Mphasis Ltd — Q4 FY26

Mphasis Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=bBUaLDPBgW0 Published: 13 days ago

0:02 2 seconds Good morning ladies and gentlemen. 0:04 4 seconds Thanks for joining the emphasis Q4 FI 2026 earnings conference call. I am NRA your moderator for the day. We have with 0:13 13 seconds us today Mr. Nitan Rakkesh CEO of emphasis Mr. Arvind Vishnuatan CFO and Mr. Vene Kalangara head of investor relations. 0:25 25 seconds As a reminder, there is a webcast link in the call and invite mail that the emphasis management team will be referring to today. The same 0:34 34 seconds presentation is also available on the emphasis website www.emphasis.com in the investor section under financial 0:42 42 seconds and filing as well as both BSE and NSE websites. Requested to have the presentation handy. As a reminder, all 0:52 52 seconds participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:59 59 seconds Should you need assistance during this conference call, please signal an operator by pressing star and zero on your touchstone phone. Please note that this conference is being recorded. 1:11 1 minute, 11 seconds Before we begin, I would like to state that some of the statements made in today's discussion may be forward-looking in nature and may involve certain risk and uncertainties. 1:20 1 minute, 20 seconds A detailed statement in this regard is available in the Q4 results release that was sent out to all of you earlier. 1:28 1 minute, 28 seconds I now hand over the floor to Mr. Nitan to begin the proceedings of this call. Thank you and over to you Nathan. 1:36 1 minute, 36 seconds Thank you, Nero, and thank you all for joining us today. As we close another financial year of delivering meaningful value to our clients while strengthening 1:44 1 minute, 44 seconds our AI first capabilities, I want to take a moment to thank all of you for your continued support and partnership. 1:50 1 minute, 50 seconds This marks my 10th year at emphasis and as I look ahead to the next phase of the journey, it's been a privilege to lead the organization. I remain deeply 1:58 1 minute, 58 seconds committed to building on this momentum together. 2:01 2 minutes, 1 second In my recent conversations with seuite leaders across industries and geographies, one theme stands out clearly. AI data 2:11 2 minutes, 11 seconds and technology platforms are no longer viewed as standalone initiatives. They are becoming the foundation of enterprise transformation. 2:19 2 minutes, 19 seconds Increasingly recognized that the value of true AI lies not in isolated use cases but in but in systematically embedding intelligence at scale across 2:27 2 minutes, 27 seconds applications, processes, and decision flows. 2:30 2 minutes, 30 seconds This shift is enabling enterprises to rearchitect themselves around what we describe as agentic AI systems that are not only predictive but capable of 2:38 2 minutes, 38 seconds driving decisions and actions in a governed autonomous manner. 2:43 2 minutes, 43 seconds We are also seeing a decisive move from experimentation to scale deployment. 2:48 2 minutes, 48 seconds Enterprises are now focused on operationalizing AI, automating end-to-end workflows, accelerating modernization efforts, and embedding [clears throat] intelligence directly 2:56 2 minutes, 56 seconds into day-to-day operations. Importantly, this is being done with explanability, governance, security, and accountability built in by design. 3:05 3 minutes, 5 seconds Another consistent priority is the need to drive structural efficiency in a self-funded way. 3:11 3 minutes, 11 seconds Enterprises are leveraging technology platforms to automate manual processes, streamline operations, and reduce unit costs, freeing up capacity to capacity 3:19 3 minutes, 19 seconds to reinvest in AI, cloud, and digital innovation while maintaining financial discipline. 3:25 3 minutes, 25 seconds At the same time, AI is increasingly being viewed not just as a productivity lever, but as a growth engine. It is enabling new business models, enhancing 3:33 3 minutes, 33 seconds customer experiences, deepening client relationships, and unlocking new monetization opportunities alongside efficiency gains. 3:41 3 minutes, 41 seconds Clients are also prioritizing modernization and simplification of complex technology estates. This includes consolidating fragmented 3:48 3 minutes, 48 seconds systems into cohesive scalable architectures and establishing 3:51 3 minutes, 51 seconds [clears throat] 3:52 3 minutes, 52 seconds unified high-quality data foundations where consumer enterprise and operational data can be contextualized, governed and activated end to end. 4:01 4 minutes, 1 second Overall, what clients are looking for is platform execution that simplifies and shrinks the core, accelerate their adoption at scale, and deliver sustainable productivity and agility. 4:12 4 minutes, 12 seconds This is what will position them to compete effectively in an environment defined by constant change and volatility. 4:20 4 minutes, 20 seconds In this context, clients are increasingly seeking platforms that can orchestrate AI and execution across the enterprise. Moving beyond isolated deployments to coordinated end-to-end transformation. 4:31 4 minutes, 31 seconds Our new IP platform plays a critical role in in enabling this shift. It accelerates the orchestration of modernization, automation and AIdriven 4:38 4 minutes, 38 seconds transformation, helping organizations move decisively from experimentation to production. More importantly, new IP provides the foundational layer of 4:47 4 minutes, 47 seconds context, traceability, and intelligence across data, processes, and decisions, ensuring that AI outcomes are explainable, trusted, and actionable at 4:55 4 minutes, 55 seconds scale. While we continue to build differentiated assets and IP across IT value stream, our strategy is evolving beyond itcentric transformation. We're 5:03 5 minutes, 3 seconds building a stack. We're building a stack that enables true business and operational transformation where AI directly impacts our enterprises great 5:11 5 minutes, 11 seconds value. Recent research from Mckenzian company highlights a powerful and somewhat counterintuitive insight. 5:16 5 minutes, 16 seconds Nearly 80% of AIdriven transformation will occur outside of the IT function. 5:21 5 minutes, 21 seconds Historically, enterprise transformation has largely meant technology transformation. Cloud migrations, ERP upgrades, cyber security modernization 5:29 5 minutes, 29 seconds and and data platform investments. These are predominantly ITLE initiatives with business functions acting as internal stakeholders. AI fundamentally changes this paradigm. 5:40 5 minutes, 40 seconds AI does not primarily create value by upgrading systems. It creates value by upgrading work. It transforms how decisions are made, how customers are 5:48 5 minutes, 48 seconds served, how revenue is generated, and how costs are managed. We are seeing this play out across domains such as supply chain optimization, revenue growth management, pricing and 5:57 5 minutes, 57 seconds promotions as well as demand and inventory planning. Similarly, in areas like underwriting modernization and payments transformation, AI is driving 6:04 6 minutes, 4 seconds measurable business impact, improving underwriting throughput, reducing fraud and lowering loss ratios. In many cases, 6:11 6 minutes, 11 seconds this value is unlocked without replacing core systems, but by layering contextdriven orchestration and decisioning on top of existing tax 6:18 6 minutes, 18 seconds stacks. This does not diminish the importance of it. On the contrary, it elevates it. It becomes a critical 6:25 6 minutes, 25 seconds enabler providing secure architecture, robust data foundations, integration frameworks and governance. However, ownership of value creation increasingly 6:33 6 minutes, 33 seconds shifts to business functions where AIdriven decisions directly translate into measurable outcomes. 6:41 6 minutes, 41 seconds The buildout of our AI stack has been significantly accelerated through the acquisition of theory and practice and its decision intelligence platform continuum AI. By integrating Continum AI 6:50 6 minutes, 50 seconds into architecture, we are extending our capabilities beyond system modernization into enterprise decision transformation. 