eClerx Services Limited , a leading provider of business process management, analytics, and technology services, has reported a strong financial performance for the second quarter of fiscal year 2026. The company's results showcase significant growth in revenue and profitability, underlining its resilience in a dynamic market environment.

Financial Highlights

eClerx delivered impressive quarterly results with operating revenue reaching $115.5 million, marking a 5.7% sequential increase. In Indian Rupee terms, the operating revenue stood at INR 10,049 million, up 7.5% quarter-on-quarter. The company's profitability metrics also showed substantial improvement:

For the first half of FY26, eClerx reported USD operating revenue of $225 million, representing a 17% year-on-year growth.

Business Performance

The company witnessed strong growth across various segments:

• Emerging businesses showed exceptional growth, particularly in the Financial Services subsegment.
• Communication, Media & Telecom (CMT) and Hi-Tech verticals demonstrated strong performance.
• BFSI (Banking, Financial Services, and Insurance) sector experienced modest growth.
• Fashion & Luxury segment continues to face pressure, reflecting broader industry trends.

eClerx secured deal wins totaling $46 million for the quarter, indicating a healthy pipeline and market demand for its services.

Operational Updates

• The company added 400 seats in Pune, expanding its operational capacity.
• Attrition rate was reported at 20%, which is typical following annual pay hikes and bonuses.
• Days Sales Outstanding improved to 76 days, reflecting enhanced efficiency in collections.

Management Commentary

Kapil Jain, Managing Director and Group CEO, commented on the results: "We are pleased with our Q2 performance, which reflects the strength of our diversified portfolio and our ability to deliver value to clients across sectors. Our focus on technology-enabled solutions and domain expertise continues to resonate well with our clients."

Future Outlook

Management expects Q3 margins to be lower than Q2 due to recent INR appreciation. However, they maintain the full-year EBITDA margin guidance of 24-28%. The company remains cautiously optimistic about its growth prospects, particularly in the BFSI, CMT, and Hi-Tech verticals.

Capital Allocation

The Board of Directors has approved a buyback of INR 300 crores, demonstrating confidence in the company's financial position and commitment to shareholder returns. Notably, the promoters will not participate in this buyback.

eClerx's strong Q2 performance underscores its resilience and adaptability in a challenging market environment. With a robust deal pipeline and strategic focus on high-growth areas, the company appears well-positioned to capitalize on emerging opportunities in the business process management and technology services space.

eClerx Services , a prominent player in the IT services sector, has recently announced its ambitious growth plans and financial outlook, signaling both opportunities and challenges ahead for the company.

Growth Targets and Annual Contract Value

eClerx Services has set its sights on achieving growth in the top quartile of its industry. The company expects to surpass its previous year's annual contract value (ACV), which stood at approximately INR 140-142 crore. This target underscores the company's confidence in its business model and market positioning.

Q3 Margin Outlook

Despite the optimistic growth projections, eClerx Services has cautioned investors about potential margin pressure in the third quarter. The company anticipates weaker margins in Q3 compared to Q2, primarily attributing this to the recent strengthening of the Indian Rupee.

Currency Impact and Full-Year Forecast

The strengthening of the Indian Rupee is expected to have a short-term impact on the company's financial performance. However, it's worth noting that currency fluctuations are a common challenge for IT services companies with significant international operations.

Despite the expected quarterly margin pressure, eClerx Services maintains a positive outlook for its full-year performance. The company has reaffirmed its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin forecast for the full year, projecting it to be in the range of 24-28%.

Financial Outlook Summary

This balanced outlook from eClerx Services suggests that while the company may face some short-term challenges, it remains confident in its ability to deliver strong full-year results. Investors and market watchers will likely keep a close eye on how the company navigates the anticipated Q3 margin pressure and works towards achieving its ambitious growth targets.