3i Infotech Q1 FY27 Results (NSE: 3IINFOLTD)
Signal: Margin pressure
The read
Revenue growth turned positive after three quarters of decline, but margin compression (EBIT margin -400bps YoY) and a plunge in other income dampened profit growth. The standalone entity showed a turnaround, but consolidated results reflect ongoing cost challenges, especially third-party product costs. EPS dilution from equity raise is a headwind.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹177.94 Cr | 4.33% | 1.23% |
| EBIT | ₹6.92 Cr | -48.55% | |
| Net profit | ₹6.46 Cr | -15.22% | |
| EPS | ₹0.31 | -27.91% | |
| EBIT margin | 3.89% |
P&L walk
Revenue grew modestly (+4.3% YoY) but profitability weakened due to a sharp rise in third-party product costs (+34.4% YoY) and a 70% drop in other income (₹639 lakh vs ₹2,153 lakh). Employee cost as % of revenue improved, but not enough to offset the cost pressure and lower other income. EBIT margin contracted 400bps YoY to 3.9%.
Segments
AAA segment (largest, 73% of revenue) drove growth with revenue +11.2% YoY and segment result +25.2% YoY, offsetting decline in IS (-6.3% YoY revenue, segment result stable) and BPS (-19.9% YoY revenue, segment result -33.5% YoY). OTHERS segment loss narrowed to ₹24 Lakh from ₹412 Lakh loss in Q1FY26.
Key positives
- Revenue grew 4.3% YoY to ₹17,794 lakh, breaking the streak of YoY declines seen in prior quarters.
- Employee cost as % of revenue improved to 63.4% from 71.2% a year ago, indicating better workforce efficiency.
- AAA segment revenue grew 11.2% YoY and segment profit rose 25.2% YoY, driving overall performance.
- Standalone net profit surged 371% YoY to ₹660 lakh, on lower third-party costs and stable other income.
Key concerns
- EBIT margin contracted 400bps YoY to 3.9%, mainly due to higher third-party product costs (26.3% of revenue vs 20.4% in Q1FY26).
- Other income dropped 70% YoY to ₹639 lakh, reducing bottom-line cushion.
- BPS segment revenue declined 19.9% YoY, indicating weakness in that business line.
- EPS declined 27.9% YoY (worse than PAT decline) due to 22% share dilution from equity issuance.
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