Operating margin retreats from Q1 spike as revenue falls 38.99% QoQ
Year-on-year operating leverage remained favourable, but the lower tax rate also helped net profit grow faster than pre-tax profit.
Filed 23 Oct 2026, 20:38 IST · after market close · Oracle Financial Services Software Ltd (OFSS)
Key takeaways
- Consolidated net profit rose 28.62% year on year as revenue grew 6.59% while expenses fell 5.09%.
- Operating margin expanded 6.33 percentage points year on year to 48.55%, but fell 11.49 percentage points sequentially after the unusually high Q1FY27 base.
- The stock gained 2.44% after the results, close to its 2.22% median absolute move across the past eight result reactions.
Price around the results
Year-on-year profit growth came from operating leverage
Consolidated revenue increased 6.59% year on year, while expenses declined 5.09%, lifting operating profit 22.56%. Net profit grew 28.62%, helped by the tax rate falling 3.45 percentage points to 28.05% and interest expense declining 85.9%. Other income contributed 6.71% of pre-tax profit, so it was supportive but not the main source of earnings.
Sequential comparison shows a sharp reversal from Q1
Revenue fell 38.99% sequentially, while expenses declined only 21.44%; costs therefore fell more slowly than revenue. Operating margin narrowed 11.49 percentage points to 48.55%, and net profit dropped 50.38%. The margin path had improved from 41.69% in Q3FY26 to 51.15% in Q4FY26 and 60.04% in Q1FY27, making this the first decline after two consecutive quarterly increases.
OFSS remained well above the reported IT peer median
Among 23 Information Technology companies that had reported the same quarter, OFSS's 48.55% operating margin was 28.9 percentage points above the 19.65% sector median. It ranked 23rd from the bottom, placing it at the top of the reported peer set on this measure.
The market reaction was close to the stock's usual range
The stock rose 2.44% on the reaction day, despite opening down 0.54%, and outperformed the market by 1.76%. Five of the past eight result reactions were positive and three were negative; the latest move was only modestly above the 2.22% median absolute move.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,907 cr | ₹3,125 cr | -38.99% | +6.59% |
| Other income | ₹66 cr | ₹78 cr | -15.59% | -1.21% |
| Expenses | ₹981 cr | ₹1,249 cr | -21.44% | -5.09% |
| Operating profit | ₹926 cr | ₹1,877 cr | -50.67% | +22.56% |
| Operating margin (%) | 48.55% | 60.04% | — | — |
| Interest | ₹1 cr | ₹1 cr | +57.14% | -85.90% |
| Depreciation | ₹14 cr | ₹15 cr | -6.12% | -16.36% |
| Profit before tax | ₹976 cr | ₹1,939 cr | -49.65% | +22.45% |
| Tax | ₹274 cr | ₹523 cr | -47.67% | +9.04% |
| Net profit | ₹702 cr | ₹1,416 cr | -50.38% | +28.62% |
| EPS (₹) | ₹80.66 | ₹162.59 | -50.39% | +28.36% |
Operating margin of 48.55% compares with a Information Technology sector median of 19.65% across 23 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +2.44% | +1.76% |
Volume on the results session was 1.22× its 20-day average.
What to watch
- Whether operating margin holds above 48.55% after the 11.49-percentage-point sequential decline.
- Whether revenue recovers from the 38.99% sequential fall without expenses again declining more slowly than revenue.
- Whether the tax rate remains near 28.05% rather than reverting to the 26.99% Q1FY27 level.