Datamatics margin falls 2.46 points as costs outpace revenue
Standalone net profit fell 8.27% sequentially, while other income accounted for 82.84% of profit before tax.
Filed 03 Nov 2026, 17:19 IST · after market close · Datamatics Global Services Ltd (DATAMATICS)
Key takeaways
- Standalone operating margin fell 2.46 percentage points sequentially as expenses grew 3.52% against revenue growth of 0.84%.
- Other income contributed 82.84% of standalone profit before tax, making reported profit quality a key consideration.
- Net profit declined 8.27% sequentially to Rs 23.41 cr despite a 1.40-percentage-point fall in the tax rate.
Price around the results
Revenue growth did not convert into operating profit
Standalone revenue increased 0.84% sequentially, but operating profit fell 32.11% and net profit declined 8.27%. The pressure came from expenses, which rose 3.52%, outpacing revenue growth and reducing operating margin by 2.46 percentage points. The results were filed after market close, so there is no reported market reaction yet.
Higher costs and depreciation compressed margins
Operating margin declined as costs grew faster than revenue, while depreciation increased 17.52% sequentially. Interest expense was unchanged, so it did not add to the pressure. The lower tax rate, down 1.40 percentage points, softened the decline in net profit but did not offset the weaker operating performance.
Profit was heavily supported by other income
Other income rose 6.26% sequentially and represented 82.84% of profit before tax. That contribution helped keep profit before tax and net profit above operating profit, but it also means the quarter's earnings were less dependent on core operations. With only Q1FY27 available in the trend, the data shows a sequential margin decline rather than a multi-quarter direction.
Digital and automation remain management's stated focus
Management said Datamatics is building digitally augmented platforms using artificial intelligence, intelligent automation, smart workflows and analytics. The company told investors it has capabilities across data and AI, cloud, intelligent automation, application modernisation and low-code/no-code platforms. The presentation also said Datamatics was recognised among the top 15 global vendors for Application Management Services and Salesforce Services.
Margin stood well below the reported IT peer median
Datamatics' standalone operating margin of 5.07% was 14.20 percentage points below the 19.27% median for 45 Information Technology peers that had reported the same quarter. It ranked fourth from the bottom on this measure, placing the margin gap in a broader sector context.
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 | ₹154 cr | ₹153 cr | +0.84% |
| Other income | ₹22 cr | ₹20 cr | +6.26% |
| Expenses | ₹146 cr | ₹141 cr | +3.52% |
| Operating profit | ₹8 cr | ₹11 cr | -32.11% |
| Operating margin (%) | 5.07% | 7.53% | — |
| Interest | ₹1 cr | ₹1 cr | +0.00% |
| Depreciation | ₹3 cr | ₹2 cr | +17.52% |
| Profit before tax | ₹26 cr | ₹29 cr | -9.71% |
| Tax | ₹3 cr | ₹4 cr | -20.17% |
| Net profit | ₹23 cr | ₹26 cr | -8.27% |
| EPS (₹) | ₹3.96 | ₹4.32 | -8.33% |
Operating margin of 5.07% compares with a Information Technology sector median of 19.27% across 45 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.
New initiatives
- Datamatics’ digitally augmented platforms use artificial intelligence, intelligent automation, smart workflows and analytics.
- Datamatics offers digital technology expertise across data and AI, cloud, intelligent automation, application modernization and low-code/no-code platforms.
Competition
- Datamatics was recognized among the top 15 global vendors for Application Management Services and Salesforce Services.
What to watch
- Whether standalone operating margin recovers from 5.07% after the 2.46-percentage-point sequential decline.
- Whether expense growth falls below the 3.52% recorded sequentially against 0.84% revenue growth.
- Whether other income's 82.84% share of profit before tax declines in the next quarter.