RNIT AI Solution Q1 FY27 Results (BSE: 517286)
Signal: Margin pressure
The read
Q1FY27 shows revenue growth (+25.7% YoY) but significant margin pressure: EBITDA margin fell 320bps YoY to 22.1% due to employee cost surge (30.4% of revenue, +395bps). Net profit beat of +53.6% YoY was aided by other income (₹34.9L, nil YoY) and a lower effective tax rate. EPS growth (36.4%) trailed PAT due to 18% equity dilution. Finance cost doubled, adding to cost pressure. The company remains single-segment software services; no order book or utilisation data disclosed.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹7.85 Cr | 25.68% | -55.42% |
| EBIT | ₹1.73 Cr | 58.97% | |
| Net profit | ₹1.27 Cr | 53.61% | |
| EPS | ₹0.15 | 36.36% | |
| EBIT margin | 22.06% |
P&L walk
Revenue grew 25.7% YoY but fell 55.4% QoQ (Q4 seasonally strong); EBITDA margin compressed 320bps YoY as employee cost surged to 30.4% of revenue (+395bps). The revenue growth is likely volume-driven (single segment, no pricing data). Other income of ₹34.9L (vs nil YoY) and a 36% PAT beat on operating profit are partly due to lower tax rate (26.9% vs 24.3% YoY). Finance cost more than doubled, eroding operating leverage. EPS grew 36% YoY, lagging PAT growth of 53.6% due to equity dilution (paid-up capital up from ₹7,179L to ₹8,479L, +18%).
Key positives
- Revenue ₹785.3L, +25.7% YoY — consistent growth trajectory.
- Other income ₹34.9L (YoY nil) boosted bottom line.
- Depreciation only +3.3% YoY — controlled fixed-cost base.
- Single-segment focus on AI/software services with high gross margin (~91%).
Key concerns
- Employee cost as % of revenue jumped to 30.4% (+395bps YoY), compressing EBITDA margin 320bps to 22.1%.
- Finance cost surged 146% YoY to ₹36.3L — interest coverage ratio (operating profit / finance cost) declined.
- EPS growth (36.4%) materially lagged PAT growth (53.6%) due to 18% equity dilution — raises earnings quality flag.
- Revenue fell 55.4% QoQ — likely seasonal but steep sequential decline warrants monitoring.
- No disclosure on order book, utilisation, or headcount to assess underlying demand.
Research and educational content only. Not investment advice.