6:57 6 minutes, 57 seconds Continum AI is a modular and scalable decision intelligence platform designed to support real-time high enterprise decision-m across domains such as demand 7:05 7 minutes, 5 seconds forecasting, pricing, marketing, and supply chain. What differentiates Continuum AI is its ability to move beyond traditional analytics. It spans 7:13 7 minutes, 13 seconds the full spectrum from descriptive insights to predictive modeling to prescriptive optimization, [clears throat] enabling enterprises to harmonize intelligence across these 7:21 7 minutes, 21 seconds functions while preserving the complexity of consumer behavior and business context. As a decision intelligence layer, Continum AI 7:30 7 minutes, 30 seconds leverages causal modeling, optimization, and behavioral economics to translate business objectives into actionable intervention strategies. It accelerates 7:38 7 minutes, 38 seconds time to value through pre-built machine learning models and reusable model ontologies across key areas such as revenue optimization, marketing 7:45 7 minutes, 45 seconds [clears throat] and promotion. With this acquisition, emphasis brings together the critical layers required to drive deliver AI at scale from enterprise memory and data foundations to 7:54 7 minutes, 54 seconds decisioning and execution enabling measurable outcomes. Importantly, we've also onboarded a set of tier one enterprise clients in the CPG and retail 8:01 8 minutes, 1 second sectors who have already validated the platform in production environments. 8:05 8 minutes, 5 seconds We're equally excited to welcome a highly specialized team of AI practitioners and domain experts who will accelerate our product roadmap and further strengthen our ability to deliver differentiated client outcomes. 8:17 8 minutes, 17 seconds Turning to our pipeline, we are seeing strong validation of our AI P strategy. 8:21 8 minutes, 21 seconds Sustained investments in AI, including our new IP platform, have expanded our pipeline to 2.6 times its initial size 8:28 8 minutes, 28 seconds since the launch of emphasis.ai, reaching an all-time high at the end of March 26. Today 69% of our pipeline is AILED reflecting a structural shift in 8:37 8 minutes, 37 seconds client demand toward AIdriven transformation. This growth is driven by Neo IPled solutions embedded across our offerings and supported by a differentiated fullstack AI approach. 8:49 8 minutes, 49 seconds Importantly, this pipeline strength is translating into tangible outcomes. Over the past year, we've achieved our highest ever annual net new TCV of over 8:58 8 minutes, 58 seconds $2.1 billion, representing a 68% increase year-on-year. Our pipeline growth remains broad-based and well balanced across multiple dimensions. 9:08 9 minutes, 8 seconds Overall pipeline increased 38% yearonear with strong momentum across verticals. 9:12 9 minutes, 12 seconds BFS segment led with an 89% increase complemented by continued expansion across nonBFS sectors as well. We are also seeing healthy distribution across 9:21 9 minutes, 21 seconds deal sizes. Large deals with CCV greater than 20 million grew by 40% while midsize and smaller deals below 20 million increased by 34%. This 9:29 9 minutes, 29 seconds underscores that Aadriven demand is pervasive across enterprises of all scales and deals of all sizes. From a solution perspective, modernization and 9:38 9 minutes, 38 seconds web archetypes have driven the strongest pipeline growth, reflecting early CJ opportunities as clients rearchitect their tech and operating models. 9:47 9 minutes, 47 seconds As mentioned earlier, our net new TCV for the year reached $2.1 billion or highest our highest ever. We continued this momentum in the quarter delivering 9:55 9 minutes, 55 seconds 47 million in net new PCV including four large large deals. 10:00 10 minutes 64% of our wins were AIEL further reinforcing the central law role AI is playing in driving client demand and deal conversion. 10:07 10 minutes, 7 seconds Moving to our revenue performance by segment for F26 revenue came in at 463 million USD reflecting a growth of 2.5% 10:16 10 minutes, 16 seconds quarteron quarter and 7.1% yearonear in constant currencies. For the full year, revenues grew 6.7% in constant currency terms. 10:26 10 minutes, 26 seconds A direct business continues to be the primary driver of growth. Direct revenues for the quarter were 456 million, crossing an annualized run rate 10:33 10 minutes, 33 seconds of 1.8 billion, contributing to 98.6% of total revenue. Direct revenue grew 3.3% sequentially and 9.2% yine in constant 10:42 10 minutes, 42 seconds currency during the quarter and 8.7% for the full year. We expect this momentum to continue supported by strong deal conversion and increasing traction in 10:51 10 minutes, 51 seconds savingsled AIdriven transformation programs. 10:54 10 minutes, 54 seconds From a geographic perspective, our anchor market, the US delivered strong performance with direct growth of 3.6% sequentially and 10.7% yearonear driven by rampups in recent large field events. 11:07 11 minutes, 7 seconds Mia continued to show healthy sequential momentum growing 6.9% QQ while Y growth was8%. This was impacted by revenue 11:14 11 minutes, 14 seconds structuring for a large global client in the logistics vertical. In the rest of the world, direct revenues grew 2.6% YI in constant currency supported by our 11:22 11 minutes, 22 seconds expanding presence in GCC markets and increasing participation in globally structured deals. 11:28 11 minutes, 28 seconds From a service line perspective, enterprise apps remains our core growth engine, contributing 76.5% of total revenue. Direct revenue in this segment 11:36 11 minutes, 36 seconds grew 5.1% sequentially and 14.8% 8% YI in constant currency terms driven again by ALE modernization programs. The idea 11:45 11 minutes, 45 seconds service line declined 21.6% on Y reflecting our strategic decision to scale down our non-core ATM business and reallocate towards higher value AL opportunities. 11:55 11 minutes, 55 seconds Moving to our vertical performance, our BFS and insurance verticals continue to lead growth driven by strong execution and increasing adoption of AL 12:04 12 minutes, 4 seconds transformation programs. At the overall company level, AFS grew 5.8% 8% quarteron quarter and 15% year-on-year 12:11 12 minutes, 11 seconds in Q4 FI26 growth was partially moderated by the ramp down of non-strategic ATM business 12:18 12 minutes, 18 seconds within direct BFS delivered stronger performance to growing 6.4% sequentially and 17.4% YI in constant currency terms 12:26 12 minutes, 26 seconds for the full year direct BFS grew 18.6% 6% supported by wallet share expansion in large existing accounts and strong conversion of new wins as well as new 12:35 12 minutes, 35 seconds logos. In insurance momentum remained robust with 7.2% sequential growth and 46.5% y growth in direct revenues and 12:44 12 minutes, 44 seconds constant currency terms. This reflects increasing traction of AIdriven decisioning use cases across underwriting claims and risk operations. 12:53 12 minutes, 53 seconds The TMT vertical saw some near-term softness due to project completions and delayed decision cycles lead to macro and geopertical uncertainty. We we 13:02 13 minutes, 2 seconds expect this segment to return to sequential growth in the coming quarters. Other segment grew 5.3% sequentially in constant currency terms 13:09 13 minutes, 9 seconds driven by recent large scale wins in healthcare. Overall growth remains broad-based and aligned with expectations with ALA transformation 13:17 13 minutes, 17 seconds increasingly acting as a primary driver across verticles. 13:21 13 minutes, 21 seconds Our client pyramid continues to strengthen, particularly across the middle tiers, reflecting both deeper relationships and successful scaling of new wins. 13:30 13 minutes, 30 seconds Year on year, we've added one new client in 100 plus million category, one client in the 75 million plus category, two clients in the 50 million plus category, 13:38 13 minutes, 38 seconds and four clients in the 20 million plus category on a net new basis. We in addition, we also added a new client in the 150 million plus category this 13:45 13 minutes, 45 seconds quarter. This broad-based expansion is driven by consistent wallet share gains in existing accounts combined with disciplined ramp up of large event wins. 13:54 13 minutes, 54 seconds On a last 12-month basis, our top 10 accounts grew 13.7% year-over-year and 3.6% sequentially. The next 20 account grew 15.2% YI and 3.3% sequentially. 