Happiest Minds Technologies Earnings Call for Q4FY26 & Full Year

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[00:00:00]day and welcome to Happiest Minds Technologies Limited Q4 FI26 earnings conference call hosted by HTSC Securities Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vinewala from CFC Securities Limited. Thank you and over to you Mala.

[00:00:34]>> Uh good morning ladies and gentlemen. Uh thank you for joining us today on the Q4 earnings call of FPS Mind Technologies Limited. On behalf of HDFC Securities, I would like to thank the management of FPS Minds for giving us the opportunity to host this call. Today we have with us Mr. uh Joseph Anandra Raju co-chairman and CEO Mr. Wanker Tramman Naran uh managing director Mr. Ram moan CEO infrastructure management and security services business Mr. Sridar Manta CEO uh generative AI business services Mr. Prain uh Daranka company secretary and compliance officer Mr. Aman Balak Krishna CFO Miss Priyanka Sharma head investor realizations.

[00:01:28]I will now hand over to Priyanka Sharma for the safe harbor statement and to take the proceedings forward. Thank you and over to you Priyanka.

[00:01:38]>> Thank you Vinmush. Good morning to all participants on the call and welcome to the conference call to discuss the financial results for fourth quarter and year ended March 31st 2026. I'm Priyanka Sharma, head of investor relations. We hope you have had an opportunity to review the earnings release issued yesterday. Now let me quickly walk you through the agenda for today's call.

[00:02:06]Jose will begin by sharing his perspectives on the business environment, our strategic priorities and overall business performance. Shr will touch upon our enterprise AI platform AIEL transformation initiatives and progress around Genailed engagements and capabilities. Thereafter, Mr. event that will walk you through the financial and operational performance for the quarter and full year followed by our outlook for FY27.

[00:02:36]Following the management commentary, we'll open the floor for questions.

[00:02:41]Before we begin, let me read the safe harbor statement. During this call, we may make forward-looking statements.

[00:02:49]These statements reflect the environment we see as of today and involve risk and uncertaintities that could cause actual results to differ materially. We do not undertake any obligation to update these statements periodically. With that, let me now hand it over to Joseph.

[00:03:11]>> Thank you Priyanka. Good morning everyone and thank you for joining us today. FI26 was an important year for Happiest Minds Technologies from both a business and strategic standpoint. We delivered healthy growth, sustained strong profitability, improved utilization, crossed 300 active customers, took several platforms to market and further strengthened our positioning as an AI first digital engineering partner. FI26 also marked 15 years since the founding of Happiest Minds. A proud smilestone giving us an opportunity to reflect on the journey so far and more importantly the opportunities ahead. Let me start with a quick view on the market. The continued to be shaped by a mixed macroeconomic environment. While discretionary spending remains selective in some of the traditional areas, we saw increasing momentum and budget allocation in AIE business transformation, modernization, automation of internal processes and productivity focused programs.

[00:04:11]AI and Genai are now central to most customer conversations and this is translating into happiest minds being viewed as a strategic partner, strong customer engagement, robust pipeline growth and improving conversion visibility. There also has been increasing discussion around platform companies entering the services arena.

[00:04:32]Our view remains clear. We see this as a positive structural shift for the industry and for happiest minds.

[00:04:39]Historically when platform companies such as SAP and Microsoft expanded into services, it spurred further demand and created significantly larger opportunities for the broader IT services ecosystem. Platform providers often generate demand through co-inovation and partnership programs and have traditionally relied on partners for scale and execution.

[00:05:01]Turning to performance, FI26 revenues crossed 2315 crores representing a year-on-year growth of 12.3% in INR terms while the constant currency growth for the year came in at 9.27% which is among the higher growth rates in the industry. Abita margins remained within a guided range of 20 to 22% despite continued investments in AI capabilities, platforms, sales expansion, and future ready talent.

[00:05:31]From a customer standpoint, we entered FI26 with 306 active customers, including 51 additions during the year, reflecting the success of our NN strategy. We also continue to deepen engagement across large enterprise accounts and today serve over $91 billion corporations globally.

[00:05:50]Importantly, during Q4, we saw a record pipeline growth of 27% which gives us increasing confidence in our FI27 outlook. Based on this momentum, the board has reconfirmed FI27 growth guidance of 12.5% while we continue to remain aspirational about a 15% growth trajectory.

[00:06:10]This is reflected in the plant hut count of,550527 with the bulk of hiring taking place in the the genative business unit and the analytics and AICOE.

[00:06:22]Over the last few quarters, we have spoken about our early investments around Genai and our broader AI first strategy which Sha will expound further on. During FI26, we saw this translate more meaningfully into scaled engagements, customer adoption, and stronger pipeline momentum.

[00:06:40]Enterprises today are increasingly looking for partners who can help them move AI initiatives from experimentation towards measurable business outcomes.

[00:06:49]And that is where happiest minds is seeing strong relevance. Based on our internal innovation initiatives and experience implementing AI strategies for our customers, we recently announced the launch of our enterprise AI platform. The platform is designed to help enterprises accelerate their adoption in a secure, scalable, and enterprise ready manner while reducing execution complexity and implementation risk. The overall momentum buildup was also reflected in several strategic wins during the quarter, including engagements such as a US-based insurance and financial service provider for product engineering services, a global warehouse automation leader for engineering and security applications and a European healthcare software company for modernization of its hospital management platform. Shir will talk a little bit about some of our experiences in the AI space. From a vertical perspective, growth during the year was led by BFSI and healthcare and life sciences, both of which continued to see strong momentum driven by AL transformation, digital engineering and modernization programs. Retail and travel, media, entertainment vertical also delivered steady growth during the year while industrial remained stable.

