3IINFOLTD - 3i Infotech

📊 NSE: 3IINFOLTD 🏢 Computers - Software - Medium / Small 📅 Last Updated: 12/13/2025 17:32

💰 Financial Performance

Revenue Growth by Segment

Q2 FY26 revenue was led by the Application-Automation-Analytics (AAA) vertical at INR 123 Cr (70.3% of total), followed by Infrastructure Services (IS) at INR 34.6 Cr (19.8%) and Digital Business Process Services (Digital BPS) at INR 16.8 Cr (9.6%).

Geographic Revenue Split

The company has a majority export-based revenue profile with a presence in South Asia, Asia-Pacific, Middle East, North America, and Western Europe. In Q2 FY26, 14 new clients were onboarded, primarily from the US market.

Profitability Margins

Q2 FY26 Gross Margin stood at INR 26.5 Cr (15.1% margin), up from INR 19.1 Cr in Q1 FY26. Net Profit Margin for FY 2024-25 improved to 17.18% from -229.10% in FY 2023-24 due to the reversal of investment diminution and credit loss allowances.

EBITDA Margin

Operating EBITDA margin reached 18% (INR 31.4 Cr) in Q2 FY26, a 74% growth QoQ. On a consolidated basis, FY 2024-25 EBITDA was INR 20.94 Cr, recovering from a loss of INR 299.53 Cr in the previous fiscal year.

Capital Expenditure

The Board approved a fundraise of up to INR 100 Cr through a Rights Issue on May 14, 2025, to enhance business capabilities and capital structure. Previously, the company used INR 1,000 Cr from a software business sale to repay all term debt.

Credit Rating & Borrowing

CRISIL and CARE ratings reflect a healthy financial risk profile due to nil term debt. Interest coverage ratio improved to 14.92 in FY 2024-25. Rating sensitivity for an upgrade requires revenue to exceed INR 800 Cr and operating margins to stay above 10%.

⚙️ Operational Drivers

Raw Materials

Skilled Human Capital represents 100% of the core service delivery cost, as the business is an IT services provider.

Import Sources

The primary talent pool is sourced from India (South Asia), with additional global delivery capabilities in the US, Middle East, and Europe.

Key Suppliers

Not disclosed in available documents; however, the company relies on global recruitment agencies and talent platforms for its 4,000+ employee base.

Capacity Expansion

Current workforce exceeds 4,000 employees. Expansion is driven by the strategic alliance with HCL Software and the onboarding of 14 new clients in Q2 FY26 to support the AAA and IS verticals.

Raw Material Costs

Employee costs are the primary expense; the company maintains an attrition rate of 16%, which is aligned with industry norms but remains a key monitorable for cost stability.

Manufacturing Efficiency

Operational efficiency is tracked via the attrition rate (16%) and debtors turnover ratio, which improved significantly to 6.13 in FY 2024-25 from 1.46 in FY 2023-24.

Logistics & Distribution

Not applicable for IT services; distribution is handled via global digital infrastructure and onsite/offshore support models.

📈 Strategic Growth

Expected Growth Rate

Growth Strategy

Growth will be achieved through the 'Vision 2030' strategic reset, focusing on high-margin AAA vertical deals (INR 123 Cr revenue), a strategic alliance with HCL Software, and a planned INR 100 Cr Rights Issue to fund digital and AI-led capabilities.

Products & Services

IT services including application development, infrastructure management, Digital BPS (Business Process Services), IT consulting, and 5G-enabled EDGE computing solutions.

Brand Portfolio

3i Infotech (formerly ICICI Infotech Ltd).

New Products/Services

Expansion into AI-led capabilities, 5G-enabled services, and robotic process automation (RPA) to keep solutions relevant in the evolving cybersecurity landscape.

Market Expansion

Targeting the US market, where 14 new clients were recently onboarded, and expanding the fast-growing quick commerce segment in India.

Market Share & Ranking

Identified as a mid-size player in the IT services industry, competing against large domestic and multinational corporations.

Strategic Alliances

Forged a strategic alliance with HCL Software to strengthen core market offerings and operational excellence.

🌍 External Factors

Industry Trends

The Indian IT sector continues to grow through digital transformation and technology adoption (NASSCOM data), with a shift toward offshore revenue models and 5G/AI integration.

Competitive Landscape

Dominated by large players such as DXC Technology and IBM, which creates persistent pressure on the company's 5-6% service business margins.

Competitive Moat

Moat is built on a diversified revenue profile and established global presence. Sustainability is challenged by the small scale of operations relative to global majors like IBM.

Macro Economic Sensitivity

Sensitive to global technology spending, which saw a 3.2% decline in 2020, impacting demand for outsourcing and consulting services.

Consumer Behavior

Enterprises are shifting toward outcome-driven, scalable digital solutions and AI-led automation, prompting the company's pivot to the AAA vertical.

Geopolitical Risks

Country risk mitigation involves geographic diversification and regular business assessments in operating regions like North America and the Middle East.

⚖️ Regulatory & Governance

Industry Regulations

Operations are aligned with the Companies Act, 2013 and global data protection and privacy standards to maintain the trust of global clientele.

Taxation Policy Impact

The company opted for the 'Direct Tax Vivad Se Vishwas Scheme, 2024' to settle income tax litigations for FY 2013-14 for its material subsidiary, 3i Infotech Digital BPS Limited.

Legal Contingencies

Pending income tax disputes for FY 2013-14 are being settled under the Vivad Se Vishwas Scheme 2024; other contingencies include country-specific compliance managed by local experts.

⚠️ Risk Analysis

Key Uncertainties

High attrition rate of 16% and intense competition from larger IT firms are the primary risks to sustaining the 17% EBITDA margin achieved in Q2 FY26.