Digitide Solutions Limited: Navigating Transition Towards an AI-First Future

Digitide Solutions Limited has reported a quarter of strategic transition and foundational investments, with Q2 FY26 revenues reaching INR 764 crores, marking a 4% sequential and 7% year-on-year increase. For the first half of the fiscal year, H1 FY26, the company achieved a significant milestone by crossing INR 1,500 crores in revenue, reflecting a 6.4% year-on-year growth. While profitability saw a short-term impact due to one-time demerger-related expenses, the management remains confident that these deliberate investments are crucial for long-term scalable and sustainable growth.

The Tech & Digital segment emerged as a key growth driver, surging by 16% quarter-on-quarter and an impressive 23% year-on-year. This segment now contributes 30% to the total revenue, up from 27% in the previous quarter, underscoring the strong demand for AI-led transformation and digital solutions. The international business also demonstrated resilience, growing 6% sequentially and 4% year-on-year, now accounting for 37% of the total revenue. In contrast, the BPM segment remained broadly flat at INR 536 crores, experiencing some softness in the domestic BFSI segment due to macroeconomic challenges, particularly regional floods affecting collections business. EBITDA for Q2 FY26 stood at INR 85 crores, with margins stable at 11.1%, while reported PAT was INR 3 crores, significantly affected by INR 11.4 crores in demerger-related professional fees and INR 2.4 crores in stamp duty. Adjusted PAT, excluding these one-time items, was INR 17 crores.

Digitide's strategic direction is anchored by its '3x3x3 strategy', a roadmap to triple revenues to USD 1 billion by FY31. This strategy emphasizes growth that is 2x faster than the market, a 200-300 basis points improvement in EBITDA margin, and a 2x improvement in billing realization per FTE. The company's 'AI-first' transformation is a core pillar, embedding AI across all delivery models to enhance productivity, service quality, and enable new business opportunities. This commitment is evident in 50% of their deal pipeline being AI-infused and the expansion of their AI Center of Excellence.

Key achievements in Q2 FY26 include securing Tier-1 partnership status with both AWS and Azure, which provides early access to next-gen AI/ML innovation and opportunities for co-investments from hyperscalers. The company also won the world's largest Google Agentic AI Hackathon, showcasing its advanced AI capabilities. To support this AI-first vision, Digitide has launched 'DigiAIWave', a large-scale upskilling program aimed at training 10,000 professionals in AI. The management noted that most demerger-related transitions and exceptional costs are now behind them, paving the way for improved operating efficiencies and stronger financial performance in the coming quarters.

Digitide Solutions Limited is clearly in a transitional phase, strategically investing in its AI and digital capabilities to pivot towards a high-growth, AI-first future. Despite the short-term impact on margins from these investments and demerger-related costs, the management's consistent sales momentum, new client acquisitions, and strong balance sheet underscore a confident outlook. The company's focus on accelerating international expansion and leveraging strategic partnerships positions it well to achieve its ambitious USD 1 billion revenue target by FY31, reinforcing investor trust through disciplined execution and a clear strategic vision.