Saksoft Ltd - Weakness across top clients drags earnings - Company Update
26 May 2026
Companies Updates
Saksoft’s Q4FY26 numbers were below our estimates on account of continued stress seen among top 2 clients. Though the company added a client in the ‘USD 0.5mn’ category, overall spends continue to remain under pressure. We expect recovery from H2FY27, with a strong pipeline (USD 25mn) aiding growth. EBITDA margins came in-line with our estimates at the lower end of the guided range of 18-19%. Going ahead we expect margins to settle in the range of 17-18%, on account of continued investments in AI capabilities, front-end sales and leadership hiring. Saksoft closed FY26 with a strong net cash position of ~Rs 2.5bn, which we believe provides optionality for an acquisition which could add USD 8-10mn (Rs 0.8-1bn) in revenue. We have cut our earnings estimates by 3%/6% for FY27/28e and slashed our target multiple from 22x to 16x on account of slower growth and deteriorating margin profile. Considering the recent correction in the stock, we reiterate our ‘BUY’ rating.
Saksoft Ltd. Stock Price Chart
Revenue de-growth despite currency tailwinds:
The company reported revenue of Rs 2.5bn a growth of -0.8%/3.7% QoQ/YoY, in-line with our estimate of Rs 2.6bn. In CC terms, company de-grew by 2% QoQ. BFS witnessed decline of 8.7% QoQ, on account of lower spends by top 2 clients. Profitability declined across segments due to heightened pricing pressure and the pass-through of AI-driven productivity gains to clients. Company added one client in the ‘USD 0.5mn’ category (Logistics) and moved one client from ‘USD 0.5mn to USD 1mn+’. We expect CC growth to be muted in Q1FY27e as spends from top clients continue to remain under pressure.
Margins likely to moderate in near term:
Saksoft reported EBITDA margin of 18.2% in Q4FY26 (+301bps YoY). The improvement was primarily driven by lower SG&A costs, new deal wins from Hi-tech vertical coming at higher margins and muted third-party charges. We expect margins to moderate by 100bps across FY27/28E on account of higher SG&A spends, aggressive hiring for AI talent and meaningful addition to the sales team across US & UK. Utilisation for the quarter stood at 83%, we expect it to peak out near 85% over the coming quarters. DSO improved by 11 days to 42 in FY26, driven by stronger collections in H2FY26.
Outlook:
Management indicated the pipeline has expanded to ~USD 25mn (vs ~USD 5mn six months ago), driven by stronger sales execution and increased participation in large deals. However, delay in decision making on account of AI-led features/productivity is dragging the overall sales cycle. We expect Saksoft's CC revenue growth to moderate to high single digits, below its historical 10–12% run-rate, as deal momentum across the broader IT services space remains subdued. Margins would continue to remain under pressure as company plans to increase investments in AI and anticipated increase in competition in mid-market space. Saksoft’s “String of pearls strategy” has helped its growth over the past 5 years and we believe any large acquisition would lead to a re-rating.
Valuation, View and Risk:
We cut our FY27/28E earnings estimates by 3%/6%, on account of continued weakness seen in Q4FY26. We have also cut our target multiple from 22x to 16x, in-line with other IT services peers. We expect Saksoft to deliver Revenue/EBITDA/PAT CAGR of 10.6%/12.4%/13.2% over FY25-FY28E, supported by recovery seen from H2FY27E. Rolling over our estimates to FY28E, we arrive at a TP of Rs 225 (vs Rs 285 earlier). Though we have reduced our estimates and multiple, CMP factors in most of the negatives and trades at an attractive valuation. Consecutively, we maintain ‘BUY’.
Key risks:
- Slowdown in any of the 4 key segments for the company
- Lower spends by SMBs in US & Europe
- Continued spending decline across top clients and inability to win new deals
Company website: https://www.saksoft.com/
| Rating | BUY |
|---|---|
| CMP* | INR 146 |
| Target Price | INR 225 |
| Upside | 54% |
*CMP is as per report published date
Click to download the full Saksoft Ltd Q4FY26 Company Update
Analyst:
- Vinay Menon - Senior Research Analyst, Institutional Equities (NISM-201600112117)
- Miloni Mehta - Research Associate, Institutional Equities (NISM-201800127664)
FAQs on Saksoft Ltd Q4FY26 Company Update
Here are key investor questions addressing near-term challenges, growth outlook and valuation based on our institutional equity research perspective.
1. Why did Saksoft’s Q4FY26 earnings decline?
Earnings were impacted by lower technology spending from top BFSI clients and delays in deal closures amid cautious enterprise spending.
2. What is driving Saksoft’s future growth outlook?
The company’s expanding deal pipeline, AI-focused capabilities and stronger sales execution are expected to support recovery from H2FY27.
