Subex Limited has initiated a postal ballot process to seek shareholder approval for the formulation of a new employee stock option plan. The company is proposing the Subex Employees Stock Option Scheme 2026 to align employee interests with corporate performance and retain key talent across its operations in India and abroad.

The scheme will be implemented through the Subex Employee Welfare and ESOP Benefit Trust. Shareholders are being asked to approve the acquisition of equity shares from the secondary market by the Trust, up to a maximum of 5% of the company's paid-up equity share capital as on March 31, 2026. This structure ensures that no fresh equity dilution occurs for existing shareholders, as shares are sourced from the open market rather than through a fresh issue.

Scheme Structure and Eligibility

The proposed ESOP 2026 extends benefits to present and future permanent employees, including directors, while excluding promoters, promoter group members, independent directors, and directors holding more than 10% of outstanding equity. The Nomination and Remuneration Committee will administer the scheme, determining eligibility based on employee grade, service length, and performance records.

Key parameters of the scheme include:

• Vesting Period: Options vest over a minimum of one year and a maximum of 48 months, subject to performance conditions.
• Exercise Price: Determined by market price or committee decision, but not less than the average price paid by the Trust in the secondary market.
• Individual Cap: No single employee can be granted more than 25 lakh options in any financial year or 1% of issued capital, whichever is lower.

Financial Support for Trust

To facilitate share acquisitions, Subex Limited seeks approval to grant an interest-free loan to the ESOP Trust. The loan amount shall not exceed 10% of the aggregate of paid-up share capital and free reserves in any financial year. The company has stipulated that disbursements will not be made from borrowed funds and that working capital debt must not exceed levels recorded as on March 31, 2026. Repayment of the loan will occur through exercise prices paid by employees upon exercising their options.

Voting Timeline

The e-voting facility, managed by National Securities Depository Limited (NSDL), commenced on August 14, 2026, at 9:00 am and concludes on September 12, 2026, at 5:00 pm. Shareholders on record as on August 7, 2026, are eligible to vote. Results are expected to be announced on or before September 14, 2026.

Subex Limited reported a consolidated net profit of ₹1,422 lakh for the quarter ended June 30, 2026, marking a 10.8% year-on-year increase from ₹1,281 lakh in Q1FY26. Revenue from operations surged 19.6% to ₹7,945 lakh, driven by new deal wins in Europe and the Middle East. Managing Director and CEO Nisha Dutt stated that the company’s three-year turnaround is now complete, shifting the strategic mandate for FY27 toward accelerating sustainable top-line growth rather than solely focusing on profitability restoration.

The Board of Directors approved the unaudited standalone and consolidated financial results on August 5, 2026, pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Statutory auditors M S K C & Associates LLP issued an unmodified review report. The company disclosed cash and cash equivalents of ₹18,480 lakh as of June 30, 2026. An earnings call held on August 6, 2026, provided further details on the quarterly performance and future outlook.

Financial Performance Highlights

Consolidated revenue from operations stood at ₹7,945 lakh, compared to ₹7,296 lakh in Q4FY26 and ₹6,640 lakh in Q1FY26. Normalized profit before tax (PBT) increased 27.5% quarter-on-quarter to ₹1,833 lakh. Normalized profit after tax (PAT) rose to ₹1,609 lakh from ₹1,151 lakh in the prior quarter. The reported PAT includes exceptional items and impairment allowances, which reduced the final figure to ₹1,422 lakh.

Standalone net profit was ₹855 lakh, up from ₹687 lakh in Q1FY26. Standalone revenue grew to ₹7,278 lakh from ₹6,256 lakh in the corresponding prior period. The company received a tax refund of ₹288 lakh in Q1FY27.

Strategic Shift and Capital Allocation

Nisha Dutt emphasized that FY27 represents the beginning of a new phase focused on translating the established foundation into consistent growth. Management aims for double-digit revenue growth, supported by a qualified pipeline that is three to four times the annual order intake target. Approximately 70% of Subex’s revenue is recurring, providing stability, while the remaining 30% comes from new wins that drive future backlog.

Regarding capital allocation, the Board is considering structural balance sheet changes, including potential equity capital reduction to write off pending losses, which requires shareholder and NCLT approval. Additionally, the company plans to launch an Employee Stock Option Plan (ESOP). Shareholder approval via postal ballot is expected within two weeks, with market acquisition of up to 2% of equity planned for Q3FY27. Nisha Dutt also confirmed that management stake improvement is under active consideration.

Business Updates and Order Wins

Subex secured several key contracts during the quarter, reinforcing its annuity-based revenue model. A Tier 1 operator in the Middle East renewed its managed services and license agreement, while another Middle East operator awarded a deal for migration assurance. In Europe, the company won a new business assurance and fraud management (BAFM) deal. Additionally, an African operator renewed its managed services for BAFM, and a Tier 1 operator in Asia-Pacific and Rest of World (APAC and ROW) renewed managed services for product efficiency management (PEM).

Revenue by service segment showed License implementation and Customization growing to 33% of total revenue in Q1FY27, up from 29% in Q1FY26. Managed Services remained stable at 29%, while Support and others declined slightly to 38%. Geographically, EMEA continued to be the largest contributor at 58% of revenue, followed by APAC and ROW at 27%, America at 13%, and India at 2%.

What the Numbers Show

The divergence between reported and normalized metrics highlights the impact of exceptional items and impairment allowances on Subex's bottom line. While reported PAT was ₹1,422 lakh, normalized PAT reached ₹1,609 lakh, indicating that core operational performance remains robust despite non-recurring adjustments. The sharp year-on-year recovery in reported EBITDA margin — from 5.92% to 18.88% — further underscores the improvement in underlying profitability. The 640 basis point quarter-on-quarter expansion in normalized EBITDA margin to 21.2% demonstrates that revenue growth is translating into higher operating leverage rather than being offset by proportional cost increases. This efficiency gain, combined with a healthy cash position of ₹18,480 lakh, provides the company with strong liquidity to pursue further strategic initiatives, including increased R&D intensity for AI capabilities and potential inorganic acquisitions.