14:06 14 minutes, 6 seconds Notably, our top client has outperformed company average growth for the third consecutive quarter in Q4. We are proactively engaging these clients with 14:14 14 minutes, 14 seconds ALET propositions enabling us to not only expand existing engagements but also participate in emerging spend areas such as SDLC transformation AI 14:23 14 minutes, 23 seconds infrastructure buildouts and and modernization of foundational tech stacks. 14:28 14 minutes, 28 seconds Turning to our financial performance to continue to execute on our strategy of maintaining margins within our stated 14:36 14 minutes, 36 seconds band while investing for growth. Q4 FY26 EIT margin expanded by 20 basis points sequentially to 15.4% while fularbit margin remained stable at 15.3%. 14:48 14 minutes, 48 seconds Operating profit for the quarter grew 7.2% QQ and 15% year yearonear to INR 6525 14:57 14 minutes, 57 seconds million. EPS increased 8.6% sequentially and 13.7% YI to 26.7 rupees. Operating 15:05 15 minutes, 5 seconds cash flow for the quarter was 21 million USD temporarily impacted by approximately 17 million due to system related delays in customer remittances. 15:12 15 minutes, 12 seconds These collections were realized in early April and adjusting for this normalized operating cash flow for the quarter was approximately $38 million. 15:22 15 minutes, 22 seconds U4 reflected a clear acceleration in growth momentum supported by discipline execution. [clears throat] We deliver 2.5% sequential and 7.1% Y growth in 15:31 15 minutes, 31 seconds constant currency alongside a strong operating margin of 15.4%. 15:37 15 minutes, 37 seconds The red business now comprising 98.6% of total revenue grew 9.2% Y in constant currency terms. We also delivered strong 15:44 15 minutes, 44 seconds PCBs of phone and $7 million in the quarter with the majority driven by AI propositions. 15:50 15 minutes, 50 seconds Across FI26, our AI first strategy drove significant pipeline expansion of 38% YI with 69% of the pipeline now AI. 15:59 15 minutes, 59 seconds Consistent conversion [clears throat] of this pipeline has resulted in record net new PCV of $2.12 billion representing a 68% growth over prior years. This 16:08 16 minutes, 8 seconds performance reflects the strength of our NEO IPled differentiation and our ability to deliver IPLE A solutions at scale. We also strengthen our client 16:16 16 minutes, 16 seconds client pyramid adding four new clients in the 21 20 plus million category, two clients in the 50 million plus category and one client each in the 75 million 16:25 16 minutes, 25 seconds and 100 million plus categories. As a result, we exceeded our initial guidance of better than industry growth delivering more than 2x industry growth 16:33 16 minutes, 33 seconds while maintaining margins within a target stated band of 14.75 to 15.75%. 16:39 16 minutes, 39 seconds I'm also pleased to share that the board has recommended a dividend of 62 rupees per share for FI26. 16:46 16 minutes, 46 seconds Coming to the outlook, we'll continue to strengthen our competitive differentiation through sustained investments in our NEO platform with the integration of theory and practice 16:54 16 minutes, 54 seconds accelerating the buildout of our AI stack, particularly in decision intelligence. 16:59 16 minutes, 59 seconds We remain focused on maintaining strong pipeline momentum and deal conversion building on FI26's record PCV performance as we enter FI27. 17:07 17 minutes, 7 seconds Despite ongoing macro uncertainty, we expect to deliver high singledigit to low double digit growth supported by discipline execution and increasing demand for a transformation in FI27. 17:19 17 minutes, 19 seconds From a margin perspective, we remain committed to operating within our target band of 14.75 to 15.75 while continuing to invest in platforms and capabilities. 17:28 17 minutes, 28 seconds We also expect to maintain an operating cash flow to net income conversion ratio of approximately 80%. With that, I will open the call for questions. Operator, over to you. 17:38 17 minutes, 38 seconds Thank you very much. We will now begin with the question and answer session. 17:42 17 minutes, 42 seconds Anyone who wishes to ask a question may press star and one on their telephone. 17:48 17 minutes, 48 seconds If you wish to remove yourself from the question queue, you may press R and two. 17:53 17 minutes, 53 seconds Participants are requested to use handsets while asking a question. 17:58 17 minutes, 58 seconds Ladies and gentlemen, we will wait for a moment while the question Q assembles. 18:04 18 minutes, 4 seconds Participants, you may press star and one to ask a question. 18:13 18 minutes, 13 seconds The first question is from the line of Nitan Padunaban from Invest. Please go ahead. 18:19 18 minutes, 19 seconds Yeah. Hi, good morning. Uh, congrats on the quarter. Uh, couple of things. So, first a very high level question and 18:26 18 minutes, 26 seconds then there's a nuanced one. Uh so you mentioned 80% of the transformation 18:32 18 minutes, 32 seconds happens outside of it and u obviously that requires budgets for clients at the 18:40 18 minutes, 40 seconds end of the day and are you how are clients actually sort of uh managing this uh there are thoughts around uh 18:48 18 minutes, 48 seconds whether it and offs budgets can be combined but there are nuances to this even happening. Uh so just your thoughts 18:56 18 minutes, 56 seconds on when the budget unlocks can really happen and uh you know if you're thinking about the top 100 enterprises 19:05 19 minutes, 5 seconds uh where are they in their thought processes on this and your thoughts on the same as well and the second is 19:12 19 minutes, 12 seconds uh primarily on the working capital intensity obviously we are in a phase where uh you have the BFSI which is growing strongly 19:22 19 minutes, 22 seconds they have increasing budgets uh and you're growing pretty strongly there as well. So obviously conversion can be lower. uh but uh in that context uh when 19:32 19 minutes, 32 seconds we look forward while you mentioned 80% uh sort of conversion uh if that 19:39 19 minutes, 39 seconds includes the 16 million which sort of passed out uh from uh last year to this year which is FI27 19:47 19 minutes, 47 seconds uh what do you how should one think about uh uh how are you thinking about free cash flow uh conversion in the near 19:56 19 minutes, 56 seconds term and How should we think about uh that sort of normalizing longer term? In that context also this contract assets 20:05 20 minutes, 5 seconds moving to DSO and when does uh what should be a ideal DSO because obviously DSO will come off over a period of time. 20:14 20 minutes, 14 seconds Uh what should be the ideal DSO one should think about? Yeah, those are the two questions. Thank you. 20:22 20 minutes, 22 seconds Thanks Nathan. I'll take the first one and Arvin will address the second one. I think uh if I rephrase the question you asked, I think it's a little bit around 20:29 20 minutes, 29 seconds the budgets and the propensity or decision- making at a client side on how they make decisions on where to invest. 20:36 20 minutes, 36 seconds So if I think about where the client sentiment is, I don't think we have seen 20:43 20 minutes, 43 seconds any major cuts in pure tech budgets, but that's only part of the story. 20:50 20 minutes, 50 seconds There's definitely a sense of urgency to act at the enterprise side given the pace of innovation. Some of it is 20:57 20 minutes, 57 seconds obviously to do with applying that innovation to get efficient and drive business outcomes. But some of it is also very defensive. You think about you know the whole anthropic mythos case. 21:07 21 minutes, 7 seconds They will have to invest to make sure that they're able to defend and protect their business and their data. So the way I would think about it is that there 21:16 21 minutes, 16 seconds is urgency to act. What we seeing is rep prioritization or prioritization where where spend is continuing to shift towards a programs with clear ROI but clients are going to be selective. 