3. How are AI investments impacting Saksoft?
Saksoft is increasing investments in AI talent, leadership hiring and front-end sales, which may pressure margins in the near term but strengthen long-term competitiveness.
4. Does Saksoft have acquisition plans?
With a strong net cash position, the company has flexibility to pursue acquisitions that could enhance revenue growth and market positioning.
5. What are the key risks for Saksoft?
Key risks include prolonged weakness in client spending, slower deal conversion and increased competition in the mid-market IT services segment.
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We retain our BUY rating on Carysil Ltd with a revised target price of Rs 1,190 (earlier Rs 1,140), factoring in a rollover to Q3FY28E and a ~4% trim to FY27E–FY28E earnings. Strong traction in quartz and stainless-steel sinks, upcoming capacity ex...
Wonderla Holidays: Chennai Takes The Baton As Mature Parks Plateau - Company Update
We upgrade Wonderla Holidays to BUY from HOLD, as we revise earnings estimates upward by ~5% and roll forward our valuation to Q3FY28E. The company continued to deliver ARPU-led growth at mature parks during the quarter, while footfall growth remaine...
Rashi Peripherals Ltd: Stellar quarter - Company Update
We retain "BUY" rating and raise our target price to Rs. 610 (vs Rs 505 earlier). Rashi reported topline growth of 42.6% YoY in a seasonally weak quarter, on the back of strong sales volume & prices across PES segment (56% of revenue) and LIT (44...
Triveni Turbine: Worst likely behind, recovery pending - Company update
We upgrade our rating on Triveni Turbine to BUY, supported by improving execution visibility and a gradual recovery in order inflows. While new applications such as CO₂-based energy storage, MVR, and turbine servicing are likely to be incrementally...
The Anup Engineering: Through the Trough, Recovery in the offing - Company Update
We upgrade our rating on The Anup Engineering to BUY (previously HOLD) and revise our target price to Rs 2,515. The company is not yet out of the woods, with the market awaiting clear signs of a recovery in order inflows. That said, we believe the wo...
Saksoft Ltd: Temporary headwinds, normalization in sight - Company Update
We maintain our "BUY" rating with a revised target price of Rs 285 (vs 325). Saksoft delivered weak results – a) topline growth saw a de-growth of 3% despite the favourable currency mix, b) Top 2 clients have cut spends in Q3, the pain co...
Mayur Uniquoters: Riding export momentum - Company Update
We maintain our BUY rating on Mayur Uniquoters with a revised target price of Rs. 825 (earlier Rs. 770), as we roll forward our valuation to Q3 FY28E and upgrade our FY27E/FY28E earnings estimates by ~4%. The company delivered a robust operating perf...
Scoda Tubes Ltd.: Slight miss; structural thesis intact - Company Update
We retain BUY rating on Scoda Tubes but upward revise target price of Rs 250 (previously Rs 240). Increase in target price is mainly due to valuation rollover. Q3FY26 was a strong performance on offtake, marginally offset by pricing weakness and dela...
TD Power Systems: Global demand fuelling growth visibility - Company Update
We upgrade TD Power to BUY / revise our target price upwards to Rs 875 (vs. Rs 840 earlier). Q3-FY26 results were a tad lower than our expectations and reflect timing issues rather than demand or competitive weakness. Going ahead, the Tumkur facility...
SJS Enterprises Ltd - Premiumisation and Export-led Outperformance - Company Update
We revise our target price on SJS Enterprises upwards to Rs2,190 to account for an increase in revenue/ margin estimates, and valuation roll-forward to Dec’27E. SJS delivered another quarter of strong industry outperformance, with record profitabil...
Sundram Fasteners Ltd.: Exports spoil the show - Company Update
We lower target price to Rs 1035 (previously Rs 1085) and maintain Accumulate rating for Sundram Fasteners Ltd. (SFL). We downward revise our multiple to account for extended weakness on exports including delay in EV order to North America, in turn l...
ASK Automotive Ltd. - Firing on all cylinders - Company Update
We upgrade ASK Automotive to BUY rating on attractive valuation and increase our TP to Rs590 (Rs525 previously). The increase in TP is largely driven by valuation rollover. ASK delivered a strong Q3, materially ahead of our expectations, led by broad...
Kirloskar Ferrous Ind. - Casting and tubes outperform, spreads spoil the show | Company Update
We lower our target price to Rs 620 (previously Rs690) and retain BUY rating for Kirloskar Ferrous Industries Ltd. (KFIL). The decrease in TP is mainly to account for weak commodity spreads and realization across end products . KFIL’s 2QFY26 perfor...
