or are there some pending for the next quarter? Sir 48:40 48 minutes, 40 seconds you want to take that? I'll take that here. So uh we would have uh some bit of exception items in Q2 as well and this 48:47 48 minutes, 47 seconds is based on our long-term contract of some professional services along with the de merger but that will be quite in line with the current levels and we 48:55 48 minutes, 55 seconds don't expect significant uh one-off items after that. 48:59 48 minutes, 59 seconds So okay after the after Q2 there will be no any oneoff right and this one could be in the lines of Q1 roughly 49:08 49 minutes, 8 seconds right? Yeah. Yeah. Okay. Okay. That's it from my side. Thank you so much. 49:15 49 minutes, 15 seconds Thank you. The next question is from the line of man. Patil from Patil and investments. Please go ahead. 49:28 49 minutes, 28 seconds You're little feeble. Man, if you can be closer to the speaker or if you can be in the hand please. 49:36 49 minutes, 36 seconds Uh yeah. Now slightly better. Yes. Thank you. Yeah. 49:42 49 minutes, 42 seconds So I have just one question. What will be the steady state uh CFO to emba conversion ratio like for long term 49:54 49 minutes, 54 seconds uh the steady state will try to come to a steady state which we were there in the last year. So if you look at in the past we were almost at around 60% OCF 50:03 50 minutes, 3 seconds period. Now with this investments uh etc going in and this working capital uh flux which we have in the first quarter 50:11 50 minutes, 11 seconds we have to come out of that and probably give you a much more smooth. So you will see that coming back to the same steady state over the quarter three to quarter 50:18 50 minutes, 18 seconds four. So we this is a a very steady business with a lot of deep relationships it's it's so quantity we 50:26 50 minutes, 26 seconds never had a big challenge. Now we getting into more deeper tech and digital operation it should only get better than that. So that we still 50:34 50 minutes, 34 seconds continue to believe that the 60 odd% will continue in the future as well. Okay sir. Thank you very much. 50:42 50 minutes, 42 seconds Thank you madam. Thank you. 50:47 50 minutes, 47 seconds A reminder to all the participants you may press in to ask question. 51:15 51 minutes, 15 seconds As there are no further questions from the participants, I now hand the conference over to Mr. Gnet Chahan for closing comments. Over to you, sir. 51:24 51 minutes, 24 seconds Thank you. And again you know thank you for joining us. Like I said we are very 51:30 51 minutes, 30 seconds very excited about the financial year 26. You know we are entering with a high 51:37 51 minutes, 37 seconds quality order book energized teams and unmatched caddy of purpose. Uh so once again I want to thank our employees 51:45 51 minutes, 45 seconds investors and stakeholders and everyone who joined us today. Thank you very much. We'll see you soon. 51:55 51 minutes, 55 seconds Thank you on behalf of Digitize Solutions. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.