21:26 21 minutes, 26 seconds However, they're not pulling back on spends for a good ROI the business is willing to fund even if it wasn't in the tech budget because the reason it is 21:35 21 minutes, 35 seconds important to understand that 80% of the AI adoption will happen outside of tech basically means that many of these programs will be able to drive a certain 21:43 21 minutes, 43 seconds business outcome that the business wants. I think I gave many examples of that in in the script. Revenue optimization, marketing and promotion, supply chain optimization, demand 21:51 21 minutes, 51 seconds forecasting. Even underwriting modernization is not a cost play or a budget play. It's a revenue expansion play. More throughput means you actually 21:59 21 minutes, 59 seconds get more, you know, underwrite more more business because you're not constrained by underwriting capacity. So to me the budget discussion of of this sector our 22:09 22 minutes, 9 seconds industry being on the cost side of the equation I think we have an opportunity to break out of the cost side and actually play across the entire spectrum of an enterprise transformation 22:18 22 minutes, 18 seconds playbook. So hopefully that gives you a sense. U having said that we haven't really seen 100 enterprises coming into 22:27 22 minutes, 27 seconds 2026 with by saying I'm going to cut my tax span. Anyways the tech span has gone up below single digits. Some of it will be repurposed. Some of a lot of it is going towards building the stack for AI. 22:39 22 minutes, 39 seconds That is definitely an area we're playing in very strongly. And there is a very large spend pocket that we will also see opening up which will again be outside 22:47 22 minutes, 47 seconds of the typical annual tech budget because those will be large infrastructure capex driven spends because they have to all modernize their 22:54 22 minutes, 54 seconds their compute environment if they have to compute AI stacks. So watch out for those that's probably one of the biggest 23:02 23 minutes, 2 seconds opportunities that that we will see opening up over the next two to three years. We are already having significant you know momentum in that segment from a 23:11 23 minutes, 11 seconds deal making perspective. Arvin you can answer the second one. So Nin lot of questions on the working capital right. 23:18 23 minutes, 18 seconds Let me start from the receivable side. 23:21 23 minutes, 21 seconds If you look at from a receivable side things have actually you know DSO improved by a day. Uh you've seen 23:28 23 minutes, 28 seconds current receivables go up. uh but you've also seen contract assets come down which means basically the the the 23:37 23 minutes, 37 seconds unbuild on fixed price prior to milestone has actually moved to a situation where the customers have accepted the milestone and to us from a 23:45 23 minutes, 45 seconds DSO standpoint we anyway include the contract assets and you would also 24:09 24 minutes, 9 seconds We have lost him. 25:30 25 minutes, 30 seconds Ladies and gentlemen, please stay connected while we return the management back to the corn. Please stay connected. 25:45 25 minutes, 45 seconds [music] 25:52 25 minutes, 52 seconds [music] 25:58 25 minutes, 58 seconds [music] 26:04 26 minutes, 4 seconds [music] 26:09 26 minutes, 9 seconds [music] 26:17 26 minutes, 17 seconds [music] 26:25 26 minutes, 25 seconds Super. [music] [music] Here we are. 26:36 26 minutes, 36 seconds [music] 26:41 26 minutes, 41 seconds [music] 26:48 26 minutes, 48 seconds [music] 26:54 26 minutes, 54 seconds [music] 26:59 26 minutes, 59 seconds [music] 27:01 27 minutes, 1 second We love you. 27:05 27 minutes, 5 seconds [music] 27:12 27 minutes, 12 seconds [music] 27:14 27 minutes, 14 seconds What you do? 27:18 27 minutes, 18 seconds [music] 27:25 27 minutes, 25 seconds [music] 27:30 27 minutes, 30 seconds [music] 27:35 27 minutes, 35 seconds [music] 28:20 28 minutes, 20 seconds Nathan, can you hear us? 28:22 28 minutes, 22 seconds Okay, let's go to the next question. You know, we will I'm sure we'll get the same question again. Sure, sir. 28:31 28 minutes, 31 seconds The next question is from the line of Sepa from Equesta Securities. Please go ahead. 28:37 28 minutes, 37 seconds Yeah, thanks thanks for the opportunity and congrats on a good set of execution and the increasing order book y uh nitin 28:45 28 minutes, 45 seconds first question is if I look at your deal pipeline uh 26% has been towards modernization 28:53 28 minutes, 53 seconds so we do agree AI is accelerating this side of the spend but most vendors are turning bullish on this side so how one 29:02 29 minutes, 2 seconds can differentiate to win the wallet share in this site. 29:10 29 minutes, 10 seconds Good question. I think uh I probably use the word NEOIP and the AI plat platform approach quite a few times in my script 29:17 29 minutes, 17 seconds and I think that truly is the ability to create a modernization road map executed 29:24 29 minutes, 24 seconds at scale with very faster a very fast time to market compared to a typical modernization program that would have 29:31 29 minutes, 31 seconds taken us years. We are now you know managing to deliver these in a fraction of the time and of course uh much higher 29:38 29 minutes, 38 seconds complexity which means the certainty of outcome is high as well. So the biggest differentiation really comes out of the stack that we've built and continued 29:46 29 minutes, 46 seconds investment in deploying that stack at enterprise clients and delivering value that comes out of that stack and that I 29:53 29 minutes, 53 seconds think is a is not an easy catchup to make if someone starts making that investment. Of course, there are third party tools and assets available. You 30:02 30 minutes, 2 seconds can stitch a solution together. But I think we we've had a pretty significant uh prime tomarket advantage given that we started on this journey years ago and 30:11 30 minutes, 11 seconds as of you know uh even in 2024 we we launched the first set of our IP assets and we codified all of that into a 30:20 30 minutes, 20 seconds platform in called new IP last year. So just staying ahead, building on the stack and now with the recent 30:27 30 minutes, 27 seconds acquisition, we believe we've created another you know uh comparative advantage because now we're extending the stack to go beyond just systems 30:34 30 minutes, 34 seconds modernization. Second thing to note is uh you can take an approach of IT modernization or application modernization or legacy modernization 30:42 30 minutes, 42 seconds but if you think about modernization in a broader construct you can actually start doing business transformation using the same stack as well. I think I gave the example of underwriting um you 30:51 30 minutes, 51 seconds know in my script and I think that that to us is quite a big breakthrough if you manage to break through into some of those conversations where you're driving more than just tech transformation. 31:01 31 minutes, 1 second Okay. And just to follow up uh is it fair to assume this side of the spend is not that sensitive to the macro 31:09 31 minutes, 9 seconds headwinds uh because if you want to scale up the AI adoption this spend is necessary. uh if yes then why for the 31:18 31 minutes, 18 seconds sector as a whole the growth is not turning net accurative uh rather than it's been diluted. So people are asking 31:25 31 minutes, 25 seconds more savings to have the budget on this side while spending they are more cautious in terms of the lease. 31:35 31 minutes, 35 seconds So I'm I cannot tell you why the rest of the industry is not tapping into the spend but I can tell you that we are definitely tapping into that spend. But to tap into the spend where you're 31:44 31 minutes, 44 seconds enabling AI at scale, you need to have the capability to actually deliver that to the customer. And you also have to have the maturity of constructing 31:51 31 minutes, 51 seconds commercial models that are linked to outcomes. And I think a lot of the commentary in the sector has been focused a lot on things like productivitybacks and and AI deflation. 32:02 32 minutes, 2 seconds Um I mean I can address those as well. 32:04 32 minutes, 4 seconds If you if you really think about in AI and the impact that is having on uh you 32:10 32 minutes, 10 seconds know on on u businesses you can play two ways. You can either say I have increased productivity gains versus last 32:18 32 minutes, 18 seconds year and hence I need to pass them all back to the customer particularly in areas like testing or maintenance. 32:23 32 minutes, 23 seconds However, in our case, the pass through to clients is very measured and structured because in most cases, we are partially passing it, but we're also 32:31 32 minutes, 31 seconds using the meaningful portion of the spend of the saves in asking the client to reinvest into the expanded scope, additional automation, additional AI 32:39 32 minutes, 39 seconds layers and modernization work. So, I think it's a question of not just having the the ability to to tap into the spend, but also having the ability to 32:46 32 minutes, 46 seconds structure a deal construct and having the ability to demonstrate to the client that you can deliver on that construct. 