Nucleus Soft. Q1 FY27 Results (NSE: NUCLEUS)
Signal: Revenue declined
The read
The quarter was marked by severe margin compression: revenue fell 3.5% YoY while employee cost rose 8% YoY, crushing EBITDA margin from 26.2% to 9.8% — the lowest in at least 12 quarters. An exceptional gain of ₹982 lakh from labour code provision reversal partially offset the operating weakness. Without the gain, PBT would have been down 64% YoY. The standalone vs consolidated gap is minimal; subsidiaries contributed only ~₹8.5 Cr net profit. Depreciation surged ~55% YoY, suggesting past capitalisation is now hitting the P&L, adding to fixed cost pressure.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹193.69 Cr | -3.5% | -6.3% |
| EBIT | ₹18.93 Cr | -64.0% | |
| Net profit | ₹22.95 Cr | -42.0% | |
| EPS | ₹8.72 | -42.0% | |
| EBIT margin | -100bps |
P&L walk
Consolidated revenue declined 3.5% YoY to ₹19,369 lakh; employee costs rose to 71.2% of revenue (+760bps YoY) crushing EBITDA margin from 26.2% to 9.8%. Pre-exceptional operating profit fell 64% to ₹1,893 lakh. An exceptional gain of ₹982 lakh (reversal of prior labour code provisions) boosted PBT to ₹2,875 lakh, but net profit still fell 42% YoY to ₹2,295 lakh (EPS ₹8.72 vs ₹15.04). Depreciation spiked 54.8% YoY, likely reflecting prior capex capitalisation.
Segments
India (revenue -6.9% YoY) and Middle East (revenue +9.7% YoY, turning from loss to profit of ₹417 lakh) were the key profit contributors; South East Asia (revenue -4.1% YoY, segment loss widened to ₹628 lakh from -467 lakh) and Africa (loss of ₹22 lakh) continued to drag.
Key positives
- Exceptional gain of ₹982 lakh from reversal of labour code provisions improved reported PBT by 34% vs pre-exceptional level.
- Middle East segment revenue grew 9.7% YoY and turned from ₹-92 lakh loss in Q1FY26 to ₹417 lakh profit.
- Far East segment revenue grew 67.5% YoY and segment profit turned positive from ₹-19 lakh to ₹140 lakh.
Key concerns
- Consolidated revenue declined 3.5% YoY — first quarterly YoY decline after four quarters of growth.
- Employee cost to revenue ratio jumped 760bps YoY to 71.2%, causing operating margin to contract 1640bps to 9.8% — the weakest since at least Q1FY24.
- Pre-exceptional operating profit (PBIT before exceptional items) collapsed 64% YoY to ₹1,893 lakh.
- South East Asia segment loss widened 34.5% YoY to ₹628 lakh; Africa remained loss-making.
- Depreciation expense surged 54.8% YoY, adding to fixed cost drag without corresponding revenue growth.
Research and educational content only. Not investment advice.