IFGL Refractories Ltd. - Domestic focus continues to payoff; overseas improving gradually | Company Update
We decrease target price to Rs 280 (previously Rs 300) but maintain BUY rating. The change in TP is mainly due to cut of earnings estimates. IFGL delivered another quarter of strong standalone growth as its domestic-focused strategy continues to gain...
Borosil Ltd. - Glassware ignites growth; levers to power margins | Company Update
We reiterate our BUY on Borosil Ltd and revise our target price upwards to Rs. 460 (vs. Rs. 420 earlier), driven by strong demand momentum and emerging structural growth and margin levers. The company continues to deliver robust growth in its glasswa...
Venus Pipes & Tubes Ltd. - Export and welded drives confidence | Company Update
We increase Target Price to Rs 2040 (previously Rs1,950) and retain BUY for Venus Pipes & Tubes (VENUS) due to attractive valuations. Increase in TP is primarily due to valuation roll forward. Revenue in 2QFY26 was strong, supported by a sharp re...
ESAB India - Encouraging quarter; growth in focus | Company Update
We retain Buy on ESAB India with TP revised upwards to Rs 6,850 (vs Rs 6,554 earlier) on valuation rollover. The company delivered a strong quarter, with overall growth hinting at signs of recovery supported by margin gains. ESAB continues to o...
The Anup Engineering - All eyes on cash conversion | Company Update
We maintain our HOLD rating on Anup Engineering but increase TP to Rs 2,475 (vs Rs 2,375 earlier) considering steady operational performance and an unchanged growth outlook coupled with valuation rollover. The impact from higher taxes was anticipated...
Rashi Peripherals Ltd – Turns cashflow positive
We retain "BUY" rating with a Target Price of Rs. 505 (vs Rs 525 earlier). Rashi Peripherals ltd reported decent topline growth, on the back of strong sales from the PES segment (PCs, Desktops). Our dealer checks suggest demand is improving for AI-en...
Wonderla Holidays - Chennai on Track; Expansion Visibility Low | MNCL Research Update
We reiterate our HOLD rating on Wonderla Holidays Ltd while revising our target multiple downwards to 18x (from ~20x) and rolling forward our valuation to Q2FY28E. In a seasonally weak quarter, the company delivered a better-than-expected topline, pr...
R Systems International - Strong growth tempered by higher SG&A & RSU costs | MNCL Research Update
We maintain our "BUY" and retain our target price to Rs 620. R Systems delivered higher than expected topline growth (7.9% vs our estimate of 3.5% in INR terms). EBITDA was in line with our estimates / margins dipped 70bps QoQ on the back of higher R...
SJS Enterprises Ltd - Designed to outperform | MNCL Research Update
We revise our target price on SJS Enterprises upwards to Rs1,930 to account for an increase in revenue/ margin estimates, valuation roll-forward to Sept’27E and target multiple expansion. SJS delivered another quarter of strong industry outperforma...
Channel checks - Opalware and Glassware - Borosil Sets the Benchmark in Opalware Retail
We conducted channel checks across key markets in Western and Northern India to gauge demand trends (qualitative aspects) in the Opalware and Glassware categories. We also analysed balance sheet / profitability trends (quantitative parts) across key ...
Goldiam International - LGD Momentum builds; ORIGEM scaling | Company Update
We reiterate our BUY rating on Goldiam International with a target price of Rs. Rs.470. Despite near-term uncertainty around U.S. tariff implications, the company has delivered an exemplary performance driven by robust topline growth and increasing w...
ASK Automotive Ltd – Meets Expectations; ALPS & Aftermarket to Drive Growth | MNCL Research Company Update
We retain ACCUMULATE on ASK Automotive while lowering our target price to Rs 525. The lowering of TP follows downward revision in our revenue and margin estimates, partially offset by valuation rollover. ASK delivered a strong Q2, broadly in line wit...
Sundram Fasteners Ltd. - Steady Domestic Momentum Offsets Export Weakness; upgrade to Accumulate - Company Update
We increase target price to Rs 1085 (previously Rs1030) and upgrade our rating to Accumulate for Sundram Fasteners Ltd. (SFL) due to steep correction in share price. Increase in TP is mainly due to valuation roll forward. SFL’s performance in 2QFY2...
JNK India Ltd – End of Overhang, Execution to Drive Growth | Q2FY26
Our interaction with JNK India led to the following conclusions: JNK India’s legacy low-margin orders (NRL, IOCL) delayed by site and client issues are expected to conclude largely by Q2FY26, with minor spillover into Q3FY26. From Q3FY26, high-marg...
Ratnamani Metals and Tubes Ltd. - Subsidiaries outperform | Company Update
We increase target price to Rs 2710 (previously 2690) and upgrade to Accumulate rating. Increase in target price is due to valuation roll forward. In 2QFY26, the core pipes business saw modest growth as strong offtake was offset by weak realizations....