32:51 32 minutes, 51 seconds So I think it's a little bit of a again a differentiation related question. I mean I wish I could answer it for the rest of the industry but you know sitting where I'm sitting in my chair I 32:59 32 minutes, 59 seconds can only tell you what emphasis is doing. Okay. Okay. And last question to Arvin. 33:05 33 minutes, 5 seconds Uh if I look at the EIT margin excluding the hedge gain or loss it has expanded 33:11 33 minutes, 11 seconds by 80 bits in the FI26 but that is not reflected in the reported margin because of the hedge losses. So how to model 33:20 33 minutes, 20 seconds this considering the rupee is depreciating? 33:28 33 minutes, 28 seconds So you know sip the you know our hedgebook still continues for the next four quarters. So I think you will see 33:36 33 minutes, 36 seconds continued impact of hedge losses in at least the first half of FI27 and then it'll kind of you know taper 33:44 33 minutes, 44 seconds down a bit. So you would still see this headwind in FI27 right we will not see the full benefit of the rupee depreciation 33:53 33 minutes, 53 seconds and typically you know what happens right by the time you know the hedge losses come off somewhere you know there are adjustments in the business that 34:01 34 minutes, 1 second kind of consumes this but you know I think you will you will see some of it reflect into in terms of lesser hedge losses only in H2 and not in H1. 34:13 34 minutes, 13 seconds Okay. Okay. Thanks. 34:19 34 minutes, 19 seconds Thank you very much. Next question is from the line of Single from Nama. Please go ahead. 34:26 34 minutes, 26 seconds Yeah. Hi. Uh thanks for taking my question uh and congrats uh to the emphasis team for a solid results. Uh 34:34 34 minutes, 34 seconds Nathan uh a couple of questions from my side. uh the BFSI vertical uh reported very strong growth in this quarter and for the full year also I think uh the 34:43 34 minutes, 43 seconds vertical has reported very strong growth shielding the company from the kind of a uh uh the sharp reduction that we saw in 34:50 34 minutes, 50 seconds the logistics revenue sitting where we are today at the end of FI26 and given the pipeline that you see and the dealings that we have done uh do you 34:58 34 minutes, 58 seconds believe this uh growth momentum of BFSI can be sustained in FI27 do you believe uh the kind of growth 17% kind of growth 35:06 35 minutes, 6 seconds that we have seen would be a little difficult to kind of pull off again uh in coming quarters. Any headwinds or tailwinds that you're looking at the vertical would be really helpful. 35:18 35 minutes, 18 seconds So I think uh firstly we are very very happy that we managed to grow our BFS business in healthy double digits and our insurance business actually grew 35:26 35 minutes, 26 seconds even more than that. Uh in both of those have been fairly broad-based. I think you you saw the client pyramid and the activity you know there are clients that 35:34 35 minutes, 34 seconds sit in those segments that are driving that growth as well. Bulk of this growth is uh driven through inaccount action deal making and ramping up those deals. 35:44 35 minutes, 44 seconds I think the fact that we sold a large you know chunk of deals in Q1 definitely helped you know accelerate the growth towards the second half of the year and 35:51 35 minutes, 51 seconds especially in this segment. If you look at the the pipeline that I that I showed in the u in the deck where we talk about 36:01 36 minutes, 1 second BFS and nonBFS, you can see that there's a pretty rapid build up of pipeline in BFS even at this after this kind of year. So for us to be able to grow to 36:10 36 minutes, 10 seconds the aspiration and the guidance that we are showing, we have to make sure that BFS and insurance both continue to play a role there and hence we are fairly 36:18 36 minutes, 18 seconds confident that we'll be able to to sustain the growth momentum. Now whether the sector the the segment continues to grow at the same rate or faster than 36:26 36 minutes, 26 seconds FI26 remains to be seen based on how we convert those deals and how quickly we convert them to revenue. But given the large client you know segment is very 36:36 36 minutes, 36 seconds stable. Again you've seen pretty strong growth in top 10 and next 20 clients. I think at this point there's nothing to call out that gives us any caution especially in in these sectors. 36:46 36 minutes, 46 seconds Got it. Got it. Got it. Really heartening to hear that. uh on the logistics vertical uh we know basically we took a big hit in the Q1 of this year 36:53 36 minutes, 53 seconds itself. Uh but for the past three quarters also the vertical has been hovering at around that $24 million mark 37:00 37 minutes kind of a number. uh any uh uh thing that you can probably work uh maybe you can probably take us through uh any uh outlook on this vertical what exactly 37:08 37 minutes, 8 seconds are we looking at any chances for it to basically support the kind looking for of course will be much 37:15 37 minutes, 15 seconds higher chance the positive momentum building up in the logistics vertical in FI27 37:23 37 minutes, 23 seconds so I think I can I can give you the answer in two ways uh firstly you know yes there's been a churn internally within the vertical because we've had to add new customers. 37:34 37 minutes, 34 seconds We had to win deals outside of the of the ramp downs and some of that is the reason why the business actually stabilized in the second half of the 37:42 37 minutes, 42 seconds year. Given the size of the vertigo, we can actually make it swing pretty quickly with one or two large deals. So 37:49 37 minutes, 49 seconds for me it's the glass half full type of discussion where instead of focusing on whether the growth will come back and whether it will grow faster or slower 37:56 37 minutes, 56 seconds than the other segments just given the size I think it has the propensity to to show an impact with one or two wins we have high quality logos we've built them 38:04 38 minutes, 4 seconds up in addition to logistics there is transportation airlines and uh railroads in there so quality of customers is not 38:11 38 minutes, 11 seconds a problem uh we definitely have the opportunity to continue to to uh make deals in those segments And we do expect 38:18 38 minutes, 18 seconds this to to gradually recover through F27. 38:23 38 minutes, 23 seconds Right. Right. Any sectoral headwinds from the war in Iran that is uh might be uh uh visible in initial conversations 38:31 38 minutes, 31 seconds with maybe airlines or any other companies or nothing as of now. 38:36 38 minutes, 36 seconds I think at this point given the bulk of the businesses in the US, we haven't seen a lot of crossber impact. Yes, of course, we're keeping an eye on what 38:44 38 minutes, 44 seconds happens to oil prices purely based on the sensitivities in transportation and uh airlines, but too early to say 38:51 38 minutes, 51 seconds whether it's it's going to have a a long-term impact on FI27 or not. I think deal making is continuing to happen. We are still sitting on large deals in the 39:00 39 minutes pipeline and hopefully we'll manage to close them, you know, with the same propensity that we expect. 39:07 39 minutes, 7 seconds Thank you, Vibore. May I request to rejoin the queue for a follow-up question? 39:14 39 minutes, 14 seconds The next question is from the line of Deep Ma from MK Global. Please go ahead. 