Black Box margin slips sequentially after Q4 peak
Year-on-year profitability improved, but faster cost growth and higher interest costs weighed on the quarter’s sequential performance.
Filed 12 Aug 2026, 21:12 IST · after market close · Black Box Ltd (BBOX)
Key takeaways
- Consolidated revenue grew 23.92% YoY while operating profit rose 37.53%, lifting operating margin by 0.92 percentage points to 9.3%.
- Sequentially, expenses grew 2.08% against revenue growth of 1.63%, narrowing operating margin by 0.41 percentage points as interest costs rose 6.62%.
- At 9.3%, Black Box’s operating margin was 8.65 percentage points below the 17.95% median of 32 reported IT peers, ranking third from the bottom.
Price around the results
Growth remained strong, but momentum moderated
Black Box reported consolidated revenue growth of 23.92% YoY, with operating profit growing faster at 37.53%; this widened the operating margin by 0.92 percentage points. Sequentially, revenue increased only 1.63% and operating profit fell 2.59%, reversing part of the improvement seen in Q4FY26. The company said project-led business order backlog increased approximately 50% sequentially.
Costs and finance charges limited profit conversion
Sequential expenses grew 2.08%, faster than revenue, which reduced operating margin by 0.41 percentage points from Q4FY26. Interest costs rose 6.62% QoQ, while depreciation increased 15.1%; YoY, interest and depreciation were also up 42.94% and 34.0%, respectively. Other income was negative and amounted to -24.8% of profit before tax, so it was a drag on profit quality rather than a contributor. The 6.43-percentage-point sequential decline in the tax rate partly cushioned the effect on net profit.
Margin remains well below the IT peer median
The 9.3% operating margin was below the 17.95% median for the 32 Information Technology companies that had reported the same quarter. It was also below Black Box’s 9.71% in Q4FY26, although above 8.38% in Q1FY26 and 8.85% in Q3FY26. The recent trend is therefore a pullback from the Q4 peak rather than a third consecutive quarterly decline.
Management set growth targets while focusing on execution
Management said FY27 revenue guidance is Rs 7,800-8,000 crore, with EBITDA of Rs 725-750 crore at a 9.3%-9.4% margin and PAT of Rs 300-325 crore. The company told investors that FY27 order backlog guidance is $1,300-1,400 million and order booking guidance is $1,325-1,450 million. Management said the Brazil-based 2S acquisition is expected to add Rs 500 crore of annualised revenue in FY27, while the company intends to add Rs 6,000 crore of revenue through inorganic acquisitions. It also said its focus remains on operating leverage, working-capital discipline and capital allocation.
No immediate market reaction after the late filing
The results were filed after market close, so there is no post-results share-price move to assess yet. Across the eight previous result reactions, the stock rose three times and fell five times, with a median absolute move of 4.14%. That history indicates a mixed reaction pattern rather than a consistent direction.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,719 cr | ₹1,691 cr | +1.63% | +23.92% |
| Other income | ₹-15 cr | ₹-12 cr | -25.81% | -38.96% |
| Expenses | ₹1,559 cr | ₹1,527 cr | +2.08% | +22.68% |
| Operating profit | ₹160 cr | ₹164 cr | -2.59% | +37.53% |
| Operating margin (%) | 9.30% | 9.71% | — | — |
| Interest | ₹48 cr | ₹45 cr | +6.62% | +42.94% |
| Depreciation | ₹36 cr | ₹31 cr | +15.10% | +34.00% |
| Profit before tax | ₹61 cr | ₹76 cr | -19.71% | +35.24% |
| Tax | ₹5 cr | ₹11 cr | -54.22% | — |
| Net profit | ₹56 cr | ₹65 cr | -13.65% | +17.90% |
| EPS (₹) | ₹3.15 | ₹3.78 | -16.67% | +12.50% |
Operating margin of 9.30% compares with a Information Technology sector median of 17.95% across 32 peers that have reported Q1FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Order backlog from the project-led business increased approximately 50% sequentially.
Guidance & outlook
- FY27 order backlog guidance is $1,300–1,400 million, representing 65–75% year-on-year growth.
- FY27 order booking guidance is $1,325–1,450 million, representing 32–45% year-on-year growth.
- FY27 revenue guidance is ₹7,800–8,000 crore, representing 23–27% year-on-year growth.
- FY27 guidance is EBITDA of ₹725–750 crore at a 9.3–9.4% margin and PAT of ₹300–325 crore.
- Black Box aims to become a US$2 billion revenue company by FY30.
Expansion
- The company intends to boost revenue by ₹6,000 crore through inorganic acquisitions.
- The Brazil-based 2S acquisition is expected to add ₹500 crore in annualized revenue in FY27.
New initiatives
- The company plans to identify sub-optimal-margin businesses, scale complementary entities and transform acquired businesses.
- The company is focusing on operating leverage, disciplined working-capital management and prudent capital allocation.
What to watch
- Whether operating margin holds above 9.3% after the sequential decline from 9.71%.
- Whether interest-cost growth moderates from 6.62% QoQ.
- Progress against management’s FY27 revenue guidance of Rs 7,800-8,000 crore and EBITDA margin guidance of 9.3%-9.4%.