iValue Infosolutions in FY26: Growth held steady, cash conversion improved, and AI became a clearer strategy

iValue Infosolutions ended FY26 with another year of double-digit growth, supported by its core cybersecurity portfolio and a broader push into next-generation infrastructure and cloud. On a gross sales basis, the company reported INR 2,913.9 crore in FY26, up 19.5% year on year. Operating EBITDA was INR 149.4 crore and normalized PAT was INR 102.3 crore, up about 20% year on year, as discussed in the investor presentation and earnings call.

The company also highlighted that FY26 included a one-time exceptional impact from labour code changes of INR 5.19 crore. Management discussed this as a cost related to gratuity and leave encashment changes and said a salary restructuring exercise partly offset the impact by around INR 0.5 crore.

The broader FY26 message was not only about growth but also about operating discipline. Working capital improved materially and management indicated that a larger share of incremental gross margin should continue to flow through to EBITDA over the next few years due to prior investments already made in capacity.

Business model snapshot: multi-OEM solutioning with a rising annuity mix

iValue positions itself as a value-added distributor and technology solutions aggregator. The pitch is that enterprises do not buy a single cybersecurity or infrastructure product in isolation. They assemble stacks across multiple OEMs, and iValue supports that process through pre-sales solutioning, interoperability validation via its Centre of Excellence, and post-sales implementation and managed services support through its ecosystem.

A key business metric that the company repeatedly emphasizes is annuity revenue. The presentation shows annuity business at 42.2% of FY26 gross sales, and the annuity pool grew 18% year on year to INR 1,228.7 crore.

Segmentally, cybersecurity remains the largest contributor and the fastest-growing segment in FY26. Data Center Infrastructure was described as a growth accelerator, and management also pointed to AI data centres and GPU infrastructure opportunities as emerging demand drivers.

FY26 financial performance: stable profitability, but margin pressure visible in gross margin percent

The presentation provides performance metrics on both gross sales and net basis. On a gross sales basis, iValue reported operating EBITDA margin of 5.1% and PAT margin of 3.5% for FY26. On a net basis, operating EBITDA margin was 14.1% and PAT margin was 9.7%.

One important nuance is the movement in gross margin percent. Gross profit percent on gross sales declined to 9.1% in FY26 from 10.0% in FY25. Management attributed most of the decline to a weak Q1 FY26 gross margin, which the CFO quantified at around 6.8%, linked to deal spillovers and forex and component cost effects.

At a quarterly level, management described the business as cyclical with H2 usually stronger than H1, and Q4 margins typically stronger because of year-end customer budgets and OEM back-end rebates.

Segment mix: cybersecurity anchors the portfolio

iValue disclosed FY26 segment contribution as a percent of gross sales in the presentation, which also allows translating into approximate FY26 gross sales by segment.

Cybersecurity contributed 50.1% of FY26 gross sales, while ILM contributed 20.6%. Data Center Infrastructure contributed 17.4% and ALM, cloud and others contributed 11.9%.

Management also discussed sequential and year-on-year movement in Q4 by segment during the call. For Q4 YoY, they said cybersecurity grew 19%, DCI grew 29%, ILM declined 20%, and ALM, cloud and others grew about 10%.

Cash flow and working capital: FY26 focused on balance sheet discipline

The CFO described FY26 as a year where operating discipline showed up in working capital outcomes. Net working capital days improved to 30 from 43. The management commentary attributed this to receivables growing slower than topline, payables growing faster than topline, and inventory staying low. Presentation numbers show inventory at INR 6.8 crore in FY26 versus INR 12.8 crore in FY25, and trade payables rising to INR 737.6 crore from INR 570.1 crore.

Management also said operating cash flow was INR 108 crore, described as the first time in the company’s history where cash flow from operations exceeded PAT. It also stated net cash after adjusting for debt was around INR 212 crore.

On returns, the presentation shows adjusted ROCE of 40.6% in FY26 versus 32.2% in FY25. On the call, the CFO clarified that adjusted ROCE was computed after adjusting for net cash.

Strategic priorities: AI ecosystem, cloud traction, and measured geographic expansion

The investor presentation added a dedicated AI strategy slide, and the earnings call reinforced that AI is being treated as an ecosystem opportunity rather than a single product category. The company described five building blocks it is curating: AI infrastructure, AI data platforms, AI operations, AI security, and AI governance.

Management highlighted AI-centric cybersecurity initiatives such as AI-powered SOC architectures and Security for AI use cases including LLM security, AI governance and prompt injection protection. It also pointed to sovereign and air-gapped AI for government and regulated sectors, and hybrid AI deployment models for BFSI and large enterprises.

Cloud, particularly Google Cloud, was positioned as a strategic growth driver. Management said it built an order book exceeding INR 300 crore in FY26, with revenue expected to play out over three to five years through metered, consumption-led billing as workloads migrate.

On geographic expansion, management said it has expanded across the SAARC region over the last few years and is evaluating entry into select ASEAN markets. It emphasised a controlled and paced approach.

What to watch in FY27

Management did not provide a detailed numerical forecast beyond reiterating its typical outlook range. On the call, it stated it aims to sustain 18% to 20% top line growth and 20% to 22% PAT growth. It also stated it expects FY27 to outperform FY26 in growth and profitability.

The company also spoke about its opportunity pipeline. Management said qualified opportunities in its CRM are around INR 5,800 crore, with a typical conversion estimate of 30% to 35% across multi-year deal durations.

Two operating variables remain important to track.

First, gross margin stability. FY26 showed a full-year gross margin percent decline driven by a weak Q1. Management framed this as a learning and said subsequent quarters were planned better to avoid similar erosion.

Second, working capital sustainability. FY26 delivered 30 working capital days, but management also cautioned that this may not be achievable every year. It stated its aim is to keep working capital sub-40 days.

Overall, FY26 reinforced iValue’s positioning as a multi-OEM solutions enabler with strong cash discipline and an increasing annuity component. The FY27 setup, as described by management, rests on cybersecurity demand, AI-led infrastructure opportunities, the scaling of cloud consumption engagements, and operating leverage from earlier investments.