Add Datamatics Solutions Ltd for the Target Rs. 920 by Choice Institutional Equities
Key Conference Call Highlights
Segment Performance
* Digital Operations: This segment 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. The segment also reported the highest-margin segment with EBIT margin of 23.2% in Q4FY26 and 18.7% for FY26.
* Digital Technologies: This segment witnessed a slight moderation due to project completions but maintained healthy double-digit margin.
* Digital Experiences: This segment remained weak amid client captive centre transitions, although recent deal wins are expected to aid recovery.
* FY26 revenue grew 15.3% YoY to INR 19,872 Mn, while Q4FY26 revenue stood at INR 5,193 Mn, up 1.8% QoQ and 4.4% YoY.
Margin Trajectory
* Performance: EBIT for Q4FY26 stood at INR 880 Mn, up 18.5% QoQ and 61.3% YoY, while EBIT margin expanded 240 bps QoQ to 16.9%. FY26 EBIT stood at INR 2,876 Mn, up 58.7% YoY, with EBIT margin at 14.5%.
* Margin Levers: Margin expansion was driven by operational efficiency, disciplined cost management, automation benefits, and acquisition synergies from TNQ Tech. Clients witnessed productivity gains of 30–60%, alongside improvement in turnaround time, accuracy, and operating costs.
Outlook & Guidance
* Margin Guidance: Management expects margins to remain broadly stable with 50–100 bps improvement potential, partially reinvested into AI capabilities.
* Revenue Guidance: Management guided for high single-digit organic growth (~8–9%) in FY27E.
* Segmental Outlook: Growth is expected to remain stable despite near-term softness in the Digital Experiences segment.
* Dividend: The Board recommended a final dividend of INR 5/share (100% payout on face value).
AI Initiatives
* AI remains a key strategic focus through Agentic AI platforms, such as TruAI and Finato.
* TruAI is designed for enterprise agentic automation, with TruAI Underwriting already securing initial customers in the insurance space.
* The company plans to expand TruAI into Life and Property & Casualty (P&C) insurance segments.
* Finato is being upgraded into an Agentic AI-led finance transformation platform with strong enterprise traction.
* DATAMATICS is increasingly adopting outcome-based and transaction-based pricing models for AI-led platforms.
* The company leverages hyperscaler ecosystems, particularly Google Cloud technologies, to power its AI offering.
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SEBI Registration no.: INZ 000160131
