Seshaasai Technologies Ltd - Q1 FY27 Earnings Call Summary
Friday, July 24, 2026
Event Participants
Executives
3
Pavan Kumar (Chief Financial Officer), Pragnyat Lalwani (Chairman and Managing Director), Gautam Jain (Whole-time Director)
Analysts
7
Deeya Jain (Sapphire Capital), Mohit Sukhani (IIFL Capital), Zaki Nasser (Nasser Investment), Pritesh (Lucky Investments), Pratik Banthia (Fermi325 Investment Advisors), Siddharth Dagha (S.N. Daga & Company), Pulkit Singhal (Dalmus Capital Management)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹377 crores | Up 21.1% YoY, down 6.9% QoQ (Q4 is historically the strongest quarter) |
| Gross Profit | ₹157 crores | Up 13.3% YoY; gross margin moderated to 41.7% from 44.5% YoY due to higher material costs |
| Cost of Material Consumed (COMC) | 58.34% of revenue | 411 bps higher than FY26 average of 54.23%; H1 typically carries higher costs due to product mix and operating leverage |
| EBITDA | ₹94 crores | Margin of 25.1%, up 135 bps YoY despite gross margin pressure; disciplined employee and operating cost management |
| Profit Before Tax | ₹82 crores | Up 48.8% YoY, supported by operating growth and substantial reduction in finance costs |
| Profit After Tax | ₹60 crores | Up 63.8% YoY; PAT margin at 16%, up 418 bps YoY |
| Cash and Cash Equivalents | ₹369 crores | As of June 30, 2026; well-capitalized balance sheet |
| IPO Proceeds Deployed (Q1) | ₹24.4 crores | Capex ₹6.7 crores, GCP ₹13.7 crores, issue expenses ₹3.9 crores; utilization in line with stated objects |
| Customer Concentration | Top 10 customers: 56% of revenue; >95% from existing clients | Demonstrates stickiness of client relationships and recurring business model |
| Segment Revenue Mix | Payment 42% / C&F 40% / IoT 18% | IoT share up significantly on 145% YoY growth; mix improving toward higher-growth segments |
| Capex Guidance | ₹140-160 crores per year | Maintained for FY27; investments across all three verticals incl. Bengaluru metal card facility |
Transcript note: Segment-wise revenue by absolute value not fully available for all segments — mixes provided by management.
Geographic & Segment Commentary
Payment Solutions (42% of revenue, +5% YoY): Experienced nominal growth, with strong traction in premium metal cards as banks and fintech partners seek differentiated premium offerings. This category offers superior margins and strengthens position in high-value card issuance. Capacity expansion underway at Bengaluru facility to meet domestic and international demand (Europe and Africa). Management sees UPI impact as largely played out; cards business is driven by issuance (not transactions) with MDR on UPI potentially equalizing the economics. Growth strategy combines volume-driven growth with value-driven growth (premiumization, sustainability cards, metal cards).
Communication and Fulfillment Solutions (40% of revenue, +13% YoY): Delivered steady performance backed by recurring requirements from BFSI, enterprise, and government customers. Benefits from Indian enterprises investing in digitalization, automation, cloud-led communication infrastructure, and secure customer engagement platforms. This segment provides stability and supports a balanced revenue mix. Expected to remain flattish in growth terms going forward (achieved ~30% growth last year).
IoT Solutions (18% of revenue, +145% YoY): The key growth driver. RFID emerging as significant long-term opportunity across retail, logistics, pharmaceuticals, food supply chains, and manufacturing. Strategy focused on moving beyond standalone RFID tags to integrated end-to-end traceability solutions combining hardware, software, data intelligence, and supply chain orchestration. Pharmaceutical traceability is a key opportunity driven by regulatory requirements. SIM/eSIM business progressing well — currently catering to 20-25% of the third-largest telecom operator's pre and post-paid SIM requirements. SIM capacity utilization at ~40% in Q1.
Company-Specific & Strategic Commentary
Diversification Strategy: Three-vertical model (payments, communication & fulfillment, IoT) delivering a balanced revenue mix. IoT grew 145% YoY, reinforcing the benefits of diversification. Management remains focused on building a resilient, future-ready business with improving quality of earnings.
Order Book / Tender Wins: Won two multi-year tenders from leading PSU banks representing approximately ₹73 crores in revenue over the tender period. Business is largely back-to-back with customer demand visibility; steady order pipeline underpins the FY27 guidance.
Capacity Expansion: Bengaluru facility (greenfield metal card plant) is near ready — certification and compliance processes underway; expected to be operational by end of calendar year 2026, contributing meaningfully from FY28. Nagpur facility still under construction. Capex plan of ₹140-160 crores per year maintained.
Technology & Innovation Investments: Continued investment in innovation, automation, and technology capabilities. SIM/eSIM business leveraging unique certification stack, secure personalization, and integrated eSIM platform to capitalize on growing eSIM adoption and enterprise IoT applications.