[00:07:59]>> [clears throat] >> We are additionally seeing signs of revival in the education sector driven by gen adoption which we're capitalizing on with our edu platform repeatable solutions. Geographically the US remained the largest market with healthy momentum across AI transformation and modernization programs while India, Europe and the rest of the world all showed good growth during the year. We also strengthened our leadership team during the quarter with the addition of Tatsh Kulkarni as executive vice president to lead our BFSI healthcare and life sciences and retail CPG verticles. Uh we had Suresh Chhatur who joined us as the digital post automation COE head Sidand Pani to spearhead our GCC business and Samarjit Singh as vice president of our newly launched SAP center of excellence. Overall, we're entering FI27 with stronger strategic positioning, a strong pipeline, healthy order book, and momentum across customers and markets. We believe the convergence of AI, engineering, modernization, and automation is expanding the digital transformation opportunity, and happiest minds remains well positioned to participate meaningfully and take advantage of the opportunities award uh offered by this evolving landscape. With that, let me hand it over to Sridar to share more details on our AIS strategy and the enterprise AI platform. Shrer, over to you. Uh, >> thank you very much, Joseph. Uh, and good morning everyone. Over the last year, of course, as all of us are observing, enterprise have moved decisively from AI experimentation towards scale deployment. The challenge today is not access to the AI models or the quality of the AI models, but integrating AI securely into the enterprise workflows and driving measurable operational outcomes. That's precisely where our enterprise AI platform is focused. The platform brings together intelligent agents out of the box and orchestration capabilities with all the agents that exist as well as get developed governance framework uh for security and guardrails and reusable engineering components into a completely unified enterprise ready architecture.

[00:10:06]We are leveraging our experience in building multiple AI solutions for customers and our repeatable solutions experience over the last several years to create a customizable platform for our clients across multiple verticles.

[00:10:20]We are seeing increasing traction across AI assisted software engineering, AIEL modernization, intelligent automation, infrastructure optimization, leveraging AI and AI workflows within cyber security operations and enterprise co-pilots. We are also working on emerging hybrid coding paradigm combining the coding agents with the human developers creating a meaningful opportunity for enterprises to modernize complex legacy environments in a more efficient and lower risk manner while driving productivity improvements as shared last quarter through our AI for strategy. We continue to add more generative AI and agentic AI use cases that have moved beyond prototypes as Joseph mentioned into scaled customer engagements with several demonstrating replicable sales potential across customer accounts and industry vehicles.

[00:11:11]And today we have 50 use cases identified and already implemented.

[00:11:16]We are also increasingly embedding agentic AI frameworks into enterprise workflows where autonomous and semi-autonomous systems can improve operational efficiency while maintaining governance and human oversight. I'll give quick view about three new wins uh we started working as well as uh delivered in some scenarios we had last quarter that illustrate the kind of projects that we are currently working in the AI space. We won a project from a bottling company in Africa where we had to also create necessary digital infrastructure so that we can actually leverage AI in terms of IoT enabling their coolers and then creating the agentic AI solution addressing asset performance optimization. The solution basically analyzes the efficiency of all their coolers and makes the necessary recommendations like reallocation of some coolers which in turn saves money through effective utilization. So this is an example where customer wants to leverage AI but we have to actually create the necessary digital infrastructure as IoT sensors etc for their hardware devices and coolers.

[00:12:19]The second example I would like to talk about is for a large automo company in India, we're actually creating an agentic infrastructure because a lot of times before we actually start creating agentic solutions, we need to actually rely upon the enterprise systems for data and information so that the agents on the top can actually leverage that information to create more intelligent applications.

[00:12:44]So we actually are creating MCP server was wrapping their 900 APIs uh so that new agentic AI solutions can be developed. So this is an example where creating the necessary agentic infrastructure for the new agentic solutions to be further developed. The third and last example I want to talk about is for one of the largest CPG companies and they want to create a marketing survey application for a new product they were planning to launch and traditional software development methods require 6 months to build such an application and they were under tremendous time pressure because the product has to be launched quickly so that in the malls people can actually test the products and all the survey information can be entered through application etc. We leveraged our relay build which is an agentic SDLC tool that can significantly accelerate the software development by using cloud agents and other technologies. So we won this project because we are able to actually complete the project in three months and deliver to the customer.

[00:13:41]These are three distinct examples of various kinds of AI projects uh in terms of agentic infrastructure, digital infrastructure as well as complex AI solution. And also in line with our AI for strategy, we'll continue to invest across AI capabilities within the organization as well as platforms, accelerators and of course the most important one is the talent. And as part of this effort, we are in the progress of building a dedicated thousand AI and generative AI focused team by end of FI27 to support growing customers demand to build generative AI solutions. Of course in terms of the AI productivity we are targeting towards all of our workforce to be trained and of course we already started adopting various AI productivity tools with multiple client projects and our goal is to reach 90% of all our engineers testers and all service delivery personnel will be trained and will start using effectively AI tools uh in the productivity space by 90% by the end of FI27.

[00:14:46]So overall our focus remains clear helping enterprises to deploy AI safely responsibly at and at scale while delivering measurable business outcomes.

[00:14:56]With that I now hand it over to Wkert.

