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Execution Improves; Growth Visibility Strengthens

AUPS delivered a sequential step-up in Q2FY27, with revenue rising 16% QoQ/YoY to a record INR 4,150 Mn, while EBITDA stood at INR 712 Mn (17.2% margin). The order book stood at INR 20.5 Bn, of which 70–75% is expected to be executable over the next 4–6 quarters, providing revenue visibility and supporting a stronger H2 as implementation bottlenecks ease and incremental R&D intensity moderates. Banking & Fintech is approaching the monetisation phase of its AI-native product stack, with meaningful deal announcements expected in Q3/Q4, while Data Centre (DC) business is projected to grow 70– 80%+ in FY27. However, a faster-growing DC business could constrain consolidated margin expansion, with the management expecting margin to broadly sustain current level at 17-18% in near term as business mix shifts towards lower-margin infrastructure execution. We see improving execution and product-led growth as key positives, but remain watchful of order-book conversion, receivables and cash conversion. We cut FY27E/FY28E EPS by 3/5% and revise our TP to INR 915, valuing the company at 16x average FY28E– FY29E EPS, while retaining ‘BUY’.

Q2FY27 Revenue Beats Estimate while PAT Misses

* AUPS reported Q2FY27 revenues at INR 4,150 Mn (vs CIE est. INR 4,060 Mn), reflecting 16.0% YoY growth and up by 15.9% QoQ.

* EBITDA came in at INR 712 Mn (vs CIE est. at INR 709 Mn), down 1.0% YoY and up 16.0% QoQ. EBITDA margin came in at 17.2% (vs CIE est at 17.5%), down 300 bps YoY due to higher investments.

* PAT for the quarter came in at INR 490 Mn (vs CIE est. at INR 574 Mn), down 9.9% YoY. Reported EPS for the quarter came in at INR 9.1

Revenue Momentum Strengthens; TIG Drives Growth

AUPS Q2FY27 revenue rose 16% YoY/QoQ to a record INR 4,150 Mn, with Banking & Fintech contributing INR 2,010 Mn and TIG INR 2,140 Mn. Growth was supported by improving banking project execution, transit wins and ramp-up in Data Centre projects. The order book stood at INR 20,050 Mn, with 28 new client additions during the quarter. The management expects H2 growth to strengthen, supported by conversion of 70–75% of the order book over the next 4–6 quarters and improving monetisation of AI-native banking products. We view the expected H2 acceleration as an encouraging sign of growth recovery, with order-book conversion and AI-native banking monetisation key to sustaining momentum

Margin Stable QoQ; Cash Conversion Key

EBITDA declined 1% YoY to INR 712 Mn, with margin at 17.2%, while PAT fell 11.4% to INR 500 Mn, reflecting elevated R&D investments and an adverse Data Centre mix. The management expects EBITDA margin to remain within 17–18% through FY27, as improving Banking & Fintech and Transit profitability offsets lower-margin infrastructure growth. Upfront execution cost and billing delay have weighed on working capital and borrowings, with normalisation expected in Q3. We remain constructive on the growth outlook, but order conversion and achieving 60–70% operating cash flow-to-EBITDA remain key tests of earnings quality.

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