Supply Chain Agility: Strengthening through diversified sourcing and strategic inventory management. Increased chip inventory holdings in recent quarters to lock in better pricing — reflected in working capital days.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth (FY27) | 8% to 12% YoY (medium-term target reaffirmed) | Based on order book, execution timelines, existing customer visibility; H2 expected stronger due to seasonal BFSI pickup, steady C&F momentum, continued IoT growth |
| IoT Segment Growth | ~45% YoY in FY27; 35-40% in FY28 | Based on strong traction in RFID and traceability; Q1 growth of 145% is flattered by weak base in Q1 FY26; expects IoT to contribute 15-18% of revenue by year-end |
| Payment Solutions Growth | 10-12% CAGR | Growth driven by metal card premiumization, volume growth, and nascent export opportunity in Europe/Africa |
| Communication & Fulfillment | Flattish | Stable recurring business from BFSI, enterprise, and government customers |
| EBITDA/PAT Margin Guidance | Not provided (specific figures declined) | Management provides "building blocks" — drivers: H2 operating leverage, product mix, input costs; assumes macroeconomic situation does not worsen |
| Gross Margin Outlook | Positive bias, no dramatic change expected | Operating leverage and better H2 product mix should improve margins from current levels; COMC expected lower in H2 (as seen in Q4 FY26) |
| Capex (FY27) | ₹140-160 crores | Consistent with earlier stated range; deployed toward capacity expansion across all three verticals |
| Bengaluru Facility | Operational by end of CY26 | After necessary regulatory approvals; will add significantly to metal card capacity; may contribute modestly in FY27 with meaningful contribution from FY28 |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical Uncertainty & Input Cost Pressure | War-related impact driving higher cost of materials consumed (COMC at 58.34% vs 54.23% FY26 average). 40-45% of cost impact attributable to currency; remainder from commodity pricing, logistics, and freight. Management actively working on price revisions with customers; no dramatic margin change expected unless conditions worsen. |
| Currency Fluctuations | Rupee depreciation impacting chip pricing (denominated in USD). Chip prices flattish/marginally better in USD terms but offset by dollar impact. Active inventory management and price pass-through discussions underway. |
| Supply Chain Disruption | Lead times from chip suppliers have increased. No price impact seen yet, but management has a forward bias of potential upward price revision next year. Mitigation: strategic inventory holding and diversified sourcing. |
| Customer Concentration | Top 10 customers contribute 56% of revenue; >95% revenue from existing clients. While this demonstrates stickiness, it also represents concentration risk. Management highlights deep relationships built over years. |
| Facility Execution Risk | Bengaluru facility requires regulatory approvals and certifications before operational; any delays could impact metal card capacity expansion timeline. Capex program execution (₹140-160 crores/year) is critical to growth plans. |
| UPI Displacement Risk (Mitigated) | Management believes UPI impact on card issuance has largely played out — UPI user base near saturation. Credit cards retain value proposition (alliance discounts, schemes); potential MDR on UPI could equalize economics. Customer volume forecasts already factor in UPI. |
Q&A Highlights
Revenue & Margin Guidance Philosophy
- Question: How should we look at the full year in terms of revenue and margins? (Deeya Jain, Sapphire Capital)
- Answer: Revenue growth guidance of 8-12% YoY maintained. Margin guidance declined — management prefers to give "building blocks" (order book, execution timelines, capacity utilization) rather than specific outcome numbers, citing geopolitical situation and input cost escalation as moving parts outside their control. They commit to transparency on margin-affecting factors quarter-on-quarter. (Pragnyat Lalwani)
Gross Margin Breakdown & Recovery Outlook
- Question: How much of gross margin decline is negative operating leverage vs pricing/rupee depreciation? Can costs be passed on? What are capacity utilizations and capex plans? (Mohit Sukhani, IIFL Capital)
- Answer: ~40-45% of cost impact attributable to currency; remainder from war-driven commodity, logistics, and freight costs. Operating leverage should play out as quarters progress (Q1 vs Q4 last year demonstrates the pattern). Capacity utilization averages 65-70%, reaching 85-90% during peak renewal cycles. Bengaluru metal card facility near ready — operational by end of CY26. Capex maintained at ₹140-160 crores per year. Specific margin guidance declined. (Pragnyat Lalwani)
Gross Margin for Full Year
- Question: Can you share the gross margin percentage for the full financial year? (Mohit Sukhani, IIFL Capital)
- Answer: Consistent with practice, no specific margin figures provided. H2 typically has better product mix and operating leverage; assuming macroeconomic situation doesn't worsen, margin should improve from current levels with no dramatic change expected. (Pragnyat Lalwani)
Margin Base & UPI Impact on Cards
- Question: Should Q1 be considered the base for margins this year? Will UPI affect the cards business? (Zaki Nasser, Nasser Investment)
- Answer: Margin should have positive bias as operating leverage kicks in and product mix improves through the year. On UPI: impact on card issuance has largely played out — UPI user base is near saturation; credit cards hold value proposition through discounts/schemes; potential MDR on UPI would equalize economics between UPI and cards. Payment solutions growth built on both volume and value (premiumization, sustainability, metal cards). Exports to Africa and Europe in nascent stages. (Pragnyat Lalwani)
Payment Gateway Entry – Ruled Out
- Question: Would Seshaasai ever enter as a payment gateway organization? (Zaki Nasser, Nasser Investment)
- Answer: Not at this point. Management focuses on businesses requiring high-end technology with compliance/technology moats, physical product delivery, scalability, and decentralization. Payment aggregator space already has players; company energy directed toward logical adjacencies leveraging current infrastructure without significant additional investment. (Pragnyat Lalwani)
Segment-wise Growth Outlook
- Question: What are the segment-wise growth expectations for cards, eSIM, and RFID over the next 2-3 years? (Pritesh, Lucky Investments)
- Answer: IoT business grew ~45% last year and expected to grow ~45% in FY27, 35-40% in FY28. Communication and fulfillment expected to remain flattish (was ~30% growth last year). Payment solutions expected to grow ~10-12% CAGR. EBITDA margins broadly similar across segments — payment solutions and IoT more or less same, communication fulfillment slightly lower. Blended EBITDA at ~25% in Q1. (Pragnyat Lalwani, Pavan Kumar)
**SIM Business Capacity