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Investment-led Transition; Platform Monetisation Key

INDA remains in an investment-led transition phase as the company continues to invest aggressively in R&D, AI capabilities and the expansion of its eMACH.ai and Purple Fabric platforms. While these investments are weighing on margin, we believe they are critical to strengthening the company’s product portfolio, scaling up subscription-led revenues and positioning the business for larger platform-led deal wins. As monetisation of the platform ecosystem gradually improves, we expect operating leverage and deal sizes to scale up meaningfully. Factoring in the near-term investment phase and slower margin recovery, we reduce our target multiple to 24x (from 28x), while maintaining our BUY rating with a revised Target Price of INR 1,250 based on FY28E EPS, supported by strong long-term platform-led growth visibility.

Revenue, EBITDA & PAT Beat Estimates Driven by Operating Leverage

* INDA reported Q4FY26 revenues at INR 8,470 Mn (vs CIE est. INR 7,921 Mn), reflecting a robust 16.7% YoY growth. The outperformance was driven by sharp acceleration in License-linked Revenue, which rose 18.4% YoY to INR 4,640 Mn (vs CIE est. INR 4,348 Mn). For FY26, revenues came in at INR 30,382 Mn, up 21.5% YoY (vs CIE est. INR 29,833 Mn)

* EBITDA came in at INR 1,834 Mn (vs CIE est. at INR 1,489 Mn), down 10.2% YoY due to higher R&D expenses. EBITDA margin came in at 21.6% (vs CIE est at 18.8%), down 650 bps YoY and up 790 bps on a sequential basis

* PAT for the full quarter came in at INR 1,202 Mn (vs CIE est. at INR 1,016 Mn), down 11.2% YoY due to higher investments

Strong Growth in License-linked Revenues; Focus on eMACH.ai Monetisation:

Intellect reported a strong growth in License-linked revenues, which grew by 18.4% YoY, primarily driven by strong growth in Subscription revenues, up 105% YoY. After a three-year phase of infrastructure creation, the company is entering a three-year monetisation phase for its eMACH.ai platform, which now features 700 microservices. For AI platform deals (primarily Purple Fabric), pricing currently starts at USD 0.25-0.5 Mn, with a strategic goal to scale to up USD 3-5 Mn, similar to Salesforce's platform sales model. Overall deal momentum remained steady, with 15 new deals signed, including 2 Destiny deals. For FY26, the company signed 59 new deals, including 21 Destiny deals. ARR crossed INR 12,470 Mn, up 11.5% QoQ and 43.3% YoY. The deal pipeline increased 18.2% YoY to INR 120.9 Bn. We believe License-linked Revenues, currently accounting for 55% of revenue, will gradually scale up to 60% as the company sharpens its focus on expanding Subscription revenues through Purple Fabric.

Profitability to Improve Gradually

INDA is navigating a transition phase, balancing margin against aggressive investments in AI, R&D and market capacity. EBITDA margin came in at 19.1% in FY26, down by 190 bps YoY due to higher investments and integration-related expenses. The management aims to maintain EBITDA margin (incl. other income) between 20% and 25%, noting that investments in sales or R&D capacity can cause temporary margin drops that typically recover in two quarters. We expect these investments to mature over time and generate operating leverage, leading to a gradual margin expansion to 21.2% by FY27E.

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