39:19 39 minutes, 19 seconds Yeah. Uh Nathan just to continue to some extent prior question. Just want to get your sense on the diversification part. 39:26 39 minutes, 26 seconds BFS is doing very well for us. Rest of the BFS even pipeline growth is slower than BFS. So just want to understand to 39:33 39 minutes, 33 seconds let's say get more diversified, more sustainable long-term growth. what kind of investment you envisage and plan in 39:41 39 minutes, 41 seconds terms of leadership capability pipeline buildup in the remaining part of nonBFS business that is question one uh second 39:49 39 minutes, 49 seconds question is OCF to profit we indicated 80%age but if I look your last 10 year average is always about 100%age kind of number now it is obviously step 39:57 39 minutes, 57 seconds difference than what we used to operate at so if you can provide broad thought process around it whether the new way of working require uh relatively weaker 40:06 40 minutes, 6 seconds case conversion Uh so broad thought process on that part and last question is everything as a platform that pipeline also grown 40:15 40 minutes, 15 seconds significantly whether it is linked with the cannibalization of ERP kind of offerings. Thank you and your overall thought process on it. 40:26 40 minutes, 26 seconds Sure. Sure. I'll answer the first and the third and then Arvin can throw more light on the FCF and the outlook going 40:32 40 minutes, 32 seconds forward. uh I think on diversification given that a large portion of the business deal making today is happening 40:40 40 minutes, 40 seconds with a propositions you have to [clears throat] understand that most forwardleaning company compan companies in in in enterprise segment will be 40:48 40 minutes, 48 seconds banks uh and to some extent consumer companies uh as well as any consumerf facing companies including uh retail CPG 40:56 40 minutes, 56 seconds and uh telecom so we will we will go make deals where deals are to be made there are obviously certain other 41:03 41 minutes, 3 seconds segments that will that either will be fast followers or slow followers and we'll continue to take propositions to them as well. So I think to me the color 41:11 41 minutes, 11 seconds of money is just the same. Uh you know we will continue to operate the business with a with a mindset of operating at a micro level. Uh I think the fact that 41:21 41 minutes, 21 seconds you know despite the the large conversion of 2.1 billion obviously a lot of all of that didn't come in BFSI right there was a pretty healthy mix of 41:29 41 minutes, 29 seconds of nonBFS uh in there as well you know in terms of of the deal wins and that obviously showing up and you look at TMT 41:36 41 minutes, 36 seconds it has grown healthy double digits for FI26 and that segment was was basically a very small business for us three or 41:43 41 minutes, 43 seconds four years ago we didn't really have an airlines or transportation vertical outside of one customer so I think We we will continue to operate in a model 41:51 41 minutes, 51 seconds where we add new clients to these these industry verticals. We've made significant investments in leadership. 41:57 41 minutes, 57 seconds Uh we've obviously announced some to the market recently as as early as this Monday, we announced the appointment of 42:05 42 minutes, 5 seconds a new leader for our global insurance business. Uh we've also very intentionally talked about adding CPG 42:12 42 minutes, 12 seconds and retail into our mix as of two weeks ago when we announced the the acquisition. So I think the efforts will continue to operate in a manner that we 42:20 42 minutes, 20 seconds we strengthen our client portfolio but we're very focused on driving almost every segment of that client portfolio across the pyramid across industry 42:27 42 minutes, 27 seconds segments and across geographies. On the third question around everything as a platform as we call it zap. I think that 42:34 42 minutes, 34 seconds is uh that is linked to [clears throat] building up of platforms that become the foundational stack for a customer. Uh 42:42 42 minutes, 42 seconds there is an element of of infusing the neoack in there. In fact, a large portion of the Neo stack, especially around Neo Saba and a bunch of other 42:51 42 minutes, 51 seconds assets that were built were built out of the Zap tribe and that gave us the foundation to actually include them in the stack as well. U we don't really 43:00 43 minutes have a very big ERP business. So I don't think for us that is cannibalizing anything on the ERP side. I think that's probably a little bit of a bigger 43:07 43 minutes, 7 seconds problem for companies that have big ERP practices which you know uh might get cannibalized because either through a 43:14 43 minutes, 14 seconds descification play or shrink the core play you might see an impact to to core systems but in our case we're really 43:21 43 minutes, 21 seconds more a custom application uh you know business versus a a core platform deployment or integration business. So 43:29 43 minutes, 29 seconds that effect is not there on our on our book on MCF and Outlook Arvin you can answer. So dipsh if you look at it 43:36 43 minutes, 36 seconds you're you're right we we used to operate at an OCF to net income at more than 100%. 43:42 43 minutes, 42 seconds But as we kind of pivoted to a lot more annuity large deals with savings you know that we are passing on to clients 43:50 43 minutes, 50 seconds that has necessitated certain amount of investments from a working capital standpoint where customers ask for year one savings and and things like that. 44:00 44 minutes And you know therefore there is a transition period where you have to make that investment and we have chosen to 44:08 44 minutes, 8 seconds make that investment from a cash flow standpoint and a working capital standpoint to drive growth. What happens 44:14 44 minutes, 14 seconds in subsequent years the page is that you start unwinding these and uh you know even when you do fresh ones you don't 44:22 44 minutes, 22 seconds see an incremental impact but right now we are in in that phase where we kind of moving and you've seen this reflect in 44:29 44 minutes, 29 seconds our price business going up substantially y so that's a pretty conscious decision but at the same time 44:37 44 minutes, 37 seconds we we want to retain a discipline that we will still be at 80% that's that's the line we will not cross and that's 44:43 44 minutes, 43 seconds what we we are targeting. So so it's a little bit of a trade-off and right now this is the level we are comfortable to operate at. 44:54 44 minutes, 54 seconds Thank you. Thank you. 45:01 45 minutes, 1 second Next question is from line of Abhishek from Enred. Please go ahead. 45:15 45 minutes, 15 seconds Abishek, may I request to unmute your line and proceed with your question? Yeah. 45:19 45 minutes, 19 seconds Yes. Hi, can you hear me now? Sorry, I was talking on mute. Uh, hi. Thank you for the opportunity. 45:27 45 minutes, 27 seconds Yeah, thank you for the opportunity and congrats on a good quarter. Uh, uh, my uh question is regarding uh the revenue 45:34 45 minutes, 34 seconds by delivery location. The onsite number has gone up. 45:45 45 minutes, 45 seconds Abisha, sorry we lost your audio. 45:48 45 minutes, 48 seconds Uh uh so can you just uh you know maybe part of it could be utilization 45:55 45 minutes, 55 seconds uh which probably is not reported this time but Nathan I would like to get a color in terms of um you know if you can 46:02 46 minutes, 2 seconds just uh give a color in terms of uh you know the nature of services uh uh you know and the nature of projects that is 46:09 46 minutes, 9 seconds driving this. The reason to ask is because we have seen an improvement in the gross margins uh despite this u mix 46:17 46 minutes, 17 seconds shift towards onsite. So um you know your thoughts on this would be very helpful. 46:25 46 minutes, 25 seconds Yeah, I think uh it's a it's a little bit of a business model transition question versus a metric on on-site 46:34 46 minutes, 34 seconds revenue versus onsite utilization question. I think Arvin just talked about the movement we've seen in our fixed price component. 