eClerx ends FY26 with strong profit growth and a steady Q4

eClerx closed FY26 with a sharp improvement in profitability and cash generation, even as Q4 revenue growth moderated sequentially. For the full year, consolidated total revenue including other income rose to INR 4,217.4 crore, up 22.6% year on year. Operating revenue was INR 4,117.0 crore, up 22.3% year on year, while USD operating revenue rose 17.9% to USD 468.9 million.

Profitability outpaced revenue. FY26 PAT increased to INR 706.2 crore, up 30.5% year on year, supported by operating leverage and cost discipline. EBITDA including other income rose to INR 1,152.6 crore, up 28.8% year on year, with margin expanding to 27.3%.

Q4 FY26 reflected a different mix: operating revenue was USD 122.4 million, up 16.8% year on year but only 0.6% sequentially. Total revenue including other income was INR 1,135.4 crore, up 23.9% year on year and 3.1% sequentially. Operating EBITDA margin was broadly stable at 25.7%, and PAT for the quarter was INR 189.4 crore.

The core financial picture: growth with margin expansion

eClerx’s FY26 result shows a pattern that investors typically look for in scaled services businesses: revenue growth, margin expansion, and rising cash conversion. The company also began emphasizing operating EBITDA, which excludes other income, as a more meaningful operating metric.

In FY26, operating EBITDA stood at INR 1,052.3 crore, while EBITDA including other income was INR 1,152.6 crore. EBIT for FY26 was INR 977.3 crore. The company highlighted FY26 EBITDA conversion of 75.7%, the highest in the last five years.

In Q4, management attributed the minor sequential margin softness to higher headcount additions and travel costs, partially offset by lower G&A and a marginal reduction in delivery employee cost percentage.

Revenue mix: BFSI remains largest, emerging segment expands

eClerx’s industry mix for FY26 remained anchored in BFSI and CMT. BFSI contributed 40.8% of FY26 revenue, while CMT contributed 25.7%. HiTech and manufacturing and distribution accounted for 16.5%. Fashion and luxury plus retail was 8.6%. The emerging bucket, which management linked to finance and accounting, rose to 8.4%.

The deck also shows continuing concentration by geography and currency. In Q4, 78% of revenue was from North America and 17% from Europe. USD contributed 86% of billing currency mix. This positioning supports scale in the largest market but keeps the business sensitive to USD-INR movements.

Client concentration improved. Top 10 clients contributed 59% of trailing twelve month revenue in Q4, down from the 63% to 64% range earlier in FY26. This is still high, but the direction is favorable.

AI and automation: early monetization, heavy capability building

The most consistent theme in management commentary was Agentic AI. eClerx stated that it secured its first large scale Agentic AI win in Q4, with deployments planned from Q1 FY27 onward. Management also referenced an agentic data sourcing platform attracting interest from large banks and an AI-native orchestrator for KYC case management already live across multiple client systems.

Importantly, management did not present Agentic AI as a separate revenue stream that can be cleanly measured today. When asked about Agentic AI revenue scale, the response was that it is too early to quantify and still small. The company framed AI as a differentiator to win and defend business, and as a productivity tool that takes time to implement.

Still, eClerx gave one meaningful scale marker for its higher value work: analytics and automation is now a USD 90 million book. Management said this area will continue to receive investment attention and is expected to grow faster than the overall company.

Operational metrics: headcount growth, utilization dip, strong cash flow

eClerx ended Q4 with total headcount of 22,639, and the press release stated total delivery headcount at 22,518, up 16.9% year on year. Delivery utilization in Q4 was 74.2%, down from 76.5% in Q3. Offshore voluntary attrition rose to 21.7%.

The company’s cash conversion was a major positive. For FY26, net operating cash flow was INR 872.9 crore, up materially year on year, and free cash flow was INR 756.0 crore. Cash and cash equivalents ended FY26 at INR 1,281.0 crore.

Other income remained meaningful, driven by investment income and FX revaluation movements. In Q4, other income was INR 28.1 crore, including revaluation income of INR 10.6 crore, which management linked to INR depreciation against the USD.

Guidance and what to watch in FY27

For FY27, management reiterated two forward statements.

First, it expects to be in the top quartile of growth relative to its peer segment on operating revenue. It did not provide a numeric revenue band.

Second, it reiterated an EBITDA margin guidance of 24% to 28%. Wage increments are effective April 1, and the CFO indicated wage hike impact in Q1 is typically about 300 to 350 basis points.

Investors should also track two risk markers explicitly discussed.

One is regulatory uncertainty in the US around offshore call restrictions for telcos and cable companies. Management said it is monitoring a proposed NPRM and is in active dialogue with clients on contingency planning.

The other is FX capture. The company’s hedge book is substantial. Outstanding hedges stand at USD 265.5 million at an average INR 90.92 per USD, and management noted that FY27 hedges around INR 89 per USD would limit upside from INR depreciation, although the company does not fully hedge and targets roughly 80% of USD receivables.

Bottom line

eClerx delivered one of its strongest years in terms of profit growth, margin expansion, and cash generation. Q4 growth slowed sequentially, but margins remained resilient and deal bookings stayed healthy with Q4 new deal ACV at about USD 46 million.

The FY27 setup is shaped by two parallel tracks. The first is execution on core operations, including utilization, attrition, and wage hike absorption within the guided 24% to 28% margin band. The second is how quickly AI-led deployments move from pilots into scaled programs that expand wallet share. Management’s commentary suggests traction is building, but measurable revenue contribution is still early.

For investors, the near-term story is disciplined execution and strong cash conversion. The medium-term story is whether eClerx can translate Agentic AI capability building and its product assets into sustained outperformance within its peer group.