ESDS Software Q2 FY27 Results (NSE: ESDS)
Signal: Margin pressure
The read
The trajectory is high topline growth but weaker operating conversion: consolidated revenue rose 42.5% YoY to ₹1,336.57 million, while EBITDA grew 27.0% and margin compressed 577bps to 47.2%; PAT rose 43.5% to ₹320.79 million, but diluted EPS fell 2.8% after the IPO share issuance.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹133.66 Cr | +42.5% | -3.4% |
| EBIT | ₹43.46 Cr | +39.3% | |
| Net profit | ₹32.08 Cr | +43.5% | |
| EPS | ₹2.83 | -3.1% | |
| EBIT margin | 47.2% |
P&L walk
Consolidated revenue increased 42.5% YoY to ₹1,336.57 million, while EBITDA rose 27.0% to ₹630.69 million and margin fell 577bps to 47.2% because total operating costs grew faster than revenue; PAT nevertheless rose 43.5% to ₹320.79 million.
Segments
The Group reports one operating segment, so the consolidated-versus-standalone gap is the key split: consolidated PAT of ₹320.79 million was ₹88.88 million above standalone PAT of ₹231.91 million, showing material earnings contribution from subsidiaries and group operations.
Key positives
- Consolidated revenue increased 42.5% YoY to ₹1,336.57 million, despite a 3.4% sequential decline.
- Consolidated PAT rose 43.5% YoY to ₹320.79 million and 12.1% sequentially to ₹320.79 million.
- Employee costs grew 18.5% YoY to ₹298.02 million, slower than revenue growth, reducing employee cost intensity to 22.3% from 26.8%.
- Standalone H1 operating cash flow was positive at ₹698.19 million, while cash and equivalents stood at ₹3,514.03 million.
Key concerns
- EBITDA grew 27.0% YoY to ₹630.69 million versus revenue growth of 42.5%, compressing EBITDA margin by 577bps to 47.2%.
- Other expenses were ₹507.78 million in the quarter and increased the cost burden sufficiently to offset the benefit of slower employee-cost growth.
- Diluted EPS declined 2.8% YoY to ₹2.77 despite 43.5% PAT growth because the IPO increased the share count.
- Finance costs rose 29.5% YoY to ₹33.28 million, while depreciation increased 6.2% to ₹196.13 million.
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