XCHANGING - Xchanging Sol.

📊 NSE: XCHANGING 🏢 Computers - Software - Medium / Small 📅 Last Updated: 12/14/2025 15:19

💰 Financial Performance

Revenue Growth by Segment

Global Business Services (GBS) grew 3.3% YoY organically, marking its 9th consecutive quarter of growth. Global Infrastructure Services (GIS) declined, with Cloud Infrastructure & IT Outsourcing falling 12.7% and Modern Workplace down 5.0%. Analytics & Engineering grew 8.8%, Insurance Software & BPS grew 5.1%, and Security grew 6.8%.

Geographic Revenue Split

Not explicitly disclosed by region, but foreign currency fluctuations (primarily Euro at 1.07) had a 0.7% impact on total revenue in Q1 FY24.

Profitability Margins

Adjusted EBIT margin was 6.5% in Q1 FY24. Consolidated Profit Before Tax (PBT) for Xchanging Solutions Limited was INR 37.79 Cr for H1 FY25, a 37.3% increase from INR 27.51 Cr in H1 FY24. Standalone PBT grew from INR 11.73 Cr to INR 29.81 Cr.

EBITDA Margin

Total segment profit margin was 8.2% in Q1 FY24, down from 9.1% in Q1 FY23, reflecting a 90 bps compression due to GIS segment challenges.

Capital Expenditure

Consolidated cash flow shows INR 0.02 Cr (INR 2 lakhs) in bank deposits with maturity over 3 months. DXC parent level targets $800M in Free Cash Flow for FY24.

Credit Rating & Borrowing

The company is committed to an investment-grade credit profile. Interest expense was $66M in Q1 FY24 at the DXC parent level.

⚙️ Operational Drivers

Raw Materials

Human Capital/IT Personnel (primary cost) and Software Licenses/Infrastructure.

Import Sources

Not applicable for IT services; talent is sourced globally with significant operations in India (Bengaluru).

Key Suppliers

DXC Technology (Parent Company) acts as the primary ecosystem partner and service provider.

Capacity Expansion

Transitioning to an 'offering-led operating model' to improve market engagement. GBS now represents 49.4% of total revenue, expanding toward becoming the majority mix.

Raw Material Costs

Not applicable for IT services; focus is on workforce optimization and real estate rationalization (Restructuring costs of $20M in Q1 FY24).

Manufacturing Efficiency

Not applicable; efficiency is measured by working capital management, which led to better-than-expected free cash flow.

Logistics & Distribution

Not applicable for IT services.

📈 Strategic Growth

Expected Growth Rate

Not disclosed

Growth Strategy

Transitioning to an offering-led operating model and focusing on the GBS segment (high-margin flywheel) to reach a majority revenue mix by FY24. The strategy involves fixing historical GIS challenges and utilizing GBS as a sustainable growth engine with double-digit margins.

Products & Services

Insurance Software, Business Process Services (BPS), Analytics & Engineering, Security Services, Cloud Infrastructure, and Modern Workplace solutions.

Brand Portfolio

Xchanging, DXC Technology.

New Products/Services

New senior talent and offering-led operating model improvements are expected to drive future revenue contribution.

Market Expansion

Targeting a shift in revenue mix where GBS becomes the majority of DXC revenue by the end of FY24.

Strategic Alliances

Primary alliance is with parent company DXC Technology.

🌍 External Factors

Industry Trends

The industry is shifting toward high-value GBS services (Analytics, Engineering, Security) while legacy infrastructure services (GIS) are facing disruption and slowing demand.

Competitive Landscape

Facing a slowing IT market where legacy infrastructure services are less competitive, necessitating a shift to an offering-led model.

Competitive Moat

Moat is built on the GBS 'flywheel' providing sustainable growth at double-digit margins and specialized Insurance Software/BPS expertise.

Macro Economic Sensitivity

Highly sensitive to the global IT market; a slowing market led to GIS non-resiliency and a -3.6% organic revenue decline.

Consumer Behavior

Enterprise clients are shifting demand toward high-margin GBS offerings over traditional GIS.

⚖️ Regulatory & Governance

Industry Regulations

Subject to international tax laws and uncertain tax positions regarding historical disputes.

Taxation Policy Impact

The company faces uncertain tax positions as of April 1, 2024; auditors challenged management's underlying assumptions in estimating tax provisions and dispute outcomes.

Legal Contingencies

Arbitration losses of $29M (approx INR 240 Cr) were recorded in FY23. The company is also under investigation regarding historical determination of TSI costs.

⚠️ Risk Analysis

Key Uncertainties

GIS segment non-resiliency (impacted revenue by $75M), currency fluctuations (0.7% impact), and potential material weaknesses in internal financial controls related to TSI cost disclosures.