[00:15:03]Thank you Srida.

[00:15:05]Good morning everyone. What I'll do in the next few minutes is give you a highlight of our financial and operation performance for the quarter and the year that ended on March 31st, 2026.

[00:15:17]Starting with our fourth quarter performance, our revenues in constant currency grew 5% sequentially and 6.4% year-over-year. Operating revenues for the quarter was 604 crores, a sequential growth of 2.8% 8% and approximately 11% year-over-year.

[00:15:37]Total income which is operating income plus other income was 621 crores a sequential growth of 3.1% and 9% sequentially and year-over-year.

[00:15:49]It's pertinent to note here that we have grown every quarter since our IPO and most importantly on a profitable basis.

[00:15:57]As you will all be aware the last quarter was one of fluctuations be it currency, geopolitical situations or technology changes. However, I'm happy to say that we have managed to navigate these very well and continue to grow here. I would be remiss if I did not say that our industry has also pulled it off decently well. With the fourth quarter uh behind us and almost two months into the new year, we are now looking forward to the new year with optimism and vigor.

[00:16:29]We are putting all our energy and focus into meeting our guided growth of 12.5% in constant currency for the next year.

[00:16:37]Operating margin for the quarter remains stable at 106 crores and 17.5% of revenue. Investments made in GBS, our AI first strategy, and our new sales engine have helped deepen our existing customer relationships while helping open many new doors. The GBS unit now contributes almost 3.3% of our revenues while improving on its profitability metrics.

[00:17:03]At the risk of repetition, I should mention that GBS is our AI innovation engine while AI and AIEL services are now a dominant part of our overall business. To make this amply clear, in the coming months, we'll we'll be reporting on a metric that is revenue from AIEL services. We will also in the coming months begin reporting on pricing models which reflect our AI first approach and AIEL business as distinct from what we call out today under contracts model namely revenue split by time and materials or fixed price. This is a much needed clarification as markets tend to mix these two distinct terms. Turning to some of the operational metrics, we continue to maintain strong utilization numbers and we are at about 81% compared to 77.4% in the previous year. In the same quarter, PAT for the quarter at 61 crores has shown a significant improvement over the previous year and the previous quarter. However, to be consistent with what I have been talking about until now, our adjusted PAT which is PAT adjusted for exceptional items and intangibles was 72 crores and it stood at 11 12% of our total income showing growth both sequentially and year-over-year. on working capital DSO increased marginally to 94 days from the 92 that we were earlier on and we we should bring that back uh through accelerated postquarter collections.

[00:18:43]Coming to the fullear performance operating revenue was 2315 crores representing a year-over-year growth of 12.3%.

[00:18:53]Growth in constant currency came in at 9.2% 2% slightly below our guidance that we had made for the year of 10%.

[00:19:02]Primarily driven by a delay in the right shifting of a couple of our Ara license deals. This also impacted our fourth quarter uh growth. Efforts are underway to close these right shifted deals in the first quarter of the current year.

[00:19:18]Total income for the year stood at 2,400 crores which I must say has a nice ring to it as a number. Growth on discount was 11%.

[00:19:29]Operating margin was 17.4% versus 17.3% in the previous year and at 401 crores it has grown 12.3%. So the 17.4% and thereabouts has been largely in line with previous year. While I spoke about our growth guidance for FI27, uh our expectations on operating margin though we are not calling it as a guidance is to improve the same by about 100 basis points. That means about 17.5 to 18.5 on operating margin is what we are seeking to achieve.

[00:20:06]We will be driving this on the back of improved utilization, execution, discipline and efficiencies that come from integrating acquired entities while continuing to make investments in our AI initiatives. Utilization for the rema for the year remained above 81% compared to the 77% in the previous year.

[00:20:29]PAT for the year at 2133 crores has shown a growth of 15% over the previous year. I'm not comparing it with the previous quarter because we had certain exceptional items. Adjusted PAT came in at 279 crores or 11.61% showing a growth of 9.4% of the previous year. From a customer perspective, we ended the year with 306 active customers, that is 51 additions during the year. I would like to draw attention to our billiondoll clients, which has grown from 82 to 91. Very interesting to know that this cohort continues to contribute almost 58% of our revenue, giving you a good uh insight into our quality of earnings. We ended the year with about 6,500 happiest minds. A slight drop slight drop from the previous year.

[00:21:27]While attrition has been high at 17%, it is not unmanageable. It is it is within the within the region that we we have been seeing it trend over the past couple of quarters.

[00:21:40]From a balance sheet standpoint, we continue to maintain a healthy financial position with robust cash flows generation generating sufficient liquidity and flexibility to continue investing in our strategic growth initiatives. Our return on capital employed has improved to 22% compared to the 21% in the last year.

[00:22:03]As I look ahead into FI27, our focus remains on sustaining growth momentum through AIEL transformation opportunities and enterprise modernization programs while continuing disciplined execution and strategic investments in AI capabilities, platforms, sales capacity and future ready talent. Our growth guidance for FI27 is supported by uh healthy and improving pipeline traction in AIEL opportunities and customer engagements.

[00:22:36]Overall, I believe we are entering FI27 on a strong footing. Before I conclude, I'm happy to share that our board has announced a final dividend of 3 rupees 65 pes per share which when approved by the shareholders will take the total dividend for the year to 6 rupees 40 per share. Thank you for listening to us patiently. I will now request the moderator to open the call for questions.

