eClerx's margin slips sequentially as costs outpace revenue growth
Standalone Q2FY27 revenue rose 17.44% year on year, but the lower tax rate and other income supported reported profit.
Filed 28 Oct 2026, 18:58 IST · after market close · eClerx Services Ltd (ECLERX)
Key takeaways
- Standalone revenue grew 17.44% year on year to Rs 811.84 cr, while operating margin expanded 2.74 percentage points to 24.87%.
- Sequentially, operating margin fell 1.17 percentage points because expenses grew 5.44% against 3.80% revenue growth.
- Net profit rose 22.77% year on year, but EPS fell 37.24% to Rs 14.71 as other income contributed 8.84% of pre-tax profit.
Price around the results
Year-on-year growth lifts operating margin
eClerx reported standalone revenue growth of 17.44% year on year, while expenses rose 13.30%; the slower cost growth lifted operating margin by 2.74 percentage points to 24.87%. Net profit increased 22.77% despite interest expense rising 27.22% and depreciation increasing 21.24%. The 0.89-percentage-point lower tax rate also supported the profit increase.
Sequential margin reversal follows faster cost growth
Revenue increased 3.80% sequentially, but expenses grew 5.44%, resulting in a 1.17-percentage-point decline in operating margin. Interest expense fell 4.73%, while the tax rate declined 0.84 percentage points, helping net profit rise 1.81% despite the weaker operating margin. Other income accounted for 8.84% of pre-tax profit, so reported earnings included a material non-operating contribution.
Margin remains above the Services peer median
The 24.87% operating margin is 3.14 percentage points above the 21.73% median for the 13 Services peers that have reported the quarter. The multi-quarter trend remains higher than a year ago, rising from 21.47% in Q1FY26 to 24.87% now, although Q2FY27 interrupted the improvement from 26.04% in Q1FY27.
Orders and staffing indicators from management
Management said ACV from new deals excluding CLX was $71.6 million in FY27 year to date. The company reported delivery-staff utilisation of 74.9% in FY27 Q2 and total headcount of 23,269. These indicators provide context for the revenue growth, while the sequential margin decline points to costs growing faster than revenue in the quarter.
No immediate market reaction after late filing
The results were filed after market close, so there was no reported post-results stock reaction at the time of this note. Across the last eight results, the stock rose four times and fell four times, with a median absolute move of 5.88%, indicating that a move around that size has been typical rather than unusual.
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 | YoY |
|---|---|---|---|---|
| Revenue | ₹812 cr | ₹782 cr | +3.80% | +17.44% |
| Other income | ₹16 cr | ₹10 cr | +57.43% | -39.57% |
| Expenses | ₹610 cr | ₹578 cr | +5.44% | +13.30% |
| Operating profit | ₹202 cr | ₹204 cr | -0.86% | +32.01% |
| Operating margin (%) | 24.87% | 26.04% | — | — |
| Interest | ₹10 cr | ₹11 cr | -4.73% | +27.22% |
| Depreciation | ₹29 cr | ₹25 cr | +13.21% | +21.24% |
| Profit before tax | ₹179 cr | ₹177 cr | +0.67% | +21.31% |
| Tax | ₹43 cr | ₹45 cr | -2.69% | +16.99% |
| Net profit | ₹135 cr | ₹133 cr | +1.81% | +22.77% |
| EPS (₹) | ₹14.71 | ₹14.43 | +1.94% | -37.24% |
Operating margin of 24.87% compares with a Services sector median of 21.73% across 13 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
- Delivery staff utilization was 74.9% in FY27 Q2.
- Total headcount was 23,269 in FY27 Q2.
New orders
- ACV of new deals excluding CLX was $71.6 million in FY27 YTD.
What to watch
- Whether operating margin recovers from 24.87% after the 1.17-percentage-point sequential decline.
- Whether expenses grow slower than revenue after rising 5.44% sequentially against 3.80% revenue growth.
- Whether delivery-staff utilisation moves from 74.9% and supports the $71.6 million FY27 year-to-date new-deal ACV.