💰 Financial Performance

Revenue Growth by Segment

The Corporate segment contributed 100% of revenue in Q2 FY26, reflecting a strategic pivot away from the startup segment. Standalone revenue from operations decreased by 39.75% YoY to INR 3.90 Cr in FY25 from INR 6.47 Cr in FY24. Consolidated revenue for Q2 FY26 was INR 0.76 Cr, a 53.7% YoY decline from INR 1.63 Cr in Q2 FY25.

Profitability Margins

Net Profit Margin stood at -2.07% in FY25 compared to -2.15% in FY24. Operating Profit Margin was -2.04% in FY25 vs -1.90% in FY24. The company reported a standalone net loss of INR 8.62 Cr in FY25, an improvement from a loss of INR 10.13 Cr in FY24.

EBITDA Margin

Operating EBITDA margin was -140.70% of operating income in FY25. Adjusted Operating EBITDA for Q2 FY26 was negative INR 1.61 Cr, compared to negative INR 1.02 Cr in Q2 FY25, primarily due to the revenue decline during the transition to corporate-focused services.

Credit Rating & Borrowing

The company is debt-free as of FY25, with an Interest Coverage Ratio of -76.64 due to the absence of debt and presence of operating losses.

⚙️ Operational Drivers

Raw Materials

Human Capital/Employee Benefits (ESOP expenses represented INR 0.25 Cr in Q2 FY26) and Technology Infrastructure.

Import Sources

Not applicable as the company provides professional and technical consulting services.

Key Suppliers

Not applicable; the company operates as a technology partner and consultant.

Capacity Expansion

Current team size is 54 members as of September 30, 2025, down from 64 clients served in FY25. The company is focusing on scaling in-house products like Rely and DocuXray rather than physical capacity.

Raw Material Costs

Employee benefit expenses are the primary cost driver; ESOP expenditure was INR 0.25 Cr in Q2 FY26, up from INR 0.01 Cr in Q2 FY25.

Manufacturing Efficiency

Not applicable; service-based model focused on client delivery and product development.

Logistics & Distribution

Not applicable.

📈 Strategic Growth

Growth Strategy

The company is transitioning from a startup-heavy revenue model to a corporate-focused model, targeting 100% corporate revenue. Growth is driven by the monetization of in-house products like 'Rely' and 'DocuXray' (BFSI automation), and a pilot project in 'AgeTech' expected to monetize by Q3/Q4 FY26. The goal is to reach EBITDA breakeven within 1-2 quarters.

Products & Services

Professional and technical consulting in product development, data science, and analytics; AI/ML technology specializing in Natural Language Processing; SaaS platforms; and automated document classification for BFSI.

Brand Portfolio

Rely, DocuXray, Xelpmoc.

New Products/Services

AgeTech pilot project (expected monetization Q3/Q4 FY26); DocuXray for automated document sorting and data extraction in the insurance sector.

Market Expansion

Focusing on the BFSI and Insurance sectors for automation products; expanding corporate segment reach globally from offices in Bengaluru, Hyderabad, and Mumbai.

Strategic Alliances

Technology partner for 12 investee companies including Mihup Communication (Fair Value INR 42.93 Cr) and One Point Six Technologies (Pencil) where it holds a 7.9% stake.

🌍 External Factors

Industry Trends

The industry is shifting toward AI/ML and automated data science services. Xelpmoc is positioning itself as a 'leveraged mutual fund' for technology, aiming to profit from the 'wealth at the bottom of the pyramid' by providing global-standard tech to underserved sectors.

Competitive Landscape

Competes with specialized tech consultants and AI/ML service providers; differentiates through its equity-for-tech business model.

Competitive Moat

The moat is built on a 'leveraged mutual fund' model where the company gains equity in high-potential startups in exchange for tech services. This provides long-term upside through portfolio appreciation (Fair Value of INR 70.34 Cr as of Sept 2025) while maintaining a debt-free balance sheet.

Macro Economic Sensitivity

Highly sensitive to the startup funding ecosystem and venture capital availability, which impacts the ability of early-stage clients to sustain operations and pay for tech services.

Consumer Behavior

Increased demand for automation in BFSI and insurance to reduce human error and manual sorting costs.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with Indian Accounting Standards (IND AS) and the Companies Act, 2013. Products like DocuXray are designed to help clients ensure compliance with regulatory standards in the BFSI sector.

⚠️ Risk Analysis

Key Uncertainties

The primary risk is the financial instability of startup clients; if they do not receive timely funding, they may fail to sustain operations, impacting Xelpmoc's receivables and equity value.

Geographic Concentration Risk

Operations are concentrated in India with offices in Bengaluru, Hyderabad, and Mumbai, though it has a UK subsidiary (Xelpmoc Design and Tech UK Limited).

Third Party Dependencies

Dependency on the success of investee companies (12 companies) for long-term portfolio gains.

Technology Obsolescence Risk

High risk given the rapid evolution of AI/ML; mitigated by continuous development of in-house frameworks like Rely and DocuXray.

Credit & Counterparty Risk

Receivables risk from startups led to the conversion of INR 1.20 Cr of receivables into equity for Pencil (OPSTPL) to manage outstanding debts.