💰 Financial Performance

Revenue Growth by Segment

In Q2 FY26, Payment Solutions contributed 51.1% of revenue, Communication & Fulfilment Solutions 37.8%, and IoT Solutions 10.8%. IoT revenue grew by INR 106.6 million YoY. Overall H1 FY26 revenue was INR 6,632.1 million, a 12.2% YoY decline from INR 7,556.5 million, though Q2 FY26 revenue of INR 3,523.4 million showed a 13.3% sequential growth over Q1 FY26.

Geographic Revenue Split

Domestic BFSI remains the primary revenue source, contributing over 80% of total revenue. The company is currently exploring international expansion into the SAARC region, parts of Africa, and Eastern Europe to diversify its geographic footprint, though specific regional percentage splits for the current period are not disclosed.

Profitability Margins

Gross margins improved significantly to 45.9% in Q2 FY26 from 41.2% in Q2 FY25, driven by a favorable product mix and lower paper prices. PAT margin for Q2 FY26 stood at 16.3% (INR 575.3 million), up 452 bps sequentially from 11.8% in Q1 FY26. Net profit margins for FY25 were 15.09% compared to 10.78% in FY24.

EBITDA Margin

EBITDA margin reached 26.9% in Q2 FY26, a 336 bps sequential improvement and a 9 bps YoY increase. For H1 FY26, EBITDA margin was 25.3% (INR 1,688.7 million) compared to 24.8% in H1 FY25. The expansion is attributed to operational efficiencies in logistics and procurement initiatives, including cash discounts.

Capital Expenditure

The company raised approximately INR 450 crore through an IPO, with proceeds earmarked for debt reduction and future capex. Specific planned capex includes setting up specialty card manufacturing (Metal, Biometric) in Bengaluru and expanding infrastructure for RFID tag and automation hardware manufacturing.

Credit Rating & Borrowing

Crisil upgraded the long-term rating to 'Crisil A+/Stable' from 'Crisil A/Stable' and reaffirmed 'Crisil A1' for short-term. Borrowing costs are expected to decrease following the repayment of INR 300 crore in debt in October 2025 using IPO proceeds, which will reduce interest expenses from Q3 FY26 onwards.

⚙️ Operational Drivers

Raw Materials

Key raw materials include paper (prices improved recently), plastic substrates for cards, and electronic inlays for IoT products. In-house manufacturing of inlays now accounts for a significant portion of IoT production, reducing external dependency.

Import Sources

The company has reduced import costs through strategic procurement, though specific countries of origin are not detailed beyond the mention of international sourcing for certain card components.

Capacity Expansion

The company operates 24 self-sustaining manufacturing units. Planned expansion includes a new specialty card facility in Bengaluru to produce high-value metal and biometric cards, aiming to capture the premium banking segment.

Raw Material Costs

Gross margins of 45.9% imply raw material and direct costs represent approximately 54.1% of revenue. Procurement strategies include availing cash discounts and sourcing from vendors with favorable payment terms to enhance margins.

Manufacturing Efficiency

Operating margins expanded to 25% in fiscal 2025 from 19.3% in fiscal 2024, driven by better product mix and improved logistics operations.

Logistics & Distribution

The company cited 'better logistics operations' as a key driver for the expansion of operating margins to 25% in FY25.

📈 Strategic Growth

Expected Growth Rate

40-50%

Growth Strategy

Growth will be driven by expanding the IoT and RFID portfolio, increasing wallet share in premium card segments (Metal, Biometric, Eco-friendly), and executing a big IoT project starting Q4 FY27. The company also plans inorganic growth through selective acquisitions and expansion into SAARC and African markets.

Products & Services

Credit and debit cards, metal cards, biometric cards, eco-friendly cards, RFID tags, IoT devices, and communication/fulfillment solutions for the BFSI sector.

Brand Portfolio

Seshaasai (STL), Atoll Solutions (subsidiary), Rite Infotech (subsidiary).

New Products/Services

Metal and Biometric cards are being launched to target premium banking customers; IoT solutions are expanding with new firmware and middleware applications.

Market Expansion

Targeting international markets in SAARC, Africa, and Eastern Europe to reduce domestic BFSI concentration.

Market Share & Ranking

The company holds a 31.9% market share for credit and debit card issuance in India as of FY25.

Strategic Alliances

Acquired Atoll Solutions Private Limited to strengthen IoT capabilities; partners with system integrators for Mass Transit Card initiatives.

🌍 External Factors

Industry Trends

The industry is shifting toward sustainable/eco-friendly cards and premium metal/biometric cards. While traditional card issuance is seeing a temporary dip due to post-COVID renewal cycles, the long-term trend is driven by financial inclusion and mass transit projects.

Competitive Landscape

Operates in a regulated market with high compliance costs, facing limited competition in high-security printing products from unorganized players.

Competitive Moat

Moat is built on 30+ years of promoter experience, 31.9% market share, and critical security certifications (NPCI, Rupay, Visa, Mastercard) which create high switching costs and entry barriers for competitors.

Macro Economic Sensitivity

Sensitive to BFSI sector spending and RBI monetary policy; growing stress in unsecured retail lending has recently moderated card issuance volumes.

Consumer Behavior

Shift toward 'Payment on the Go' and premium card aesthetics (Metal cards) is driving the product roadmap.

Geopolitical Risks

Global conflicts and tariff uncertainties are cited as factors that have moderated the pace of new customer acquisition and delayed international expansion.

⚖️ Regulatory & Governance

Industry Regulations

Subject to stringent security approvals from the Indian Banks Association (IBA) and Global Payment Schemes; must adhere to Payment Card Industry Data Security Standards (PCI DSS).

Environmental Compliance

Focusing on eco-friendly and sustainable card portfolios to align with the ESG priorities of banking clients.

Taxation Policy Impact

Effective tax rate was 24.5% in Q2 FY26, with a historical average range of 25-26%.

⚠️ Risk Analysis

Key Uncertainties

Revenue concentration in BFSI (>80%) makes the company vulnerable to sector-specific downturns or regulatory changes by the RBI regarding card issuance.

Geographic Concentration Risk

Heavy reliance on the Indian domestic market, though international expansion is planned.

Third Party Dependencies

98% of revenue comes from existing clients, showing high dependency on the retention of a few large banking relationships.

Technology Obsolescence Risk

The company must constantly upgrade its facilities to keep pace with technological changes in the banking sector, such as the shift from physical to digital-only payments.

Credit & Counterparty Risk

Offers credit of 2-3 months to customers; reliance on creditors reduced to 38 days in FY25 from 100 days in FY22, improving the working capital profile.