FIDEL - Fidel Softech

📊 NSE: FIDEL 🏢 Computers - Software - Medium / Small 📅 Last Updated: 12/13/2025 22:04

💰 Financial Performance

Revenue Growth by Segment

IT and Consulting Services contribute 60% of revenue, while Language Engineering and Localization Services contribute 40%. AI services revenue reached INR 1.2 Cr in Q2 FY26. Overall revenue grew 67.63% YoY in Q2 FY26 to INR 23.15 Cr and 51.37% YoY in H1 FY26 to INR 39.78 Cr.

Geographic Revenue Split

Exports account for 90% of business, with domestic markets at 10%. Post-US acquisition, the split is 50% Asia-Pacific (including Japan and India), 25% US, and 25% Europe.

Profitability Margins

H1 FY26 PBT margin stood at 21% and PAT margin at 16%. Q2 FY26 PAT margin was 12%, impacted by M&A costs and salary hikes. Historical PAT margins typically range between 16.8% and 17.5%.

EBITDA Margin

H1 FY26 EBITDA margin was 21.8% (INR 8.68 Cr). Q2 FY26 EBITDA margin was approximately 16.1% (INR 3.73 Cr), showing a decline from 23.4% in Q2 FY25 due to acquisition-related expenses and project deferments.

Capital Expenditure

IPO proceeds of INR 13.49 Cr raised in June 2022 were utilized for working capital (INR 6.84 Cr) and general corporate purposes (INR 3.37 Cr). INR 1.91 Cr was reallocated from working capital to general corporate purposes per board approval.

Credit Rating & Borrowing

The company started interest payments and repayments on a foreign currency loan in Q2 FY26. Specific interest rate percentages were not disclosed.

⚙️ Operational Drivers

Raw Materials

Personnel and talent costs (Cost of Services) are the primary operational drivers, representing the majority of direct costs for this technology services firm.

Import Sources

Talent is sourced primarily from India, Japan, and the US to support the 'Japan-India-US corridor' strategy.

Capacity Expansion

The company maintains an active strategic client base of 25+ customers and added 12 new customers in Q2 FY26. Expansion is focused on increasing onsite presence in Japan and the US.

Raw Material Costs

Cost of services saw a substantial increase in Q2 FY26, leading to a margin compression of approximately 15 percentage points YoY as direct personnel costs rose.

Manufacturing Efficiency

Not applicable as a service-based company.

Logistics & Distribution

Not applicable for digital technology services.

📈 Strategic Growth

Expected Growth Rate

30-40%

Growth Strategy

Growth is driven by a mix of organic expansion (12 new clients) and inorganic growth through the acquisition of Techvine in the US (completed Aug 1, 2025) and Technology KK in Japan. The company is leveraging the Japan-India-US corridor and expanding into AI services which already contribute INR 1.2 Cr quarterly.

Products & Services

IT Technology Services, Language Localization and Engineering, Japan-India Business Consulting, AI Services, and Digital Transformation solutions.

Brand Portfolio

Fidel, Fidel Softech.

New Products/Services

AI services contributed INR 1.2 Cr in Q2 FY26. Japan-India consulting services are being scaled to leverage growing bilateral trade interest.

Market Expansion

Expanding onsite presence in Japan and the US to capture upstream consulting activities, with plans to move downstream work to offshore centers to improve margins.

🌍 External Factors

Industry Trends

The 'AI rush' and digital transformation for SMEs are key trends. The industry is evolving toward integrated technology and language solutions.

Competitive Landscape

The company competes in the SME digital transformation and localization space, positioning itself as a niche player for the Japan-India corridor.

Competitive Moat

Moat is built on a niche specialization in the Japanese market and the combination of technology with last-mile language localization, which is difficult for generic IT firms to replicate.

Macro Economic Sensitivity

Sensitive to global geopolitical challenges and market conditions, though the company maintained 39% QoQ revenue growth despite these factors.

Consumer Behavior

Growing interest from Japanese and US companies in India-based consulting and offshoring services.

Geopolitical Risks

Global volatility and macro factors are monitored; however, the company believes its small scale allows it to chart 30-40% growth regardless of macro trends.

⚖️ Regulatory & Governance

Industry Regulations

Compliant with SEBI Listing Regulations (30, 33, 47) regarding financial disclosures and fund utilization reporting.

Taxation Policy Impact

Effective tax rate is approximately 24% based on H1 FY26 PBT of INR 8.43 Cr and PAT of INR 6.41 Cr.

Legal Contingencies

The company reported a 'Nil Report' for statement of deviation or variation for IPO funds, indicating no regulatory disputes regarding fund usage.

⚠️ Risk Analysis

Key Uncertainties

Integration risks of the US acquisition, potential for further project deferments, and margin pressure from onsite-heavy business models in the US and Japan.