Ksolves India Limited demonstrated strong operational momentum in Q3 FY26, delivering robust quarter-on-quarter growth while achieving significant margin expansion. The IT services company reported revenue of INR42.3 crores for the quarter ended December 31, 2025, marking a solid recovery in financial performance.

Financial Performance Highlights

The company's quarterly results showcased strong execution across multiple metrics:

The EBITDA margin expansion of 194 basis points quarter-on-quarter to 32.4% reflected improved operating leverage from revenue growth and better execution efficiency. This marked a significant recovery from previous quarters' margin compression.

Nine-Month Performance Overview

For the nine-month period ending December 2025, Ksolves reported comprehensive financial metrics:

The margin compression during the nine-month period was attributed to strategic investments in international expansion, leadership strengthening, brand visibility enhancement, and differentiated product development capabilities.

Strategic Investments and Market Expansion

Management emphasized that margin softness resulted from planned strategic initiatives rather than structural cost increases. The company invested significantly in:

• International market expansion with focus on US, UAE, and Australia
• Leadership depth enhancement across key functions
• Brand visibility through participation in over 10 industry events
• Product and platform capability development
• Digital marketing and branding initiatives

Chairman and Managing Director Ratan Srivastava noted that while some marketing initiatives did not yield expected outcomes, the company does not expect similar spending intensity going forward. The benefits of overseas expansion and capability investments are expected to translate into improved deal flow and revenue traction in coming quarters.

Business Segments and Client Concentration

The company's revenue composition demonstrated strong diversification:

Telecom remains the largest industry segment, while the company serves diverse sectors including BFSI, technology, retail, healthcare, manufacturing, and education technology.

Growth Outlook and Guidance

Ksolves maintains confidence in achieving 20% year-on-year revenue growth for FY26, supported by healthy pipeline visibility and strong demand across core service offerings including ERP, cloud, data engineering, AI, Salesforce, and enterprise transformation programs.

The company expects margins to normalize toward medium-term EBITDA margin outlook of around 30% as revenue scales, utilization improves, and overseas initiatives contribute more meaningfully to financial performance.

Shareholder Returns and Capital Allocation

Demonstrating commitment to shareholder returns, the Board declared a third interim dividend of INR5.00 per share, bringing total dividends for FY26 to INR11.00 per share. The company maintains strong cash generation with INR13.00 crores in cash and cash equivalents while remaining net debt-free.

Additionally, the Board approved establishing a wholly owned subsidiary in Australia to support growth and scale in that region, reflecting the company's strategic focus on international market expansion.

Ksolves India has outlined its strategic approach to cost management, announcing plans to reduce spending on events and marketing activities in the coming years. The company has indicated that no major events are planned that would have a material impact on EBITDA performance.

Cost Management Strategy

The company's decision to lower marketing and event expenditures represents a focused approach to operational efficiency. This strategic shift suggests Ksolves India is prioritizing core business activities while maintaining financial discipline.

Labor Code Compliance Impact

Regarding the implementation of new labor code requirements, Ksolves India has assessed the financial implications of gratuity expenses under the updated regulations. The company has determined that these additional costs will not materially impact its financial performance.

Financial Guidance Maintained

Despite the various operational adjustments and regulatory compliance requirements, Ksolves India has maintained confidence in its FY26 EBITDA margin guidance. The company's assessment indicates that both the reduced marketing spend and new labor code expenses will not significantly alter its profitability projections.

This balanced approach to cost management and regulatory compliance demonstrates the company's commitment to maintaining operational efficiency while meeting statutory requirements. The strategic reduction in discretionary spending, combined with manageable compliance costs, supports the company's financial guidance for the upcoming fiscal year.