💰 Financial Performance

Revenue Growth by Segment

Total revenue for H1 FY26 reached INR 59.12 Cr, a 14.5% YoY increase from INR 51.67 Cr. Revenue from operations grew by 4.95% in H1 FY26, while 90% of the business is recurring and 10% is project-based. The company maintains a guidance of >=15% YoY revenue growth for the full year FY26.

Geographic Revenue Split

Not explicitly disclosed in percentage terms, but the company operates a development center in Gurgaon (expanded to 80+ seats), an office in the Netherlands, and is establishing a new office in Saudi Arabia to capture regional demand.

Profitability Margins

Profit After Tax (PAT) for H1 FY26 was INR 14.80 Cr, up 8.1% YoY from INR 13.69 Cr. Net margins have seen a temporary compression to approximately 25-26% in H1 FY26 compared to historical levels of 30%+ due to front-loaded investments in senior leadership and AI capabilities.

EBITDA Margin

EBITDA for H1 FY26 stood at INR 20.45 Cr, representing an 8.3% YoY growth from INR 18.88 Cr. The EBITDA margin is currently impacted by deliberate investments in a new AI Center of Excellence and a 14% increase in total income driven by other income sources.

Capital Expenditure

The company has earmarked INR 40 Cr specifically for strategic acquisitions. Additionally, it invested in expanding the Gurgaon development center to an 80+ seater capacity and established a Netherlands office in 2025 to support global delivery.

Credit Rating & Borrowing

The company maintains a zero-debt balance sheet as of H1 FY26. It holds cash investments of INR 147.49 Cr, providing significant liquidity for organic and inorganic growth without incurring interest costs.

⚙️ Operational Drivers

Raw Materials

The primary 'raw material' is human capital (IT talent), specifically senior architects, developers, and leadership in AI, Salesforce, and Cloud engineering, which constitute the bulk of the operational cost base.

Import Sources

Talent is primarily sourced from India, with a major development hub in Gurgaon and a presence in Bangalore. Global sales talent is being onboarded in the Netherlands and planned for Saudi Arabia.

Key Suppliers

Not applicable as a service-based IT company; however, the company utilizes technology platforms from partners like Salesforce, Oracle, and SAP (though currently lacking a formal SAP/Oracle practice).

Capacity Expansion

Current capacity includes a newly expanded 80+ seater development center in Gurgaon. The company is investing in 10 key technological areas, with 3 areas (AI, Salesforce, Cloud) being prioritized in the current fiscal year.

Raw Material Costs

Employee benefit expenses and talent acquisition costs are the primary drivers. Management noted that salaries have averaged out across India (e.g., Gurgaon vs. Bangalore), and they are investing 'ahead of the curve' to win higher-margin deals.

Manufacturing Efficiency

Efficiency is measured by the 'land and expand' strategy, where the company starts with smaller pilot projects for FTSE and NYSE listed clients to build trust before scaling to larger digital transformation contracts.

Logistics & Distribution

Distribution is handled via digital delivery models and global sales offices. Sales capacity is being strengthened to improve 'pipeline quality' and 'win velocity'.

📈 Strategic Growth

Expected Growth Rate

15%

Growth Strategy

Growth will be driven by doubling revenue over three years through a three-pronged strategy: expanding the global sales team, deepening AI/ML and data engineering capabilities, and executing strategic M&A using the INR 40 Cr earmarked fund. The company is targeting companies with strengths in Salesforce and Cloud to enhance market reach.

Products & Services

End-to-end software development solutions, digital consulting, IT engineering, AI-driven delivery models, Salesforce implementation, and cloud engineering services.

Brand Portfolio

Capital Numbers

New Products/Services

Launched AI Center of Excellence and specialized practices in Salesforce and Cloud engineering, which are expected to contribute to a gradual expansion in revenue momentum in H2 FY26.

Market Expansion

Expanding global footprint with a new office in Saudi Arabia and leveraging the existing Netherlands office to target European and Middle Eastern enterprise clients.

Market Share & Ranking

Positioned as a premier SME IT services provider; differentiates from large-cap peers like Infosys and Wipro by offering more 'nimble and agile' services for smaller, high-trust contracts.

Strategic Alliances

The company is actively screening over 20 companies for M&A and is in discussions with multiple targets to enhance digital engineering capabilities.

🌍 External Factors

Industry Trends

The industry is shifting toward AI-driven delivery and cloud-native engineering. Capital Numbers is positioning itself by hiring a new Director for its AI CoE and focusing on high-growth technology practices to maintain industry-leading profitability.

Competitive Landscape

Competes with other SME IT firms on credentials and with large-cap firms on agility and price-to-value ratio for mid-sized digital transformation projects.

Competitive Moat

Moat is built on high-tier credentials (SOC 2 Type 2, ISO 27001) which are rare for SME-sized IT firms, allowing them to win trust from NYSE/FTSE listed entities that typically only hire large-cap firms.

Macro Economic Sensitivity

Sensitive to global IT spending trends and regional economic shifts in the US and Europe, which currently show 'softer demands' in certain sectors.

Consumer Behavior

Enterprise clients are increasingly seeking 'nimble' partners for smaller, specialized AI and cloud pilots rather than massive, multi-year legacy contracts.

Geopolitical Risks

Global market volatility is cited as a factor, though the company maintains consistent execution despite these headwinds.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with international data security standards (SOC 2 Type 2, ISO 27001) is critical for maintaining its license to operate in global enterprise markets.

Environmental Compliance

Not a high-impact area for IT services, though the company adheres to international ISO standards.

Taxation Policy Impact

The company's effective tax rate is reflected in the difference between EBITDA (INR 20.45 Cr) and PAT (INR 14.80 Cr).

Legal Contingencies

No specific pending court cases or high-value legal disputes were disclosed in the provided H1 FY26 documents.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timing of the margin realignment; management expects margins to expand as new practices scale, but front-loaded costs currently impact short-term profitability by approximately 4-5%.

Geographic Concentration Risk

While expanding, the company still has a significant delivery concentration in India (Gurgaon/Kolkata), making it sensitive to local labor market inflation.

Third Party Dependencies

Dependency on global cloud platforms (AWS, Azure, Salesforce) for service delivery.

Technology Obsolescence Risk

Risk of falling behind in AI/ML; mitigated by the establishment of a dedicated AI Center of Excellence and hiring senior leadership from the industry.

Credit & Counterparty Risk

Strong receivables quality indicated by a current ratio of 30.55 and a high percentage (90%) of recurring revenue from marquee listed clients.