This article first appeared on GuruFocus .
Release Date: July 16, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Onward Technologies Ltd ( BOM:517536 ) achieved its highest ever quarterly revenue of INR151.2 crores, marking a significant milestone.
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The company reported a 20% quarter-on-quarter increase in EBITDA, with margins improving by 113 basis points to 12.3%.
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A significant offshore development center engagement worth 33 crore was secured with a leading global power and management company from North America.
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The number of customers generating over a US million dollar per year annual revenue increased from 16 to 18, indicating deeper account penetration.
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The company completed its first-ever buyback program, reinforcing confidence in its business and long-term growth outlook.
Negative Points
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Despite revenue growth, the profit after tax margin did not show a significant year-on-year improvement.
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The subcontracting costs increased by 36% year-on-year, indicating potential challenges in managing employee costs.
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The company faces macroeconomic uncertainties, which could impact future growth and profitability.
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There is a reliance on a limited number of large customers, which could pose a risk if any of these relationships were to change.
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The company's aspiration to improve revenue per employee to industry benchmarks remains a long-term goal without a specific timeline.
Q & A Highlights
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Q: What are the growth expectations for the auto segment this year, given the mixed commentaries from the industry? A: The spending pattern remains selective, but customers continue to invest in core innovation, software-defined engineering, AI, automation, and cost optimization. Onward Technologies is well-positioned in these areas and continues to see healthy demand. Despite industry news about project cancellations, Onward is experiencing positive momentum with select customers in the auto segment. (Respondent: Unidentified_3)
Q: Can you provide insights into the strategy for medium to long-term growth, especially given the competitive landscape? A: Onward Technologies focuses on existing customers where there are established relationships and master service agreements. The company is confident in delivering robust double-digit revenue and EBITDA growth year-on-year. The strategy involves focusing on three broad verticals with significant potential for growth over the next three years. (Respondent: Unidentified_3)
Q: How is the healthcare vertical performing, and what is its expected contribution over the next 18 months? A: Currently, no healthcare clients have crossed the $1 million revenue mark, but the business is expected to grow between 20% to 50% year-on-year. The focus is on executing well and growing with existing customers, as the potential in healthcare is significant. (Respondent: Unidentified_3)
Q: With the recent ODC deal and focus on large accounts, how should we view the evolution of deal sizes and potential for multi-year engagements? A: All 70-plus customers are large, with outsourcing budgets ranging from $100 million to $1 billion. The recent 33 crore ODC deal is just a starting point, and there are several large multi-year engagements in the pipeline. The quality of the pipeline is broader and higher than a year ago. (Respondent: Unidentified_3)
Q: What led to the increase in subcontracting costs, and how does it relate to employee work per employee? A: The subcontracting cost, along with employee cost, has decreased as a ratio compared to the previous year. Due to macroeconomic conditions, short-term local hires were made in Europe and the US, which will eventually be replaced by team members as travel restrictions ease. The focus remains on serving customers effectively. (Respondent: Unidentified_3)
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
