Aurionpro Solutions Ltd - Weak quarter amid ME tensions and banking softness - Company update

Aurionpro Solutions’ Q4FY26 earnings were below our estimates due to delays in deal closures in the Middle East region (Rs 300 - 400mn impact). Banking saw slower deal wins across India and APAC, while TIG performed well on the profitability front despite shipment delays arising from geopolitical tensions. EBITDA margins came in at 19.3% (below our estimate of 20.3%), due to slower revenue growth and higher employee costs. We expect margins to remain in the range of 19-20% through FY27E. We still believe the company can deliver 20%+ organic growth supported by an order book of Rs 18bn+. We have cut our earnings estimates by 11/14% for FY27/28E and lowered our target multiple from 30x to 22x amid rising AI-led disruption seen across global IT product companies.

Revenue impacted by delayed deal closures:

Aurionpro Solutions reported a subdued quarter due to delays in execution of multiple projects in Saudi Arabia, which led to subdued growth of 5.7% YoY vs our estimate of 20.8%. Banking saw considerable slowdown in ME due to geopolitical tensions, while Indian & APAC saw witnessed delay in decision making plus lesser number of Go-lives. TIG experienced improvement in profitability on the back of larger share of transit projects (higher margin). For FY26, Banking grew 24.6% YoY (ex-Fenixys, growth was in the range of 11-12%) while TIG grew 8.6%. We expect TIG to grow by 40%+ in FY27E on the back of large data center deal execution along with multiple transit deals.

Margins impacted by execution delays and higher investments:

Aurionpro Solutions reported Q4FY26 EBITDA of Rs 0.7bn, 1.3%/-10.7% YoY/QoQ with EBITDA margins at 19.3% (-80bps/-90 bps YoY/QoQ). EBITDA margins were slower revenue growth, continue R&D, and upfront investments for large projects. We expect margins to remain in the range of 19-20% as the company continues to incur higher R&D spends (8-9% of revenue) to build its product portfolio.  Despite decline in EBITDA, APAT increased by 23.3%, primarily due to higher other income. Growth in other income was supported by forex gain. Cash conversion cycle weakened in FY26 due to working capital getting tied up in large projects and elevated inventory levels. We expect it to remain in the range of 85–90 days going ahead, given the order book mix is increasingly skewed towards large, working capital-intensive TIG projects.

Strong pipeline and order book provide healthy visibility:

Aurionpro Solutions continues to maintain strong order book (Rs 18bn+) at the end of Q4FY6 and a healthy pipeline across Banking, Transit, and Data Center. The company secured its largest-ever AI-focused data center mandate (~Rs 3.5bn) from a leading hyperscaler during FY26, along with multiple strategic wins across transaction banking and transit solutions. In banking, we expect decision-making delays to persist as banks reassess their AI investment priorities and spending plans. On the TIG side, we continue to see a strong pipeline supporting growth visibility for FY27/28E.  We expect performance to recover from Q2 onwards, supported by normalization in deal closures across the Middle East and ramp-up in execution of large TIG orders.

Valuation, view and risks:

We have downward revised our FY27/28E earnings estimates by 11/14%, reflecting a weaker demand environment in banking.  We expect Aurionpro to report Revenue/EBITDA/PAT CAGR of 19.5/17.9%/16.6%. for FY25-28E. Further, we have lowered our target multiple from 30x to 22x to factor in rising uncertainty across the global IT products landscape. Rolling over our estimates to FY28E, we arrive at a TP of Rs 1,230 (vs earlier TP 1,820). Considering recent correction in stock price, we continue to maintain our BUY rating. Key risks: Continued geopolitical tensions in the Middle East leading to further delays in deal closures, lower-than-expected government capex on metro projects in India, and delays in data center execution and ordering activity domestically.

Company website: https://www.aurionpro.com/

*CMP is as per report published date

Click to download the full Aurionpro Solutions Ltd Q4FY26 Company Update

Analyst:

• Vinay Menon - Senior Research Analyst, Institutional Equities (NISM-201600112117)
• Miloni Mehta - Research Associate, Institutional Equities (NISM-201800127664)

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FAQs on Aurionpro Solutions Ltd Q4FY26 Company Update

Here are quick answers to common investor queries on the Aurionpro investment opportunity, including entry strategy, targets and key growth drivers.

Why did Aurionpro Solutions report weak Q4FY26 earnings?

The quarter was impacted by delayed deal closures in the Middle East, slower banking technology spending, shipment delays, and higher employee and R&D investments.

What supports Aurionpro Solutions’ long-term growth outlook?

Strong order visibility, AI-focused data center projects, transit infrastructure opportunities, and digital banking transformation initiatives continue to support long-term growth.

What is the target price for Aurionpro Solutions?

Analysts maintain a BUY rating on Aurionpro Solutions with a revised target price of Rs 1,230, supported by strong order inflows and recovery expectations from FY27 onwards.

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