[00:23:04]>> Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.

[00:23:29]The first question comes from the line of Aditi party with ICA securities.

[00:23:35]Please go ahead.

[00:23:38]Hello, thank you for the opportunity. Uh my first question is on the Q4 uh revenue growth. While you mentioned that there were uh there was a right shifting of Ara licenses in Q4. Was there any other reason for a softer growth like in high-tech vertical we see a sharp QQ decline in both Q3 and Q4.

[00:24:03]So if you can help me on this.

[00:24:05]>> Sure.

[00:24:05]>> Thanks sir. Yeah.

[00:24:06]>> Yeah.

[00:24:08]>> Yeah. Go ahead, Joseph.

[00:24:09]>> Yeah. So, you know, if you look at the Q Q4 uh growth, uh you know, we did 5% uh quarteron quarter at constant currency and INR growth was 2.8% and for the year constant currency was 9.2%, slightly short, you know, very tad bit short of the 10% that we had projected at the beginning of the year and uh at INR was, you know, 12.3% yearonear. Now if you just get down to uh you know uh uh a couple of u uh verticals that did well and a couple where uh you know where the you know where we saw a little bit of a drop BFSI continues to do well whether you look at a quarteronquarter uh growth or year-on-year growth you know the bets that we made on pure software and orius uh is paying off and uh you know uh so that's one second is if you look atte perspective there was uh uh a good growth of 8.4% 4% quarteron quarter and we are seeing you know in a couple of accounts where we had the challenge we're seeing traction back in those accounts we're also seeing our edu uh platform uh getting traction we have couple of customers already for this uh platform and there are quite a few uh prospects as far as uh you know high-tech uh is is concerned uh there was you know the a big reason was for one of our customers who based out of uh you know Canada and who has operations in China. We were developing a completely new product for them. uh a mixture of you know an automated uh uh cooking system and back you know on the hardware and backed up by uh low code no code uh platform uh that was AIdriven and this got completed the customers trying to take it to market and there's a pause in the engagement and the drop in that revenue it was a pretty sizable uh you know account for us that's what's resulted in the drop in high-tech I can almost uh link it back to one customer.

[00:26:20]Now, healthcare grew 12.8% yearonear. uh but for the quarter there was a dip of 5% and that's because one of the uh customers in the farmer space there was an engagement that also included some license revenue that got completed in uh in Q Q3 and therefore you know in Q4 we had that thing but overall I would say BFSI and healthcare continue to show good uh resilience as I had pointed out in my talking points we also see uh retail uh CPG having good traction. EdTE already talked about we see budding shoots and Edu should lead to uh growth and AI is driving fair bit of uh uh interest in this uh segment >> we have lost the line of um Mr. A reminder to all the participants that you may press star and one to ask a question.

[00:27:30]Once again a reminder to all the participants press star and one to ask a question.

[00:27:37]>> Yeah operator uh V here. So I will go ahead with the question.

[00:27:42]>> Yes please go ahead.

[00:27:45]Yeah. So sir on our AI first uh initiatives uh how does uh the AI first initiative fundamentally differs from the company's previous uh digital engineering approach and what specific changes in the operating model or service delivery or client engagement have we implemented since it's loan?

[00:28:07]>> Sure. So let me take the first question uh first part of the question uh let's talk about some of the uh initiatives and some of the work we're doing in the AI space. So you know we started the company as uh uh you know a digital native uh company uh Vines and uh I would say uh you know uh lot of the work we did was around data cloud uh uh customer user experience but you know one thing that was common was uh data all along and even in our initial years we did uh quite a bit of uh you know AI work with the customers but it was more of the traditional or legacy AI Right.

[00:28:49]Right. And 3 four years back with Geni uh with a you know with with announcement of co-pilot and uh seeing the the the prospects for this uh technology or this trend we started generative uh business unit and uh uh you know we've seen very good traction in uh generative AI business unit and what we are seeing is that any init and what we are also evangelizing to customers and uh guiding them is that any initiative they take up now any platform that they build they should look at you know how do how how how does AI become a central part of this and it could you know a lot of it would be digitization or digital uh engineer transformation and you know for those who who who who've not really fully realized the benefits of digital transformation their advantage is now they can do it with AI at the central part of it uh you know so that is the overall thought process behind the AIFS strategy which has multiple elements.

[00:29:54]I'll talk I'll let you talk about some of the things that you're doing on you know on on multiple fronts uh from an AI perspective and also a little bit about how the the legacy I ML ops and generative AI you know how we view them.

[00:30:09]So she over to you. Thanks Joseph Dh.

[00:30:13][clears throat] Uh there are two sides of course is an integral part of or classically has been integral part of our digital uh positioning as well as the capabilities historically as Joseph shared. However, as you could see from the example that we are illustrating customers to take the advantage of the AI there's a lot that happens behind the scenes that could be even sometimes creating the digital infrastructure. I did talk about uh even creating the IoT sensors kind of infrastructure before leveraging AI uh and sometimes it could be you need to have the data or AI infrastructure. I have taken the automobile example, right? So think about it more like the tip of the iceberg when it comes to the AI solutions. However, the reason for us to actually go heavily on the AI first as a strategy is not what we build for the customers but also how we build for the customers. That's where the AI productivity tools uh for the entire service delivery come into the picture.

