Fractal Analytics net income surges 92% in Q1 FY27 as TMT bottoms out
Fractal Analytics posted a 92% YoY net income rise to ₹723 million in Q1 FY27, driven by 20% revenue growth and margin expansion. While the TMT segment declined 22%, management indicated it is bottoming out. The company announced the departure of CFO Ashwath Bhat and highlighted strategic wins including a BMC pilot for Cogentiq Health.
*this image is generated using AI for illustrative purposes only.
Fractal Analytics Limited reported a 92% year-on-year increase in consolidated net income to ₹723 million for the quarter ended June 30, 2026, driven by a 20% rise in operating revenue to ₹9.12 billion and significant margin expansion. During its earnings conference call on July 24, 2026, management clarified that the Technology, Media, and Telecommunications (TMT) segment, which dragged headline growth with a 22% decline, is bottoming out. Group CEO Srikanth Velamakanni stated that excluding TMT, the business grew 35% year-on-year, reflecting strong underlying demand in Healthcare and Life Sciences (HLS) and Banking, Financial Services and Insurance (BFSI). The company also announced the departure of Chief Financial Officer Ashwath Bhat after five-and-a-half years.
The results were approved by the Board of Directors on July 23, 2026, and subjected to a Limited Review by statutory auditors B S R & Co. LLP. Fractal Analytics released its investor presentation for the quarter, highlighting an R&D investment of ₹61 crore (6.7% of revenue). On a standalone basis, revenue from operations stood at ₹5,060 million, up from ₹4,217 million in the corresponding quarter of the previous year. Standalone profit after tax rose to ₹753 million from ₹406 million in Q1 FY26.
Segment Performance and Growth Drivers
Revenue growth was led by the HLS industry, which recorded 69% year-on-year growth, solidifying its position as the second-largest industry in the company's portfolio. The BFSI segment also performed strongly with 36% growth. Consumer Packaged Goods and Retail (CPGR), Fractal Analytics's largest industry, grew by 19%. In contrast, the TMT segment declined by 22%. Management noted that TMT performance is driven by big tech firms shifting spend from operating expenses to capital expenditures for AI infrastructure. Excluding TMT, the business grew 35% year-on-year. Geographically, Americas contributed 67.4% of revenue, growing 24% year-on-year, while Europe grew 25%. APAC and others declined by 2%, impacted by TMT issues and geopolitical conflicts.
| Industry Segment: | YoY Growth (%) |
|---|---|
| Healthcare and Life Sciences (HLS): | 69 |
| Banking, Financial Services and Insurance (BFSI): | 36 |
| Consumer Packaged Goods and Retail (CPGR): | 19 |
| Technology, Media and Telecommunications (TMT): | (22) |
Margin Expansion and Client Metrics
Fractal Analytics reported improved profit margins across all levels. Gross margin increased by 29 basis points to 46%. Adjusted EBITDA grew at 35% year-on-year, with margins widening by 189 basis points to 17%. The company's focus on deepening customer relationships resulted in a Net Revenue Retention of 117% in Q1, up from 108% last year. Revenue from new clients contributed 3% to revenue growth, with 0% churn. The Net Promoter Score (NPS) stood at 77, up 4 points year-on-year. Revenue per Billable FTE rose 3% year-on-year to USD 83K (₹7.5 million).
Srikanth Velamakanni attributed the performance to enterprises allocating real transformation budgets behind AI. "TMT was the drag on our headline growth this quarter. Excluding TMT, our business grew 35% year on year, which is a better read on the underlying demand we're seeing," he said. He added that data sovereignty priorities are driving clients to seek partners who can work across models and infrastructure.
Consolidated Financial Highlights
Total income for the quarter stood at ₹9,321 million, compared to ₹7,749 million in Q1 FY26. Total expenses rose to ₹8,182 million from ₹6,996 million, primarily due to higher employee benefits expense of ₹6,319 million versus ₹5,541 million in the prior-year quarter. Profit before tax was ₹974 million, including an exceptional item of ₹69 million related to the statutory impact of new Labour Codes. The share of loss of an associate amounted to ₹234 million. Excluding the share of loss of associates, net income was ₹957 million. Cash from operations was negative ₹103 crore due to variable pay payments, but Days Sales Outstanding (DSO) improved to 71 days from 73 days.
| Metric: | Q1 FY27 | Q1 FY26 |
|---|---|---|
| Revenue from Operations (₹ Mn): | 9,125 | 7,605 |
| EBITDA (₹ Bn): | 1.43 | 1.00 |
| EBITDA Margin (%): | 15.66 | 13.50 |
| Total Income (₹ Mn): | 9,321 | 7,749 |
| Total Expenses (₹ Mn): | 8,182 | 6,996 |
| Profit Before Tax (₹ Mn): | 974 | 530 |
| Net Profit After Tax (₹ Mn): | 742 | 375 |
| Basic EPS (₹): | 4.31 | 2.41 |
Business Transfer and IPO Proceeds
The Board approved a revision to the Business Transfer Agreement with Analytics Vidhya Educon Private Limited, changing the effective date to May 1, 2026, and revising the aggregate consideration to INR 11.6 crore. As of June 30, 2026, ₹2,702 million of the total IPO proceeds of ₹9,593 million had been utilised, primarily for repaying borrowings of Fractal USA. ₹6,891 million remains unutilised. The company repaid debt of INR 2,887 million in April 2026 as planned, resulting in zero long-term debt. Cash and cash equivalents stood at INR 16,378 million as of June 30, 2026.
Strategic Developments and Leadership Change
Management highlighted several strategic developments during the call. Fractal signed a Memorandum of Understanding with Mumbai's municipal corporation (BMC) to pilot Vaidya.ai, now called Cogentiq Health, across public hospitals. Additionally, the company integrated iqigai and EdTech-related teams from Fractal.ai into Analytics Vidhya, restating segment numbers for fiscal 2026 to reflect this change. Fractal Alpha segment loss increased to INR 14 crore due to these investments, though Asper's Annual Recurring Revenue (ARR) grew 59% to $9 million. Associate company Qure.ai saw revenue grow 160% year-on-year to INR 24 crore, despite a share of loss of INR 23 crore.
Chief Financial Officer Ashwath Bhat announced his departure for personal reasons, marking his last earnings call. He credited the finance team and leadership for navigating the IPO, acquisitions, and disciplined reporting over his five-and-a-half-year tenure. The company stated it has made progress in identifying his successor.
Historical Stock Returns for Fractal Analytics
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +1.05% | +0.71% | -0.93% | -4.11% | -1.53% | -1.53% |
How will the departure of CFO Ashwath Bhat impact Fractal Analytics' financial strategy and investor relations during the transition period?
What specific initiatives is management implementing to reverse the 22% decline in the TMT segment amidst the shift from OpEx to CapEx by big tech firms?
Can Fractal Analytics sustain its 69% YoY growth in the Healthcare and Life Sciences segment, or is this driven by one-off large deals?
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