Capillary's operating margin rebounds to 44.44% in Q2FY27
Revenue rose +31.06% QoQ as expenses declined -4.92%, while zero tax and other income supported reported profit.
Filed 02 Nov 2026, 12:17 IST · Capillary Technologies India Ltd (CAPILLARY)
Key takeaways
- Standalone revenue grew +31.06% QoQ while operating profit rose +148.84%, lifting the operating margin by 21.02 percentage points.
- Net profit increased +279.25% QoQ, with a 0.00% tax rate and other income contributing 13.08% of pre-tax profit.
- Capillary's 44.44% operating margin was 24.87 percentage points above the 19.57% median for 38 reported Information Technology peers.
Price around the results
Revenue growth translated into a sharp profit rebound
Capillary Technologies India Ltd reported standalone revenue growth of +31.06% QoQ in Q2FY27, while expenses declined -4.92%. That operating leverage drove operating profit up +148.84% and lifted net profit by +279.25% QoQ. The company also reported that its first customer migration using AI-powered migration capabilities was completed during the quarter.
Operating margin expanded as costs fell despite higher revenue
Operating margin widened by 21.02 percentage points to 44.44% because revenue grew while expenses fell; interest expense also declined -7.89% QoQ and depreciation was broadly flat. Reported profit quality was helped by a 0.00% tax rate, while other income accounted for 13.08% of pre-tax profit. Management said SessionM achieved break-even in Q2 and H1, although it also identified low margins on new SessionM and Kognitiv revenue as the main reason behind a Rs 25 Mn turnaround.
Margin now sits well above the reported IT peer median
Capillary's 44.44% operating margin was 24.87 percentage points above the 19.57% median among 38 Information Technology peers that had reported the same quarter. The available trend shows a sharp rebound from 23.42% in Q1FY27, rather than a multi-quarter direction. Management said inorganic NRR was 94%, reflecting migration-related effects among acquired customers.
Management reiterated FY27 targets and integration progress
Management said the company remains on track for its FY27 guidance of Rs 10,650 Mn revenue and Rs 1,720 Mn Adjusted EBITDA. It also said the SessionM acquisition, completed on May 1, was integrating as planned across North America, LATAM and APAC. The presentation said H1 FY27 included a Rs 333.9 Mn exceptional loss from a cyber fraud incident, pending a potential insurance settlement.
Q2FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹84 cr | ₹64 cr | +31.06% |
| Other income | ₹4 cr | ₹5 cr | -17.56% |
| Expenses | ₹47 cr | ₹49 cr | -4.92% |
| Operating profit | ₹37 cr | ₹15 cr | +148.84% |
| Operating margin (%) | 44.44% | 23.42% | — |
| Interest | ₹1 cr | ₹1 cr | -7.89% |
| Depreciation | ₹11 cr | ₹11 cr | -0.18% |
| Profit before tax | ₹29 cr | ₹8 cr | +279.25% |
| Tax | ₹0 cr | ₹0 cr | — |
| Net profit | ₹29 cr | ₹8 cr | +279.25% |
| EPS (₹) | ₹3.70 | ₹0.98 | +277.55% |
Operating margin of 44.44% compares with a Information Technology sector median of 19.57% across 38 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- SessionM achieved break-even in Q2 and H1, while its integration remained on track.
- The company completed its first customer migration in FY27 Q2 using AI-powered migration capabilities.
Guidance & outlook
- The company is on track to deliver FY27 guidance of ₹10,650 Mn revenue and ₹1,720 Mn Adjusted EBITDA.
Expansion
- The SessionM acquisition was completed on May 1 and integration remains on track across North America, LATAM and APAC.
New initiatives
- The company completed its first customer migration using AI-powered migration capabilities and is preparing for more migrations.
Problems & risks
- Inorganic NRR was 94%, reflecting migration dynamics among acquired customers that resulted in NRR below 100%.
- The company recorded ₹333.9 Mn of exceptional loss in H1 FY27 from a cyber fraud incident, pending a potential insurance settlement.
- Low margins on new SessionM and Kognitiv revenues were cited in the turnaround of ₹25 Mn.
What to watch
- Whether standalone operating margin holds above 44.44% after the 21.02-percentage-point QoQ rebound.
- Whether inorganic NRR improves from 94% as acquired-customer migrations progress.
- Whether SessionM remains at break-even after achieving it in Q2 and H1.