[00:31:12]Be it engineering, testing, uh infrastructure uh management ori cyber security all the services that we are delivering uh historically and we continue to deliver is being significantly impacted by the AI. So that way from the talent as well as our offerings right behentric offerings or leveraging the AI for other kinds of work that the customer requires all those pieces already are various programs that we have in the organization I already shared some kind of three goals I mentioned right which is 90% of when we started uh the digital initiative we had the goal of doing the digital work only and eventually we reached approximately 95 96% as a company. Very similarly when it comes to leveraging the AI product tools at varying levels be it agentic or AI augmented we want to hit 90% plus by end of the year. So fundamentally it is changing every service offering that we are having right that's the reason why we wanted to take it as an AI first initiative that has an impact on our learning function right project managers and how we price our customers more focus on the outcome based models and then of course our offerings also integrated with AI and that allows us also to start looking at certain tools I mentioned reliability and of course the most important flagship ship solution is enterprise air platform.

[00:32:45]>> Yeah. Uh got it. Thanks for the elaborate answer. So one more thing uh right now all the companies are announcing the partnership. So how are we looking at partnership with some of the players in order to scale this AI capabilities.

[00:33:00]>> Thanks Vesh. Actually I missed that part as part of uh telling there were two new partner. Of course, historically we do have strong partnership with Microsoft as well as with AWS. However, in the last quarter itself, we did establish with two interesting companies of course. One is Anthropic when they started uh a formal partnership program.

[00:33:22]We became one of the early partners for them. So, we closed a partnership with Anthropic uh in the last quarter. The second one which is much more interesting is a young startup uh called Unifi apps. they actually are they have a product which actually can connect the data side of the enterprise environment all the way up to the AI right we created a 360deree partnership with them and uh we work very collaboratively with them in terms of taking out of the box AI based solution with low code no code way of developing agents on the top of it so that way we are looking at the industry giants historically Microsoft AWS we did have anthropic we established already in the last quarter and young emerging startups that are transforming the enterprises like UniFi apps we established partnership also in the last quarter so two new partnerships in the last quarter anthropic and unifi apps >> okay thank you uh thank you sir and I will join back with you again >> thank you next question comes from the line of Aditi Pati with ICS securities.

[00:34:34]Please go ahead.

[00:34:35]>> Yeah, thank you for the followup. So now I wanted to uh I had two questions on the GBS business unit. While the uh revenue growth this quarter uh like it it has grown sequentially but there is a drop in the uh segmental margins. U can you share the reason for this drop? uh and also in terms of the AI platforms what kind of I mean apart from ARA what other platforms are are already being adopted by customer and if you can share some matrix of the platform adoption >> so Adi let me take the first one on the margins and I'll hand it over to Shrupo for the second as far as GBS business unit is concerned it contributes about 3.3% of our total u you know company's revenues it's it's actually nothing but an AI u you know center of innovation if you really look at it because if you look at this concept of AIE services or AI induced uh you know uh services that number is much much larger but what we do in GBS is the AI uh it's an AI center of innovation we started it to take a lead in um in in all that thing we do in AI created it as a BU and like I've been saying in the past we have we have dedicated people to it about 200 people but the large part of AI is now becoming uh it it's going into various other parts of the business so while there is this concept of BU and BU profitability the intent at uh GBS is to make sure that we create uh solutions and uh tools which are ahead of time focused on customer needs and that kind of a thing.

[00:36:26]So it's not profitability the profitability tends to get captured in the larger PDS and the IMSS area of work. Just to give you a case in point u conversion of ara banking or inducing it with AI is something that's happening the entire revenue of our banking sits inside BFSI and it it gets attributed to PBES something that we do in or ellipse our platforms on the security and the customer uh support standpoint that gets counted as part of IMSS which is another BU but you know without GDS giving you the uh the the the tech direction and the the direction on the innovation and where the markets are headed. We are not going to be able to do that. So what we are trying to do is over a period of time GBS becomes a horizontal they supply and they they will serve the entire company uh with the AI capabilities that are built. So as a BU the first order of preference is to make sure that the people deployed in that unit. Uh they they are completely uh you know uh used across the company but at the same time they stand for certain element of revenue and let me not say profitability but at least to make sure that it makes economic sense for uh having that team. That does that make sense?

[00:37:47]>> Okay. Yes it makes sense.

[00:37:49]>> Yeah. Over to you.

[00:37:52]>> Yeah. So Adati in [clears throat] terms of the of course the platforms that we're building I'll put them into three buckets. Adjit. One is the AI productivity. I mentioned something called relyu right we have something called agent hub. So the idea is like when the engineering teams are like looking at the requirements how can we generate near 100% code right uh from the specifications directly that's what the reliability addresses and today we are I already did talk about uh one customer right which is a large CPG and also within our internal projects in lot of places we are using it the other one is agent hub where enterprise quality cartridges can be put on this coding coding agents because we are seeing lot of these news articles on coding agents, removing the production database or turning rogue etc. Right? So checks and balances guard rails etc. so that they at least are uh controlled. So those are more on the AI productivity side and uh on the service delivery side of course one example was mentioned by Vancut and that is predominantly on the customer support side a completely AI based solution that we have uh which is little bit skewed towards the pharma industry but is applicable to other uh uh verticals too and another one on the cyber security space again falls broadly under ISS umbrella sea which is actually on the cyber security side so [clears throat] lot of uh the the issue use a text based and complete AI solution that can analyze and identify what kind of security threats can be there and the last category is the vertical solutions. uh Joseph did talk about the edge right which is actually [clears throat] a collection of multiple AI use cases for the educational institutions along with the digital infrastructure so that any academic institution can leverage one example out of all AI use cases we have is uh student engagement [clears throat] so leverage in the video analytics image analytics and everything how well the students are engaged in the class so multi use cases in the education space and we have insurance in a box right again lot of AI use cases along with the complete insurance workflows as part of it after anyhow on the banking side we have and all this experience is what made us to come up with the enterprise AI platform that can be highly customizable for each of the vertical for us to start rapidly creating vertical oriented solution so these are some examples of the various AI solutions apart from that we do have bioinformatics solution multiomics solution etc. which are again very AI focused and little bit narrower than the solutions I mentioned.

