R Systems Intl. Q1 FY27 Results (NSE: RSYSTEMS)
Signal: Margin expansion
The read
Consolidated Q1FY27 — revenue growth accelerated to 30.1% YoY (vs Q4FY26's 30.0%), but PAT fell 15% YoY as last year's ₹435.95 million Noida land sale gain dropped out — ex that, operating PAT likely grew ~25%. EBITDA margin expanded 400bps YoY to 19.8% on employee cost leverage (employee cost/ revenue down 520bps). However margin sequentially contracted from Q4FY26's 28% (annualised) partly due to seasonally higher costs. The composite scheme of amalgamation (Velotio/Scaleworx) became effective May '26 adding scale; goodwill rose to ₹6,959 million. EPS growth (5.6%) trailed PAT growth marginally on dilution from OCRPS allotment. The balance sheet remains net-cash (cash ₹3,330 million vs debt+leases ₹3,693 million) with strong operating cash flow of ₹1,632 million in H1CY26.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹117.65 Cr | 30.1% | 104.7% |
| EBIT | ₹18.92 Cr | 18.6% | |
| Net profit | ₹12.1 Cr | 5.7% | |
| EPS | ₹10.21 | 5.6% | |
| EBIT margin | 19.8% |
P&L walk
Revenue surged 30% YoY driven by Information Technology services +31.5% and Knowledge services +18.9%, but EBITDA margin contracted QoQ from 28% in Q4FY26 (annualised) to 19.8%, offsetting some volume gains; PAT growth heavily muted by absence of last year's ₹435.95 million Noida land sale gain in other income.
Segments
Information technology services segment (92% of total segment revenue) drove growth (+31.5% YoY) but saw profit margin decline from 10.6% to 12.6% of revenue; Knowledge services segment (8%) had higher profit margin at 43.0%, contributing disproportionately to segment profit (27% of total).
Key positives
- Revenue grew 30.1% YoY to ₹1,176.47 Cr, the highest quarterly growth in the recent series (Q3FY26: +23.6%, Q4FY26: +30.0%).
- EBITDA margin expanded 400bps YoY to 19.8% on employee cost leverage (employee cost/revenue down 520bps to 60.8%).
- Operating cash flow for the six months at ₹1,632.58 million covered PAT 1.35x — strong cash generation.
- Segment revenue mix improved: Knowledge services (high margin) grew 18.9% YoY vs IT services 31.5% — yet Knowledge services margin at 43.0% vs IT's 12.6% provides a profitability cushion.
Key concerns
- PAT fell 15.0% YoY to ₹555.70 million as last year had a ₹435.95 million one-off Noida land sale gain in other income.
- Finance costs surged 342.6% YoY to ₹94.77 million due to increased borrowings for acquisitions.
- Depreciation/amortisation grew faster than revenue (+39.0% vs +30.1%) as intangibles from past acquisitions amortise.
- EPS growth (5.6% YoY) lagged PAT growth slightly — diluted share count increased from OCRPS and ESOP allotments.
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