Updater Services Q3FY26: Net Profit Drops 70% to ₹92m Despite Revenue Growth
Updater Services Limited faced significant profitability challenges in Q3FY26 with net profit declining 70% to ₹92 million despite revenue growth of 10% to ₹7.67 billion. The quarter was impacted by ₹201 million impairment losses related to subsidiary Avon Solutions and ₹54 million exceptional items from new labour code implementation. While IFM segment achieved highest-ever quarterly run rate, BSS segment reported losses, though the company continues investing in AI-led solutions and maintains strong market positioning.
*this image is generated using AI for illustrative purposes only.
Updater Services Limited announced its consolidated financial results for Q3FY26, revealing a challenging quarter marked by significant profit decline and margin compression despite revenue growth. The Chennai-based integrated facility management services provider faced substantial headwinds from impairment losses and regulatory changes.
Financial Performance Overview
The company's Q3FY26 performance presented a mixed picture with strong revenue growth offset by substantial profit erosion and margin compression:
| Metric: | Q3FY26 | Q3FY25 | Change (%) |
|---|---|---|---|
| Revenue from Operations: | ₹7.67 billion | ₹6.95 billion | +10.40% |
| Consolidated Net Profit: | ₹92 million | ₹309 million | -70.23% |
| EBITDA: | ₹204 million | ₹462 million | -55.84% |
| EBITDA Margin: | 2.66% | 6.65% | -399 bps |
| Basic EPS: | ₹1.37 | ₹4.61 | -70.28% |
Nine-Month Performance Analysis
For the nine months ended December 31, 2025, the company demonstrated resilience in revenue generation while facing profitability challenges:
| Parameter: | 9M FY26 | 9M FY25 | Growth (%) |
|---|---|---|---|
| Revenue: | ₹21,966.86 million | ₹20,270.43 million | +8.37% |
| Net Profit: | ₹554.06 million | ₹847.92 million | -34.66% |
| Basic EPS: | ₹8.61 | ₹12.60 | -31.67% |
Segment-wise Performance
The company operates through two primary segments - Integrated Facility Management Services (IFM) and Business Support Services (BSS). For Q3FY26:
Integrated Facility Management Services:
- Revenue: ₹5,319.20 million (Q3FY26) vs ₹4,669.46 million (Q3FY25)
- Segment profit: ₹168.78 million vs ₹248.10 million
Business Support Services:
- Revenue: ₹2,524.75 million vs ₹2,440.77 million
- Segment result: Loss of ₹99.32 million vs profit of ₹151.44 million
Key Challenges and Exceptional Items
The quarter was significantly impacted by two major factors:
Impairment Losses: The company recorded impairment losses of ₹220.69 million in Q3FY26, substantially higher than ₹17.96 million in Q3FY25. This included ₹201 million related to expected credit losses on trade receivables of ₹266 million in subsidiary Avon Solutions & Logistics Private Limited due to alleged irregularities under investigation.
Regulatory Impact: Updater Services recorded exceptional items of ₹53.57 million due to the statutory impact of new labour codes notified by the Government of India on November 21, 2025. These codes consolidated 29 existing labour laws and resulted in incremental employee benefit provisions.
Strategic Outlook and Business Positioning
Despite quarterly challenges, the company's investor presentation highlighted several positive developments:
| Key Highlights: | Details |
|---|---|
| IFM Growth: | Reached highest-ever quarterly run rate |
| Workforce: | 60,122 IFM headcount, 16,146 BSS headcount |
| Technology Investment: | Heavy investment in AI-led solutions for BSS |
| Market Position: | Benefits from labour code formalization |
| Global Operations: | Delivered highest-ever profitability |
The company emphasized that margins were impacted by transitory factors, including upfront costs on new contracts, with profitability expected to normalize as contracts mature. BSS businesses continue investing heavily in technology and AI-led solutions, positioning for improved efficiency and scalability.
Operational Metrics
Despite challenges, the company maintained operational stability:
| Expense Category: | Q3FY26 | Q3FY25 |
|---|---|---|
| Employee Benefits: | ₹5,991.76 million | ₹5,184.26 million |
| Other Expenses: | ₹1,020.41 million | ₹1,020.45 million |
| Finance Costs: | ₹14.51 million | ₹19.86 million |
The company's paid-up equity share capital remained stable at ₹669.53 million with a face value of ₹10 per share. Updater Services maintains its position as a net cash company with a debt-to-equity ratio of -0.2x, providing financial flexibility for future growth initiatives.
Historical Stock Returns for Updater Services
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.98% | -1.65% | +2.27% | -36.17% | -48.95% | -44.57% |
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