[00:40:32]>> Okay. Um got it. Uh do you can you share some adoption metrics for these platforms or or they are still in the initial stage.

[00:40:43]So in terms of the adoption like uh the AI productivity of course naturally you can assume as well as understand that the adoption is extremely much higher because these are not vertical solutions pretty much every software development project we can use right so that way the reliability which is on the AI product side at this point and we already have 40% adoption within our internal projects and the customer projects and everywhere and from there like of course they'll they'll keep adopting more And Alera for example right is actually a companion solution for our wellestablished ellipse platform right which actually can allow complete infra ops kind of solution. So that way like we have ellipse very well adopted with lot of our projects and is being adopted in those places for the customer support.

[00:41:37]>> Okay. Okay. Got it. My uh m I had a couple of more questions on the uh guidance. So uh my revenue guidance of 12.5% is very assuring. Uh can you help me understand how much of it is due to the deals we have already won and how much is contingent on the high probability pipeline conversion?

[00:42:05]It's you know it's a mixture of both. Uh uh Aditi the approach we took is to do a you know rounds up uh uh revenue plan uh in in March. We got we had each of the industry groups and the IMSS and uh genetic business unit to come up with their plans but we also had the centers of excellence uh come up with independent plans to make sure that it's all uh uh aligned and just before this board meeting uh you know last week and the week before last we did a stress test of the uh Q1 and Q2 uh guidance because uh if if you can meet the first half yearly numbers it it it gives much higher level of confidence uh that we'll be able to meet the annual plan and we built the plan for 15% whereas we've kind of uh the revenue plan but the P&L has been built on 12 and a half% so that there's a little bit of uh cushion uh and you know as we've said our pipeline has grown by 27% quarteron quarter this is a mixture of uh you know NN and uh uh uh opportunities in our uh existing uh business as you know our repeat uh business is 92%. uh you know varies between 92 to 94% depending on the quarter that gives quite a bit of soles right having that uh stability and the good thing about the pipeline also is there are several large deals that are cutting across quarters and across uh years which gives a little bit more of uh stability and cushion to the overall uh projection I've already talked about uh uh vertical uh outlook uh that we have so based on all and And then we've talked about how we're getting a lot of traction and success in the AI first uh strategy. So all of these uh fact have factors have contributed to uh giving us the confidence uh for the 12.5% uh guidance that we provided.

[00:44:14]>> Okay, got it. And on the margin side, what would be the planned uh head headwind in terms of like investments on sales and marketing or AI capability building and the annual wage agreements?

[00:44:29]Uh if you can call us.

[00:44:30]>> Yeah. So Aditi u we have called that out in the uh in in the press release yesterday. See we did have uh tailwinds and headwinds last year um thanks to you know the way the foreign currency moved in our favor. We have also had currency losses because of the forwards that we have taken. So quite a few moving parts but despite that focus will be to maintain protect the 17 and a half.

[00:44:57]>> Oh okay. So I was asking from uh from FI27 point of view would we be in would our sales and marketing investments and AI investments would be higher uh in FI27 versus FI26?

[00:45:17]I think my pet has dropped off. So let me take that. Uh other uh I think uh you know there would be little bit of increase in the uh sales uh uh headcount and cost because uh you know there were some open positions uh that's that took time to fill up uh last year that that are seeing people come on board uh right now. We also had to do a little bit of a uh a shift because when we moved from hybrid BDMs to uh client partners or account managers for existing accounts and hired a new set of NN BDMs, we also found that you know some of the people that we had were not fitting into that pure you know uh client partner profile that can grow accounts uh into large uh customers. So those shifts are taking place on AI. We'll continue investing whether it's on the platforms shether talked about the uh you know many platforms that we are uh building all of them have well detailed GTM and positioning uh uh you know behind them and even capability building because we feel quite confident that uh the business will come because as we speak from an AI and generative AI perspective GPS uh we do have money sitting on the table uh so we don't look at this as really being headwind It could be transitory and that's why what bank said you know that we will make sure that we operate in the uh guided debita margin and operating margin of between 17.5 to 18.5% is what we targeting in FIN.

[00:46:56]>> Hey sorry um I did I get cut off somewhere in between that and yeah I just addressed that question. Yeah.

[00:47:04]Yeah. Thank you. And we have covered this uh in our press release. 17 1/2 to 18 and a half is what we're trying to maintain while you know balancing out all the headwinds and tailwinds on um on on the uh expenditure and uh revenue front. But investments will continue um and we we'll obviously prioritize that if it comes to um the question of where to deploy money.

[00:47:29]>> Okay. Got it. Thank you.

[00:47:35]Thank you.

[00:47:38]The next question comes from the line of Deep Meta from MK Global. Please go ahead.

