Costs outpace revenue as UDS margin slips to 5.31% in Q2FY27
Consolidated revenue rose 6.27% qoq, but profit growth benefited from lower interest and tax; other income contributed 14.01% of PBT.
Filed 30 Oct 2026, 20:13 IST · after market close · Updater Services Ltd (UDS)
Key takeaways
- Consolidated revenue grew +6.27% qoq, but expenses grew +6.53%, leaving operating profit up only +1.94%.
- Operating margin slipped 0.23 percentage points to 5.31% qoq, 16.31 percentage points below the Services peer median of 21.62%.
- Net profit rose +6.11% qoq as interest fell -20.29% and the tax rate dropped 1.23 percentage points, while other income was 14.01% of PBT.
Price around the results
Revenue growth did not translate into operating leverage
Updater Services reported consolidated revenue growth of 6.27% qoq in Q2FY27, but operating profit rose only 1.94%. Expenses increased 6.53%, faster than revenue, which limited the operating profit increase. The company said IFM delivered its highest-ever quarterly revenue of Rs 5,597 million, up 11% YoY, while H1 growth came from 11 new logos, ramping strategic contracts and higher spending from existing accounts.
Lower interest and tax supported profit growth
Operating margin narrowed by 0.23 percentage points qoq to 5.31% because costs grew faster than revenue. Net profit nevertheless increased 6.11%, helped by a 20.29% fall in interest and a 1.23 percentage-point reduction in the tax rate. Other income represented 14.01% of pre-tax profit, so reported earnings also included a material non-operating contribution.
UDS remains well below the Services peer margin
UDS's 5.31% operating margin was 16.31 percentage points below the 21.62% median for the 24 Services companies that had reported the quarter, placing it fourth from the bottom. The available quarterly trend shows a sequential margin decline from 5.54% in Q1FY27, rather than a sustained improvement in operating leverage.
Management linked efficiency plans to AI and automation
Management said it will rationalize employee costs through AI and automation to improve margins. The presentation said the BSS businesses are investing in technology and AI-led solutions, and that agentic AI deployments at Athena had started generating revenue. Management also said Athena maintained margins, had zero client attrition and won two new clients; it said Global faced softer Q2 traffic, while non-scheduled and charter operations increased their share.
The filing came after market close
The consolidated results were filed after market close on 30 October 2026. The immediate stock reaction is therefore not part of this update, and there is no post-results trading move to compare with the stock's prior reaction history.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹812 cr | ₹764 cr | +6.27% |
| Other income | ₹5 cr | ₹4 cr | +8.48% |
| Expenses | ₹769 cr | ₹722 cr | +6.53% |
| Operating profit | ₹43 cr | ₹42 cr | +1.94% |
| Operating margin (%) | 5.31% | 5.54% | — |
| Interest | ₹1 cr | ₹1 cr | -20.29% |
| Depreciation | ₹12 cr | ₹12 cr | -0.65% |
| Profit before tax | ₹35 cr | ₹33 cr | +4.68% |
| Tax | ₹3 cr | ₹3 cr | -10.45% |
| Net profit | ₹32 cr | ₹30 cr | +6.11% |
| EPS (₹) | ₹4.82 | ₹4.44 | +8.56% |
Operating margin of 5.31% compares with a Services sector median of 21.62% across 24 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
- IFM delivered its highest-ever quarterly revenue of ₹5,597 million in Q2, up 11% year on year.
- Growth in H1 came from 11 new logos, ramping strategic contracts and increased spending from existing accounts.
- Athena delivered strong performance with sustained margins, zero client attrition and two new client wins.
- Global operated in all 23 operational airports during the quarter.
Guidance & outlook
- The company will rationalize employee costs through AI and automation to improve margins.
New orders
- Athena won two new clients in the quarter.
New initiatives
- The company is investing in technology and AI-led solutions to improve efficiency, scalability and outcome-based growth.
- Agentic AI deployments at Athena started generating revenue.
- Denave is leveraging AI voice bots to convert marketing-qualified leads into validated sales-qualified leads.
Problems & risks
- Global reported softer traffic in Q2, although non-scheduled and charter operations increased their share.
What to watch
- Whether operating margin recovers from 5.31% after the 0.23 percentage-point qoq decline.
- Whether expense growth falls below the +6.53% recorded in Q2FY27 against revenue growth of +6.27%.
- Whether AI-led initiatives contribute further revenue while management pursues employee-cost rationalisation.