46:42 46 minutes, 42 seconds Many of the large transformation programs including deployment of the stack requires the forward deployed capability that typically happens on in 46:50 46 minutes, 50 seconds client location onshore and [clears throat] as we scale we probably will see a little bit more normalization but we're not charging by headcount or 46:59 46 minutes, 59 seconds by effort. So that kind of gets lost in the in the translation of numbers. So I think as we transition more and more towards these kind of solutions and 47:07 47 minutes, 7 seconds propositions as we link more to either outcomes or large programs with milestones I think we'll also have to adjust our own understanding of how to 47:16 47 minutes, 16 seconds value the business and how to evaluate the business from metrics that are probably dated at [clears throat] at this point. So we you know we'll 47:24 47 minutes, 24 seconds continue to report what we feel is appropriate at this point. We're still reporting all a lot of these metrics, but my view is you should be mentally 47:32 47 minutes, 32 seconds prepared that over the next year to two years, we will see addition of new set of metrics and some of these probably will not be as significant as they used 47:41 47 minutes, 41 seconds to be 5 years ago. But that's kind of really what's happening where most programs are getting kicked off where the where the clients are and of course 47:48 47 minutes, 48 seconds because we are reporting it and tracking it and capturing it, we're we're capturing it that way. 47:54 47 minutes, 54 seconds Um, very helpful. Just a follow up to that Nathan uh you know most of the companies that reported earnings had 48:03 48 minutes, 3 seconds highlighted deferrals uh to project starts uh and what you are highlighting and what the data is suggesting is 48:10 48 minutes, 10 seconds contrary to you know this thesis. So just trying to understand um you know was there um anything that uh you know 48:20 48 minutes, 20 seconds you saw differently versus what the peers had saw. Jabishek the environment is the same. 48:28 48 minutes, 28 seconds The client sets are very similar. I think it all depends on the propositions and I think I have actually been calling out for this kind of divergence for the 48:35 48 minutes, 35 seconds last four or five quarters. Uh again I cannot answer for the rest of the industry but the ability to drive value 48:44 48 minutes, 44 seconds and the ability to do value based deals while having the capability and the competency both from 48:51 48 minutes, 51 seconds a people standpoint and from a tech standpoint becomes important. So it's not an easy environment for sure. There is a lot of noise around AI. There is a 49:01 49 minutes, 1 second lot of noise around macro and geopolitics, but staying very focused on the micro, 49:08 49 minutes, 8 seconds staying very focused on the value of the propositions, making sure that we invest so we we maintain whatever differentiation we think is appropriate 49:17 49 minutes, 17 seconds and continue to double down on making those investments is really what's driving a lot of this discipline. Of course, remember we made a very 49:24 49 minutes, 24 seconds intentional investment in building up our large news capability about 18 months ago when when we brought on a new leader and and a team built around it. 49:32 49 minutes, 32 seconds That's definitely created some scalability and repeatability in our ability to drive these propositions as well. And I think we still we still 49:40 49 minutes, 40 seconds don't think the full impact of the teams played out in the numbers because there is always a ramp up time and that's what excites us about FI27 as well. 49:50 49 minutes, 50 seconds uh super helpful and thank you for taking my question. Thank you. 50:00 50 minutes Next question is from the line of Rishi Jinganala from Capital. Please go ahead. 50:06 50 minutes, 6 seconds Yeah, thanks for the opportunity. Um Nathan if we uh you know from what we understand uh when it comes to AI 50:15 50 minutes, 15 seconds adoption or productivity demand uh some of the large BFSI firms are the ones who 50:22 50 minutes, 22 seconds are actually u you know asking for it uh more um apart from the hyperscalers um 50:30 50 minutes, 30 seconds at least that's what uh you know we get to understand um given your exposure um 50:37 50 minutes, 37 seconds to large clients And there you yourself are fairly large. Um you know it exposes 50:44 50 minutes, 44 seconds you to that both in terms of uh uh new growth opportunities as well as uh [clears throat] uh productivity 50:51 50 minutes, 51 seconds compression. So just wanted to understand given the kind of growth you have seen in BFS um you know how are things playing out 51:00 51 minutes for you and how are you seeing those clients behaving when it comes to uh um you know asking for productivity as some 51:08 51 minutes, 8 seconds of your peers have already mentioned they had to pass it on and whether are they ramping up rapidly on uh AI 51:16 51 minutes, 16 seconds adoption and and you gaining knowledge share out So Rishi, I think I uh talked about it 51:24 51 minutes, 24 seconds very briefly earlier on. I mean if you think about AI productivity, you know, we're definitely seeing increased productivity gains versus maybe a year 51:31 51 minutes, 31 seconds or two ago, especially in areas like engineering or testing or maintenance. 51:36 51 minutes, 36 seconds However, the pass through to clients, at least in our case, is very measured and structured. And I'll tell you how it's structured. We may pass a part of the 51:43 51 minutes, 43 seconds productivity back to the customer or they may choose to actually shift to a a commercial model that incents both parties to operate and align on the outcomes. 51:53 51 minutes, 53 seconds But a meaningful portion of that productivity gain has to be used and and offered in additional automation or AI layers on organization. So while 52:01 52 minutes, 1 second [clears throat] 52:02 52 minutes, 2 seconds productivity is real and increasing, the net effect at least for us is not pure deflation. It's driving both efficiency and growth within plan accounts. But 52:10 52 minutes, 10 seconds again for that what what's important is the ability to to to show them a path to to driving the transformation. We've seen this in top banking accounts 52:17 52 minutes, 17 seconds already where we've gained wallet share because the delivery of productivity through our teams through a commercial construct that we believe work for both 52:25 52 minutes, 25 seconds was superior to our peers and hence we were able to consolidate a lot of SDLC work that came that was available in that account to to consolidate. So this 52:35 52 minutes, 35 seconds is a a theme that we have to continue to play out. There are parts of the business that are more exposed and parts that are that are insulated. But it is 52:42 52 minutes, 42 seconds less about exposed versus insulated and more about the type of work and the commercial construct. So to me I think if you're able to get more resilient 52:50 52 minutes, 50 seconds platform layer transformation programs, modernization work you know around data and stitch it to outcomes I think the 52:59 52 minutes, 59 seconds the ability to then grow the account is much higher. 53:05 53 minutes, 5 seconds Got it. The other thing is um if we look at uh you know your margins uh in this quarter and if I strip out the hedging 53:14 53 minutes, 14 seconds losses uh which are of course temporary we are probably at multi-year high in terms of EBIT margins XFX. 53:23 53 minutes, 23 seconds Um as per my calculations it's like 16 and a half%. 53:28 53 minutes, 28 seconds um how do we think about so firstly you know I mean u you know how do we think about margins given that you've given a 53:35 53 minutes, 35 seconds ban um otherwise which I'm assuming includes uh forex impact but still you're you know um effectively running 53:44 53 minutes, 44 seconds above that so are we um looking at increase in investments uh in FI27 that 53:53 53 minutes, 53 seconds could you know have some impact on this given that uh your growth is also accelerating and as a result some of the investments you've been making in large 54:02 54 minutes, 2 seconds deals and others would also start paying off. So how do we think about uh you know margins going forward within that band? 54:14 54 minutes, 14 seconds So Rishi I'll give you uh at least my view and then Arvin can definitely add on that. uh the the way we've 54:22 54 minutes, 22 seconds constructed the business at least over the last 2 three years is you know if we can hold margin steady despite all of the pressure and and noise around 54:30 54 minutes, 30 seconds productivity and deflation and and passbacks we should have the ability to invest back in the business and I think 54:37 54 minutes, 37 seconds you've seen the amount of you know AI investment we've made the amount of sales and GTM investment and now we are 54:45 54 minutes, 45 seconds we are actually making leadership investments as So I think just having that operating leverage gives you the flexibility to either pass it through the P&L or 54:54 54 minutes, 54 seconds actually have have the ability to make these investments. But so far we managed to to maintain the margins, expand them slightly as you said despite all the all the ups and downs on on uh uh currency. 55:07 55 minutes, 7 seconds The thesis hasn't really changed by 27 either. uh if this platformled 55:14 55 minutes, 14 seconds proposition model continues to operate, I definitely think we have operating leverage that will become available 55:21 55 minutes, 21 seconds because the cost of goods sold equation can be impacted very nicely if we can deliver the same outcome without necessarily pricing for the same effort. 