[00:47:44]>> Yeah. Uh thanks for the opportunity. Uh couple of question. I just want to understand the guidance part. Uh uh we expect uh revenue growth to accelerate into FY27.

[00:47:57]Uh what gives us confidence? Can you for some sense about let's say deal PCB SV related anything pipeline I heard you said but pipeline obviously is need to get converted and then revenue need to so if you can give some more detail and which vertical you expect the the growth >> the I'll >> shall I I'll I'll quickly cover the TCV ACV question and then you know hand it over to Joseph see we have traditionally not been giving DCB ACD because there is no one standard formula adopted by the industry. I'm not making a statement that it's not something that is possible not possible but we have stayed away from giving it that but that said uh we are you know pulling that uh together and we we'll hopefully in time be able to share that but the larger thing is you should see the way we build our uh business numbers. One is based on repeatable business. The extent of new business that is expected to come in from the pipeline. When we talking about pipeline, it is new business, existing, new and new, new. And then you have the existing business which is growing at a certain clip forming part of a large percentage 93 94% of the total business.

[00:49:11]You put that together that's how we build up our business plan. So um we we it was on the same basis that we have been reporting over the last you know uh four five years. uh while we we we are getting our you know numbers together you know the the the TCD large deal value these are all something that makes possibly sense in the large uh kind of an environment large company environment but at our size of 300 million it's all about focused execution on the current u current pipeline and the opportunities the page >> to I understand yeah sorry just to add to that uh uh the pesh you I'll I'll break it up into uh three sections, right? Some of the deals that we've closed. I'll just give you a high level view, right? With with uh you know uh one of a Pond company that's in the warehouse and logistics solution space.

[00:50:06]We've just you know signed a deal to take over all of their uh applications and infrastructure. It's a three-year deal that's around 12 to 15 million, right? And we are in discussion to sign up for taking over their technology uh operate tech the technology uh as well right uh the engineering arm and that will you know uh it's very active conversation again over 3 years it will be8 to$10 million right now for a large insurance provider in uh in in Southeast Asia we during the year we won couple of uh you know uh new contracts or deals.

[00:50:51]Uh it's an existing customer where uh we've been able to grow the account.

[00:50:57]It's a it's a $10 million plus account where we've been able to grow uh 40% uh uh year on year and got two large programs from them. Uh you know and we're in discussion for couple of more such uh programs again with a large CPG company. We won a 5-year deal to help them with some of their uh marketing experience uh with uh uh a a company in the that provides uh agent to care platform.

[00:51:28]We've done a 360deree uh uh partnership where uh we are their implementation arm and you know it's a it's already a multi-million dollar engagement. So that's on what we won. But in terms of pipeline as well, right? Uh we have several large uh deals uh both NN and uh as I mentioned earlier that are quite large and cutting across multiple years.

[00:51:54]Uh that's the pipeline part of it. And if you look at some of the initiatives that we had right, we had talked about P initiative and as we speak, we're the preferred partner for four of you know four uh P firms and I did give you know some of the wins that I talked about our pipeline I talked about is coming from P this this these uh uh you know P companies. We talked about uh GCC strategy and we brought on board as I mentioned in my uh you know in my talking points we brought on board a heads for that was putting a strategy that we will be implementing and we should get traction over there. uh the large account strategy we've you know we've created two business units one under Rohit Matur uh which has high-tech industrial manufacturing and edtech and the other one with Tutnh who came on board uh four months 5 months back that has retail CPG BFSI and healthcare both have are very seasoned leaders who grown large accounts so they will be leading the industry groups and the client partners to make sure that the foundation we laid for a large account strategy last year we'll be able to take it to the next level and the goal is to create multiple uh large accounts and uh this year maybe create one or two $20 million account but at least lay foundation for multiple of these uh accounts and another area that we thought where we're leaving money was on the SAP front and we'll take up very specific areas over there we're not going to boil the ocean so we brought a very seasoned leader on board uh you know to to to to lead that practice so if you just look at all of is you know there's so much and uh you know we have all of our platforms as Shder talked about where we're getting good traction.

[00:53:37]So this is what has given us the the confidence right that we'd be able to hit this uh revenue growth that we've guided.

[00:53:50]>> Thank you.

[00:53:54]>> Thank you. Next question comes from the line of Kubir with Access Securities.

[00:53:58]Please go ahead.

[00:54:00]Yeah. Uh thank you for taking my question. It's uh thank you for the opportunity. Uh two questions from my end. So uh I would like to know about your acquisitions. I mean historically we have done a lot of acquisitions right. So how these acquisitions are going to get benefited to us in future when we talk about 1.3% of top growth uh could be a mix of if you can share some mix of inorganic as well as organic growth. And the second question is on AI. So everyone is talking about AI and uplifting their platforms as well. How different are we from those players? If you can just uh if you can just share some thoughts on that.

[00:54:36]>> Yeah, I I'll just address the question on organic inorganic. Whatever we have put out there 12.5% is organic. Uh first there there's no question of inorganic because there's nothing in the pipeline as of now. uh whatever acquisitions we had done in the past have been integrated a year and a year and a half back. I I too covered that. So it's it's uh it's completely part of our company um we are in fact our plan for next year considers some of the efficiencies that are coming on account of you know uh the integration that we are talking about. So we have progressed far deep into uh integration and even if you're looking from a regulatory standpoint the companies should not be in existence post couple of months. So um the number of 12.5 is completely organic Joseph. So just yeah uh thanks wanka just adding to that uh uh kubir if you look at it last one and a half years whether it's me shran roh we we've been you know meeting all of these customers whether it's from pure software orius and from you know the earlier acquisitions as well and the planning and the cross-selling all of that is being carried out you know by by us out And we are also at the same time leveraging some of the capabilities uh that uh you know the people in pure software and brought to the table in some of the other customers that we have whether it's in the insurance space or in the banking space or even in the healthcare space. So it's a totally integrated unit now and as Benquip pointed out the 12.5% is purely organic that we projected if we do an acquisition that will be on top of it.

