Pelatro Limited: H1 FY26 Performance Driven by Strategic Expansion and Profitability

Pelatro Limited, a prominent player in customer engagement and loyalty management solutions for telcos, has delivered a robust financial performance for the first half of fiscal year 2026 (H1 FY26). The company reported a significant 58% year-on-year increase in revenue, reaching INR 60.74 crores. This strong top-line growth was accompanied by even more impressive profitability, with EBITDA soaring by 59% to INR 13.81 crores and Profit After Tax (PAT) climbing by 63% to INR 8.21 crores. This non-linear growth, where PAT outpaces revenue, underscores the inherent operational leverage in Pelatro's product-centric business model, signaling a healthy trajectory for the company.

The H1 FY26 results reflect the successful integration and initial contributions from the newly acquired Estel Division. While Pelatro's core CVM (Customer Value Management) Division continues to be the primary revenue driver, contributing INR 53.83 crores (88.62% of total revenue), the Estel Division, acquired effective July 1, 2025, added INR 6.91 crores (11.38%) to the total revenue in its first quarter of consolidation. This strategic acquisition has expanded Pelatro's product portfolio to include specialized payment solutions, prepaid recharge, and distribution services, complementing its existing contextual campaign management and loyalty solutions. The company is actively working on launching new versions of all acquired products by March 2026, a move expected to enhance product capabilities, improve customer retention, and unlock significant cross-selling and upselling opportunities.

Financial Highlights: A Snapshot of Growth

Pelatro's H1 FY26 performance demonstrates consistent growth across key financial metrics, building on the previous fiscal year's foundation. The consolidated figures highlight the company's expanding scale and improving efficiency.

Note: All figures are consolidated and in INR Crores.

Strategic Pillars for Sustained Expansion

Pelatro's management articulated a clear, three-pillar growth strategy designed to ensure sustained expansion and profitability. The first pillar, Geographic Expansion, focuses on a 'land-and-expand' approach within specific geographies, targeting telcos and banks. The company aims to replicate its success by entering a group through one operating company and then expanding into 'sister' operating companies. This strategy is particularly relevant in regions like Africa, the Middle-East, and Asia, where a large number of telcos remain potential customers, indicating significant room for growth without saturation in the near future.

The second pillar, Expansion of Recurring Revenue Per Customer, emphasizes maximizing value from existing clients. After securing an account, the company endeavors to introduce new recurring revenue streams or increase existing ones. This focus has led to a steady increase in recurring revenue per customer and its proportion of total revenue, contributing to a more predictable and stable income base. The third pillar, Service Expansion, targets customers who license Pelatro's products but have not yet fully adopted its comprehensive suite of services. This represents a substantial opportunity to upsell and cross-sell value-added services, further deepening client relationships and revenue streams.

Operational Efficiency and Future Outlook

Operationally, Pelatro has demonstrated improved efficiency, with EBITDA margins for H1 FY26 standing at 22.7%, slightly up from 22.6% in H1 FY25. The company's contracted revenue visibility is exceptionally strong, with 100% of the target revenue for FY25-26 already secured and 59% for FY26-27. This high visibility provides a solid foundation for future planning and execution. Management expects the revenue CAGR to be between 25% to 30% over the next three years, with full-year EBITDA margins projected at around 24% and PAT margins at 14%. While acknowledging that cash flow has been 'a bit slow in catching up,' management expressed confidence that it is now turning around and expects positive free cash flow in the coming quarters and for the full next year.

Segmental Financials: A Deeper Look

*Note: Estel Division figures are for Q2 only, as the acquisition closed effective July 01, 2025.

Despite the Estel Division currently operating at lower margins (14.8%) compared to the CVM Division (23.8%), management anticipates that Estel's margins will improve to CVM levels in the short term, thereby reducing its drag on consolidated profitability. The company's Days Sales Outstanding (DSO) of 100 days for H1 FY26 is also within its healthy range of 100-120 days, reflecting disciplined working capital management.

Pelatro Limited's H1 FY26 performance underscores its strategic clarity and disciplined execution. The company is effectively leveraging its recent acquisition, expanding its market reach, and deepening customer relationships to drive sustainable growth. With high revenue visibility, improving profitability, and a clear roadmap for future expansion, Pelatro appears well-positioned to capitalize on the evolving demands of the telecom sector and deliver continued value to its investors.