Onward Technologies Q3 FY26: Sustained Growth and Strategic Offshore Push

Onward Technologies Limited, a leading software outsourcing company specializing in digital and ER&D services, has reported a robust performance for the third quarter and nine months ended December 31, 2025. The company delivered a total revenue of INR 136.1 crore for Q3 FY26, marking a 9.3% year-on-year growth. For the nine-month period (9M FY26), total revenue reached INR 411.8 crore, reflecting an 11.7% year-on-year increase. This strong financial showing was underpinned by a record quarterly EBITDA margin of 14.6% in Q3 FY26, and a 13.9% EBITDA margin for 9M FY26, significantly exceeding the company's annual guidance of 11-12%. Management attributes this success to disciplined execution, focused account management, and strategic investments in offshore capabilities.

The company's growth momentum is evident across its key business segments. The Industrial Equipment & Heavy Machinery (IEHM) vertical continues to be the largest contributor, accounting for 63% of the Q3 FY26 revenue. The Transportation & Mobility (T&M) segment contributed 34%, while Healthcare & Life Sciences (HCLS) made up 3%. This diversified yet focused approach allows Onward Technologies to cater to specialized needs within these high-growth industries. The management emphasized that a substantial portion of the revenue growth now stems from the digital side of their business, reflecting a successful transition and investment in advanced technologies.

Financial Highlights

Here is a summary of Onward Technologies' consolidated financial performance:

Note: Figures for PAT and PAT Margin are excluding one-time exceptional item due to new labour code in Q3 FY26.

Strategic Initiatives and Operational Excellence

Onward Technologies has been proactive in its strategic initiatives, particularly in enhancing its offshore delivery capabilities. The company has completed CAPEX investments of INR 18.6 crore so far this year and remains committed to further investments across all three geographies in FY26. This includes upgrading infrastructure in Pune, Chennai, Bangalore, and Hyderabad, with Chennai now providing several hundred additional seats to support new engagements. This offshore expansion is a key driver for margin improvement, as offshore billing rates are significantly higher than on-site rates.

Furthermore, the company has successfully restructured its leadership team, moving from a promoter-driven model to a professionally led, vertical-led structure. This new leadership is focused on building and scaling the business, with specific strategies for each vertical. For instance, the IEHM vertical aims for delivery-led growth and expansion into Europe, while T&M focuses on transitioning existing relationships to global markets and offshoring work. The HCLS vertical is geared towards deepening client engagements, with management anticipating it to be a very exciting vertical over the next one to three years. Automation initiatives are also being implemented to strengthen operational efficiency and contribute positively to margin improvement.

Outlook and Management Confidence

Management expressed strong confidence in achieving double-digit revenue and EBITDA growth year-on-year for the next three consecutive years, specifically for 2026 and 2027. The company's goal is to maintain a 90% Time & Material (T&M) revenue mix until it reaches INR 1,000 crores in revenue, emphasizing a steady and dependable business model. Despite a crowded automotive space, Onward Technologies is finding its niche by focusing on high-quality engineering solutions and owning SLAs for its customers. The company's improving Days Sales Outstanding (DSO) of 70 days and strong cash reserves of INR 116.3 crore further underscore its financial health and operational efficiency. While a legal dispute with an ex-employee was noted, management is confident in its legal position and has engaged expert counsel.

Onward Technologies continues to build on its performance, committed to driving sustainable growth, deepening client partnerships, and strengthening its position as a trusted engineering and digital services partner globally. The company's strategic investments, leadership restructuring, and focus on high-growth digital and AI services position it well for continued success in the evolving technology landscape.