eClerx margin slips for a third straight quarter as costs outpace growth
Revenue rose +23.31% YoY, but sequential profit fell -13.40% as expenses grew faster and other income declined.
Filed 05 Aug 2026, 17:59 IST · after market close · eClerx Services Ltd (ECLERX)
Key takeaways
- Consolidated revenue grew +23.31% YoY, but expenses grew faster at +24.24%, narrowing operating margin by 0.58 percentage points.
- Sequential momentum weakened as costs rose +7.70% against revenue growth of +4.07%, cutting operating margin by 2.59 percentage points.
- Other income contributed 8.17% of pre-tax profit, while interest expense rose +53.56% YoY, limiting the benefit of operating growth.
Price around the results
Revenue growth loses operating leverage
eClerx reported consolidated revenue growth of +23.31% YoY in Q1FY27, but operating profit grew only +20.27% because expenses increased +24.24%. On a sequential basis, revenue rose +4.07% while expenses climbed +7.70%, driving a 2.59-percentage-point margin contraction. The company’s 23.02% operating margin matched the median of 15 Services peers that had reported the quarter.
Margin pressure extends the post-Q2 decline
Operating margin has declined from 26.98% in Q2FY26 to 25.81% in Q3FY26, 25.61% in Q4FY26 and 23.02% in Q1FY27, making this the third consecutive quarterly decline. Interest expense rose +26.75% sequentially and +53.56% YoY, adding to the pressure below operating profit. The tax rate changed by only 0.14 percentage points YoY, so tax was not the main explanation for the profit movement.
Other income and currency effect temper profit quality
Other income represented 8.17% of pre-tax profit, making it a meaningful contributor to reported earnings. Management said revaluation income decreased because the rupee depreciated less against the US dollar in Q1. Sequentially, other income fell -39.99%, contributing to the -13.23% decline in pre-tax profit and the -13.40% decline in net profit.
Utilisation and staffing provide the operating context
Management reported delivery-staff utilisation of 75.5% in Q1FY27 and total headcount of 22,499. These disclosures give context to the quarter’s cost growth and should be read alongside the decline in operating margin. The results were filed after market close, so there is no current market reaction to assess; across the last eight result reactions, the stock rose four times and fell four times, with a median absolute move of 5.88%.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,152 cr | ₹1,107 cr | +4.07% | +23.31% |
| Other income | ₹18 cr | ₹30 cr | -39.99% | +26.58% |
| Expenses | ₹887 cr | ₹824 cr | +7.70% | +24.24% |
| Operating profit | ₹265 cr | ₹284 cr | -6.47% | +20.27% |
| Operating margin (%) | 23.02% | 25.61% | — | — |
| Interest | ₹15 cr | ₹12 cr | +26.75% | +53.56% |
| Depreciation | ₹50 cr | ₹50 cr | -0.10% | +34.44% |
| Profit before tax | ₹219 cr | ₹252 cr | -13.23% | +16.24% |
| Tax | ₹54 cr | ₹62 cr | -12.73% | +16.90% |
| Net profit | ₹164 cr | ₹190 cr | -13.40% | +16.03% |
| EPS (₹) | ₹17.86 | ₹20.47 | -12.75% | -40.78% |
Operating margin of 23.02% compares with a Services sector median of 23.02% across 15 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
- Delivery staff utilization was 75.5% in Q1 FY27.
- Total headcount was 22,499 in Q1 FY27.
Problems & risks
- Revaluation income decreased in Q1 because the INR depreciated less against the USD.
What to watch
- Whether operating margin recovers from 23.02% after three consecutive quarterly declines.
- Whether expenses grow more slowly than revenue after the Q1FY27 gap of +24.24% versus +23.31% YoY.
- Whether delivery-staff utilisation moves from 75.5% alongside the reported headcount of 22,499.