Black Box margin improves, but tax normalisation limits profit growth
Revenue grew 9.48% year on year and operating margin reached 9.71%, while the company remains 9.98 percentage points below the IT peer median.
Filed 26 May 2026, 14:58 IST · Black Box Ltd (BBOX)
Key takeaways
- Q4FY26 consolidated operating margin rose 0.86 percentage points sequentially as revenue grew faster than expenses.
- Profit before tax grew 31.78% year on year, but net profit rose only 7.09% as the tax rate moved from -4.66% to 14.95%.
- The stock gained 8.21% five sessions after the results, above its 4.14% median move after the last eight result announcements.
Price around the results
Q4 revenue growth came with operating leverage
Black Box reported consolidated revenue growth of 9.48% year on year and 1.89% sequentially in Q4FY26. Expenses grew slightly slower than revenue in both comparisons, at 9.24% year on year and 0.93% sequentially, lifting operating profit growth to 11.68% and 11.72%, respectively. Management said its renewed go-to-market strategy and focus on high-value accounts helped it win large orders.
Higher interest and tax reduced the conversion to net profit
Operating margin improved 0.20 percentage points year on year and 0.86 percentage points sequentially because costs did not grow faster than revenue. Interest expense fell 4.66% year on year but rose 13.74% sequentially to Rs 45.02 cr, limiting the benefit of the operating improvement. Other income was negative and represented -15.83% of profit before tax, so it acted as a drag rather than a source of profit. Year-on-year net profit growth was held to 7.09% as the tax rate rose 19.61 percentage points to 14.95%, compared with a negative tax rate in Q4FY25.
Margin recovered in Q4 but remains near the bottom of IT peers
The operating margin path was 8.38% in Q1FY26, 9.01% in Q2FY26, 8.85% in Q3FY26 and 9.71% in Q4FY26, so the latest quarter reversed the prior quarter's decline rather than extending it. Black Box's margin was 9.98 percentage points below the 19.69% median for the 19 Information Technology peers that had reported the same quarter. It ranked second from the bottom on this comparison.
Management linked Q4 bookings to high-value orders
Management said Q4FY26 order bookings reached $377 million, driven by high-value orders, and that the company secured a new global hyperscaler contract covering managed services and time-and-material maintenance. The company said its actual order backlog was $792 million against revised FY26 guidance of $775-$825 million. Management said the Brazil-based 2S acquisition was completed effective May 1, 2026 and is expected to add Rs 500 cr to annualised revenue, with offerings in networking, datacentre, collaboration and cybersecurity. The company said it aims to reach an EBITDA margin above 10% by the end of FY27 and has a target ROCE above 27%.
The five-session reaction was better than its usual result response
The stock rose 0.22% on the results date and 1.84% the next session, before gaining 8.21% after five sessions. That five-session move was above the 4.14% median absolute move across the last eight result announcements, when the stock rose twice and fell six times. The move was therefore ordinary at the initial close but more positive than its recent post-results pattern by day five.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,691 cr | ₹1,660 cr | +1.89% | +9.48% |
| Other income | ₹-12 cr | ₹-21 cr | +41.84% | +16.49% |
| Expenses | ₹1,527 cr | ₹1,513 cr | +0.93% | +9.24% |
| Operating profit | ₹164 cr | ₹147 cr | +11.72% | +11.68% |
| Operating margin (%) | 9.71% | 8.85% | — | — |
| Interest | ₹45 cr | ₹40 cr | +13.74% | -4.66% |
| Depreciation | ₹31 cr | ₹30 cr | +3.62% | +12.31% |
| Profit before tax | ₹76 cr | ₹57 cr | +34.12% | +31.78% |
| Tax | ₹11 cr | ₹7 cr | +60.51% | — |
| Net profit | ₹65 cr | ₹50 cr | +30.35% | +7.09% |
| EPS (₹) | ₹3.78 | ₹2.92 | +29.45% | +5.88% |
Operating margin of 9.71% compares with a Information Technology sector median of 19.69% across 19 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.22% | +0.71% |
| Next session | +1.84% | — |
| 5 sessions | +8.21% | +10.82% |
| 15 sessions | +4.31% | — |
| 30 sessions | -4.29% | — |
Volume on the results session was 1.20× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Q4 FY26 order bookings were $377 million, driven by high-value orders.
- Black Box achieved a strategic breakthrough with a new global hyperscaler during Q4 FY26.
Guidance & outlook
- The company aims to reach an EBITDA margin above 10% by the end of FY27.
- The company’s revised FY26 order-backlog guidance was $775–825 million, compared with actual backlog of $792 million.
- The company’s target ROCE level is above 27%.
Expansion
- Black Box completed its acquisition of Brazil-based 2S effective May 1, 2026.
- 2S is expected to add ₹500 crore to annualized company revenue.
New products
- The 2S acquisition adds offerings spanning networking, datacenter, collaboration and cybersecurity.
New initiatives
- Black Box renewed its go-to-market strategy and focused on high-value accounts to win large orders.
Competition
- The company said it serves most enterprises in the digital-infrastructure industry, especially in the US.
Problems & risks
- ROE and ROCE declined in FY26 after the company raised 75% of the preferential issue at the end of March 2026.
What to watch
- Whether operating margin holds above 9.71% after the Q4 recovery.
- Whether interest expense moderates from Rs 45.02 cr after rising 13.74% sequentially.
- Progress against management's 10%+ EBITDA margin aim for the end of FY27 and the $792 million backlog.