55:31 55 minutes, 31 seconds Uh which is kind of what I was trying to explain earlier when it comes to the metrics that we were tracking in the past versus today on hedge impact. I 55:39 55 minutes, 39 seconds think part of the reason we hedge is to not have volatility in the operating margin but maybe you can add a little bit more. No, so I think Rishit you know 55:46 55 minutes, 46 seconds that sudden depreciation does result in an uplift in margins and you know sudden 55:54 55 minutes, 54 seconds appreciation will have a reverse problem and in this kind of environment right we don't know which you know you don't want that kind of volatility in Europe the 56:02 56 minutes, 2 seconds end that's why we kind of stick to a pretty consistent hedging policy and when rupee depreciate sharply you know 56:11 56 minutes, 11 seconds the losses are a headwind and you know If rupee suddenly were to [clears throat] appreciate, you know, you would ask the same question saying 56:18 56 minutes, 18 seconds your margins are probably not moved despite hedge gains, right? So, so I I think it's a it's a it's a tricky 56:25 56 minutes, 25 seconds slippery slope and you know in general you know you guys don't like it if I if we give X anything in our commentary and 56:33 56 minutes, 33 seconds you know we don't look at anything X in that sense. So Forex is a realistic part of the business and you know that's a 56:40 56 minutes, 40 seconds reality we have to live with. uh we don't look at it saying if rupee depreciates you know we will improve margin and if rupee appreciates it's 56:48 56 minutes, 48 seconds okay to drop margins you know you've seen situations as early as four quarters back when rupee went to 85 you know I I don't 56:57 56 minutes, 57 seconds think we changed our margin commentary then so I think it is important to give that comfort that you know rupee is just 57:05 57 minutes, 5 seconds another variable like utilization and you know uh billing rates and things like that and and that's how we approach the business. 57:14 57 minutes, 14 seconds Fair enough. No, I I was also asking it because this was a year where you had significant headwinds in the logistics 57:22 57 minutes, 22 seconds and transportation vertical from a um you know a profitability perspective also and um you know going forward if if 57:30 57 minutes, 30 seconds rupee stabilizes ideally these hedging losses will also come down. So that will be a tailwind on the reported um uh you know margins. So that that forward. 57:41 57 minutes, 41 seconds Thank you. 57:43 57 minutes, 43 seconds That's true. That's true. You know yeah that that will play out. I I think the only point is we keep discussing that 57:51 57 minutes, 51 seconds but rupee never lets you settle down to a point where we reach stability. So sometimes it's a pipe dream to think it will stabilize and something will flow in but yeah mathematically yes. 58:03 58 minutes, 3 seconds Thank you. Thank you. 58:10 58 minutes, 10 seconds Next followup question is from the land of Nan Padman from Invest India. Please go ahead. 58:16 58 minutes, 16 seconds Hey. Hi. Thanks for the followup. Uh Arvin, I lost you uh while you were explaining. Um so uh just an add-on as 58:26 58 minutes, 26 seconds you continue on that where we lost you is uh you essentially mentioned uh that contract assets have come down. it's 58:33 58 minutes, 33 seconds moved to DSO and C which means customer has accepted the milestone and you'll be giving context there 58:40 58 minutes, 40 seconds just to add some flavor of what I'm seeking is that see there are a lot of questions uh that we're getting on this 58:49 58 minutes, 49 seconds so uh just your thoughts around from a high strategic perspective because obviously when you're growing at BFSI at maybe 18%. 58:59 58 minutes, 59 seconds uh for that it will consume working capital and strategically when you're looking at uh participating on the AI side of things you need to be there and 59:08 59 minutes, 8 seconds get market share to be able to participate there. Uh but uh just just to hear your thoughts on a high level 59:14 59 minutes, 14 seconds and some granularity on a question which is that the $16 million is uh uh 59:22 59 minutes, 22 seconds released post this year uh which was supposed to come last year. So overall that 80% looks lower. Uh so just a high level view there would be very helpful to sort of asuade some concerns. Yeah. 59:35 59 minutes, 35 seconds Sure. So Nathan first point right 16 million is probably what uh uh maybe 4% 59:42 59 minutes, 42 seconds of uh or maybe 7 8% of of your pat right. So yeah you know you can you can 59:50 59 minutes, 50 seconds presume that you know this will be 80 excluding that because that 16 you're kind of covering as part of uh FI26. So, 59:58 59 minutes, 58 seconds so I'm not you know it's it's not a material number in that sense but it's semantics and you know we are looking at 1:00:05 1 hour, 5 seconds 80 on a consistent basis right so so that is the first point two is from a contract asset standpoint it is not 1:00:12 1 hour, 12 seconds coming into DSO it's coming into dattors it was always part of DSO so from our disclosure perspective we've always been 1:00:20 1 hour, 20 seconds consistent to include contract assets even when it was when it kind of spiked up our DSO reflected it and it's just an 1:00:27 1 hour, 27 seconds internal movement between one part of DSO to the other part of DSO. In fact, in general, quality of dattors I would 1:00:34 1 hour, 34 seconds say is is better because your contracts have come down and our non-current dattors have come down, right? So, you you've actually seen an improvement in 1:00:42 1 hour, 42 seconds the dattors and you've also seen DSO improve by a day and the improvement by a day is without the 17 million uh 1:00:50 1 hour, 50 seconds benefit, right? If you include that is actually improved by about four five days. One of the elements from an operating cash flow standpoint that has 1:00:59 1 hour, 59 seconds played out in Q4 is that if you remember we had other liabilities go up and I explained it I think in our Q1 call with 1:01:08 1 hour, 1 minute, 8 seconds our contract acquisition cost. some of those payments have happened to clients, right? And whatever we are showing as operating cash flow for FI26 1:01:17 1 hour, 1 minute, 17 seconds reflects a reasonable reduction in other liabilities which which were attributed to the contract acquisition cost for 1:01:25 1 hour, 1 minute, 25 seconds large deals. So there there is an element in the base which already factors in the investments that we have 1:01:32 1 hour, 1 minute, 32 seconds made for large deals and I think we will continue to make those investments but the way to look at is uh you know and I 1:01:40 1 hour, 1 minute, 40 seconds think dep asked this question you know from historic levels of 100% plus we think we would operate at 80% in FI27 1:01:48 1 hour, 1 minute, 48 seconds and that's largely because of these results. 1:01:54 1 hour, 1 minute, 54 seconds So perfect. Very helpful. Thank you so much. Thank you very much. 1:02:02 1 hour, 2 minutes, 2 seconds Thanks. 1:02:05 1 hour, 2 minutes, 5 seconds Ladies and gentlemen, we will have to take that as the last question. While there are more questions on the queue, we would have to wrap up the call on 1:02:13 1 hour, 2 minutes, 13 seconds time. With this, I now hand the call to Mr. Nitan for closing comments. 1:02:21 1 hour, 2 minutes, 21 seconds Thank you, Nero. Uh to close, you know, while the macroeconomic uncertainty persists, our strategic direction remains unchanged. We will continue to 1:02:28 1 hour, 2 minutes, 28 seconds stay focused on execution, accelerating a tech techled differentiation and scaling of our AI capabilities to deliver measurable outcomes for our 1:02:36 1 hour, 2 minutes, 36 seconds clients. We will also be scheduling an investor day in Mumbai over the next few weeks and we will be informing you shortly about the the exact location and 1:02:45 1 hour, 2 minutes, 45 seconds the dates and we look forward to engaging with many of you in person at that time. Thank you. Thank you very much. 1:02:54 1 hour, 2 minutes, 54 seconds On behalf of Emphasis Limited, that conclude this conference. If you have any further questions, please reach out to the emphasis investor relations at investor.reations@emphasis.com. 1:03:06 1 hour, 3 minutes, 6 seconds Thank you for joining us and you may now disconnect your lines. Thank you.