[00:56:23]we are quite uh clear internally in terms of AI I'll I I'll attempt you know I'll uh uh I'll give my point of view and I'll let Sher also jump in. So if you really look at it uh uh Kubel I think minds is the only company that has a separate business unit for genetic and you know what that allows us to do is to just focus on the space reader pra and the team to focus on the space develop you know depth in AI and generative AI work closely with analytics and the DPSE which you know which have become kind of a overlapping or extensions of the generative AI business unit because there's so much If you look at automation right uh business auto process automation there's a lot of agentic coming in there if you look at analytics uh CO then data is the the underlying uh need for doing anything on AI and so we are able to put this integrated story with GBS uh leading the way with the depth they bring uh to the table. The second thing I would talk about is the uh the repeatable solutions that we are looking at and the platforms. I think the number of repeatable solutions that we have I'm sure we have talked about quite a few of them brings a lot of value to the table.

[00:57:43]uh on the SDLC front you know we've created a separate center of excellence for making sure that we keep uh you know we saw that change the pace of change was just too fast and very often uh you know for us to uh advise the customer or to uh make pivots internally in terms of what to use what not to use we felt that having a separate center of excellence that would focus on these productivity tools whether it's cloud code copilot gemini all of the others cursor and just keep track of the changes how customers are adopting it so we can we can distill all of these learnings go back to customers as well as to implement it uh internally uh you know that again I think is something that uh I don't think too many companies uh have done so given our size I think we are putting quite a bit of investment we're making a lot of progress on multiple fronts our whole AI first strategy has been you know has got multiple elements to it including internal adoption of AI tools which we can then be leveraged to advise customers and I think that's what we are bringing to the table as a value proposition to our customers anything you want to add she start the only point I want to add there is of course there is always excitement by multiple IT services companies to keep coming with platforms right and that's where how we differentiate and why clients actually like what we are coming up with this one of the strategic decisions we have taken is we didn't want to build a broader enterprise AI platform two years back because it's everything is in total flux right at that point I'm saying any platform clients are not in a position to believe they themselves don't know what this technology is so what we did is we wanted to wait so that we gain sufficient experience some of the examples Joseph shared right in terms of uh our repeatable solutions and all the knowledge and experience that we gained is what prompted us to start thinking about as well as start developing and creating enterprise their platform the rest We were actually using our existing experience with AI for example elixir understanding and experience we enhanced and moved into alera kind of solution.

[00:59:50]So that's how we created multiple point solutions and now is the time for us to create a broader enterprise AI platform after two to three years of experience with generative AI.

[01:00:03]>> Okay. Okay. Thanks.

[01:00:08]>> Thank you.

[01:00:09]The next question comes from the line of Aidan Sharaf an individual investor.

[01:00:13]Please go ahead.

[01:00:15]>> Uh yes uh thank you for the opportunity.

[01:00:19]Uh so my question is uh little N I would say from a long-term governance governance perspective could management provide some color on succession planning and development of the next line of leadership uh considering substantial promoter holding of around 32%.

[01:00:36]>> Sure. So uh you know from one of the things that u uh some some of us in the founding team found a little surprising is that in 2012 just a year after we had started the company Ashoke had initiated a succession planning discussion and we said we've just started the company. So it's it's you know it's become a uh uh I would say uh annual exercise that we have not missed a single year where we take all the senior and next level roles and we look at you know the people playing those roles what are they going to be ready for next and have discussion on who could be a potential successor what is the uh areas that that can be considered for development and then what are programs you know uh that that uh are available or that we can uh avail of and this gets discussed with the board as well. Last year we also included uh Hogan assessments to get a different view of these leaders and uh you know and had that reviewed by the board again and uh born out of this have been multiple development programs including having some of our leaders attend IM Bangalore ISB for specific uh uh uh you know training programs. We've we've started some training programs uh or development programs I would say not training development programs internally and we feel very confident in the kind of succession planning that we've done at the same time as I mentioned you know we've got a few leaders externally because we also believe that getting you know uh some of some leaders from outside brings in fresh uh ideas and uh you know challenge some of the ways of doing things. Uh so this is the approach we've taken to succession planning and uh you know it's all been done with uh with with involvement active involvement and inputs uh from the board.

[01:02:41]>> Okay. Uh that answers.

[01:02:44]>> Sure.

[01:02:49]>> Thank you ladies and gentlemen. Due to time constraints we have reached the end of question and answer session. I now hand the pass over to Pri and Kasha for closing comments.

[01:03:00]>> Thank you everyone for joining us today.

[01:03:03]We would also like to sincerely thank HGSC authorities for hosting this call on our behalf. We appreciate your continued engagement and support. Should you have any further queries, please feel free to reach out to the investor relations team at iirderhappiestminds.com.

[01:03:24]Thank you once again and have a great day ahead.

[01:03:29]>> Thank you on behalf of HDFC Securities Limited. That concludes this conference.

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