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Margin Improved but Revenue Visibility Remains Moderately Cautious DATAMATICS delivered a resilient Q4FY26 performance, marked by steady revenue growth and strong margin expansion driven by improving execution, operational efficiencies, and acquisition synergies. Digital Operations remained the key growth driver, supported by platform-led automation, while AI emerged as a strategic focus through Agentic AI platforms such as Finato and TruAI. The management highlighted meaningful productivity gains across AI-led deployments and guided for high single-digit organic growth in FY27E. We believe the company is gradually transitioning toward a scalable AI-led and platform-driven business model, although continued AI investments and weakness in select segments could weigh on near-term revenue visibility. We expect Revenue/EBIT/PAT to expand at a CAGR of 8.8%/10.1%/18.8% over FY26– 29E and maintain a TP at INR 920, assigning an ‘ADD rating, valuing the company on FY28E EPS.

Steady Revenue Growth; Margin Pleasantly Surprises

* DATAMATICS reported Q4FY26 revenues at INR 5,193 Mn, up 1.8% sequentially and 4.4% YoY (vs CIE estimate of INR 5,304 Mn). For the full year, the revenue grew by 15.3% at INR 19,872 Mn.

* EBIT for Q4FY26 stood at INR 880 Mn up 18.5% QoQ and 61.3% YoY (vs CIE estimate of INR 851 Mn). For the full year, EBIT stood at INR 2,876 Mn, up 58.7% YoY. EBITM came in at 16.9%, up by 240 bps QoQ (vs CIE estimate       of 16.0%), while for the full year, EBITM stood at 14.5%.

* PAT for the quarter came in at INR 449 Mn, up 23.5% QoQ and flat YoY (vs CIE estimate of INR 723 Mn). For the full year, PAT stood at INR 1,950 Mn, down 5.1% YoY. EPS for the quarter stood at INR 7.48.

Agentic AI and Digital Operations Drive Scalable Growth 

Digital Operations remained the key growth driver, delivering strong growth of 9.5% QoQ in Q4FY26 and 12.4% YoY for FY26, supported by automation and platform-led efficiency. We expect the segment to remain central to its AI transformation strategy. Digital Technologies witnessed slight moderation due to project completions but maintained healthy double-digit margin, while Digital Experiences remained weak amid client captive centre transition, though recent deal wins are expected to aid recovery. Finato is being upgraded into an Agentic AI-led finance transformation platform with encouraging enterprise traction. The management guided for high single-digit organic growth (~8–9%) in FY27E. We expect the growth to remain stable despite near-term softness in the Experiences segment.

Strong Margin Recovery Backed by Automation and Cost Discipline

DATAMATICS delivered a sharp improvement in profitability in FY26, with EBIT margin expanding by 240 bps QoQ to 16.9%, driven by operational efficiency, disciplined cost-management, automation benefits and synergies from recent acquisitions (TNQ Tech). The margin is expected to remain broadly stable with 50–100 bps improvement potential in the next year, partially reinvested into AI capabilities. Sales restructuring focussed on deeper wallet share expansion among existing customers is yielding traction.

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