CANARYS - Canarys

📊 NSE: CANARYS 🏢 Computers - Software - Medium / Small 📅 Last Updated: 12/13/2025 20:41

💰 Financial Performance

Revenue Growth by Segment

Technology Solutions revenue grew by 195% YoY in H1 FY26, now contributing 98% of total revenue (INR 1,012 Mn). Water Resource Management (WRM) contributed 2% of revenue (INR 5 Mn) but represents 27% of the total order book, indicating a significant lag between order booking and revenue recognition.

Geographic Revenue Split

The company is expanding its global footprint with the acquisition of Fortira Inc. in the USA (April 2025) and operations in Singapore (Canarys APAC Pte Ltd). Fortira contributed USD 6.6 Mn in revenue for the H1 FY26 period (from April 16 to Sept 30, 2025).

Profitability Margins

PAT Margin stood at 9% in H1 FY26, a decline of 241 bps from 11% in H1 FY25. EBIT Margin also compressed from 18% to 13% (-504 bps) during the same period, reflecting higher operational costs associated with global expansion and product development.

EBITDA Margin

EBITDA Margin was 13% in H1 FY26, down 530 bps from 18% in H1 FY25. This decline is primarily attributed to higher Employee Benefit Expenses, which rose 113% YoY to INR 362 Mn as the company invested in solution and product development for future growth.

Capital Expenditure

Not explicitly disclosed in INR Cr; however, the company completed a major acquisition of Fortira Inc. in April 2025 to strengthen its North American presence and AI capabilities.

Credit Rating & Borrowing

Finance costs increased by 75% YoY to INR 7 Mn in H1 FY26 compared to INR 4 Mn in H1 FY25, suggesting increased borrowing or higher interest obligations to support working capital and acquisitions.

⚙️ Operational Drivers

Raw Materials

As an IT services firm, 'Human Capital' is the primary input, with Employee Benefit Expenses accounting for 35.6% of total income (INR 362 Mn). Purchases and changes in inventory (related to WRM hardware) accounted for 40% of total income (INR 407 Mn).

Import Sources

Technology talent is primarily sourced from India (Bengaluru), USA (New Jersey), and Singapore. WRM components are sourced for projects across 15 states in India.

Key Suppliers

Not specifically named; however, the company is a major partner for GitHub (awarded Global Partner of the Year 2025) and Microsoft, relying on their platforms for service delivery.

Capacity Expansion

Resource count increased by 13.8% from 436 in FY25 to 496 in H1 FY26. The company added 52 new logos across 10+ sectors in H1 FY26 to expand its service capacity.

Raw Material Costs

Employee costs rose 113% YoY to INR 362 Mn. Purchases and inventory costs surged 422% YoY to INR 407 Mn in H1 FY26, reflecting the execution of hardware-heavy WRM or technology integration projects.

Manufacturing Efficiency

Average Revenue per Project stood at INR 3.4 Mn in H1 FY26. Average Revenue per Employee remained stable at INR 1.6 Mn.

Logistics & Distribution

Not disclosed as a significant percentage of revenue.

📈 Strategic Growth

Expected Growth Rate

37-42%

Growth Strategy

Achieving growth through the 'Vision 2028' roadmap involving: 1) Global expansion via the Fortira Inc. acquisition in North America; 2) Launching AI-powered proprietary products like 'Auryis' for the Pharma sector; 3) Cross-selling to 25+ large enterprise logos acquired through Fortira; and 4) Scaling the IT solutions order book which grew 43.8% to INR 1,510 Mn in H1 FY26.

Products & Services

Digitalization and Modernization software services, 'Auryis' AI compliance platform, Water Management Automation for canal modernization, and Telemetry systems.

Brand Portfolio

Canarys, Auryis, Fortira.

New Products/Services

Launched 'Auryis', an AI/ML-powered compliance assessment platform for the Pharma and Life Sciences industry, expected to drive high-margin recurring revenue.

Market Expansion

Expansion into North America (USA) via Fortira and strengthening APAC presence through the Singapore headquarters.

Market Share & Ranking

Recognized as a leading global partner in the GitHub ecosystem (Partner of the Year 2025).

Strategic Alliances

Strategic partnership with GitHub (Overall Growth Partner of the Year 2025) and Microsoft (DevOps and ALM partner).

🌍 External Factors

Industry Trends

The industry is shifting from task-based support ('Caterpillar' phase) to AI and Automation-powered strategic consulting ('Butterfly' phase). Canarys is positioning itself in this 15-20% growing digital transformation market.

Competitive Landscape

Competes with global IT service providers and niche AI consulting firms; distinguished by its 'Overall Growth GitHub Partner' status.

Competitive Moat

Moat built on 30+ years of industry existence, deep integration with GitHub/Microsoft ecosystems, and proprietary AI products (Auryis) which create high switching costs in regulated industries like Pharma.

Macro Economic Sensitivity

Highly sensitive to IT spending budgets in North America and BFSI/Pharma sectors; revenue grew 169% YoY despite global macro uncertainty.

Consumer Behavior

Enterprises are shifting toward long-term partnerships for process optimization rather than simple troubleshooting.

Geopolitical Risks

Trade barriers or visa regulation changes in the US could impact the integration and onsite delivery model of the Fortira acquisition.

⚖️ Regulatory & Governance

Industry Regulations

Operations must comply with global data privacy laws and US/India labor regulations. The 'Auryis' product is specifically designed to help clients meet Pharma regulatory standards.

Environmental Compliance

Not disclosed in INR; WRM solutions contribute to water conservation and sustainability goals.

Taxation Policy Impact

Effective tax rate was 25% in H1 FY26 (INR 30 Mn tax on INR 121 Mn PBT).

Legal Contingencies

The company maintains a Structured Digital Database (SDD) for insider trading compliance as of December 12, 2025. No specific pending litigation values disclosed in available documents.