Onward Technologies Limited (ONWARDTEC) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Onward Technology Limited Q4 FY26 running conference call. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touch-tone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Pratik Jakta. Thank you and over to you, sir.

Good day to all of you. Welcome to the Q4 FY26 earnings call of Onward Technologies Limited. The results and presentation have already been mailed to you, and you can also view them on our website, www.onwardgroup.com. To take us through the results today and to answer your questions, we have with us Mr. Jigar Mehta, Managing Director of Onward Technologies Limited. He will start the call with business update and financial performance for the quarter, which will be then followed by Q&A session. As usual, I would like to remind you that anything that is said on this call that reflects any outlook for the future or which can be construed as a forward-looking statement must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited to what we have mentioned in prospectus filed with SEBI and subsequent annual reports that you can find in our website. Having said that, I will now hand over the call to Mr. Jigar.

Over to you, Jigar. Thank you.

Good evening, everyone, and thank you again for joining us. It's good to be back and share our performance for the fourth quarter and the full year for FY25-26. FI 26 has been, as you must have seen from the press release and the numbers released earlier today post the board meeting, FI 26 has been the strongest year in our history. We've delivered the record revenue of 550 odd crores, which is a worldwide growth of 10.5% and a record EBITDA of 71.9 crores. The gross margin improving to our highest in our history to 13.2%. In absolute terms, EBITDA grew 60.9% and PAD grew 72.3% by OI, reflecting the strength of the execution and the quality of our earnings. Again, the performance is driven by consistent delivery, like I've been sharing for the last several quarters, better operating leverage, focusing on very few direct clients, and discipline, cost control, and steady progress across our 3x3 vertical strategy. This is also transferring to strong cash flows. Operating cash flows with net cash now increasing to 127.3 crores, the highest in our history again. Our biology strength continues to give us confidence and the flexibility as we continue to invest for higher revenue growth while continuously improving our EBITDA margins. Over the last four years, since the pandemic, and especially since the new strategy has evolved, focusing on the U.S. and Europe market, We have delivered a revenue CAGR of 15.3% and an EBITDA CAGR of 35.4% in this period, while keeping headcount largely stable, close to 2,500 employees. Our final headcount end of March 31, 2026 was 2,485 employees who are based between India, Europe, and North America, which is predominantly the U.S. and Canada for us. This is a strong indicator of the operating leverage and productivity level growth that we are seeing, including our revenue and employee for growing consistently over the next four years, and we believe it will consistently grow even higher, close to industry benchmark in the next several years. In Q4, our revenue continued momentum. We, again, rose the highest at 139 crore, delivering a 6.9% bio-wide growth, while EBITDA margins were at 11.2%. Our growth continues to be anchored in deep and long-term client relationships, predominantly companies headquartered in North America and Europe. And our top 25,000 customers continue to grow at a steady pace, which is now at 88% of our revenues, affecting strong concentration around strategic clients and increasing relevance within their engineering and R&D programs. We're still very, very, the best part about our business model and where we are today, starting the new financial year, FY26, FY27, is we still have a very small percentage of the clients R&D budget or outsourcing software, outsourcing budget, and which gives us a huge confidence for the next three to five years as we look forward and the growth runway that we have with our existing clients. Another very interesting development over the last couple of quarters is through our existing clients, we got six amazing client references as well. So in the last 12 months, we added net six new clients, just still at a very nascent stage, but where we assigned the master services agreement and now started bidding for projects. We started billing for them as well. And I think that is a very exciting stage for a young company like us, which shows the confidence our existing large clients have in us when they obviously give you and references of other similar lodge. Especially in the industrial vertical that we are focused on. In terms of our vertical horizontal strategy continues to remain consistent as we've shared earlier is three by three, three verticals and three horizontals, IHM being the largest and the other two where we are investing and we hope to continue to make a lot of momentum Thank you very much. In parallel, we have come to invest in strengthening our horizontals, especially the digital and AI-led capabilities supported by dedicated budgets. We also believe we also are gearing up for setting up our digital AI lab in Chennai in the next couple of months. We'd love to welcome all of you guys there to showcase some of the amazing work that our teams and delivery teams are doing for our clients. If I look forward several years from now, I think Onward will have a substantial portion of revenues coming from digital AI projects, and I believe that will give us both huge revenue growth as well and margin expansion consistently and a very sustainable model. Simplification has also actually helped us in a very, very big way. I've shared that last quarter. We are now able to execute very, very, very focused trainings, very focused learning, organizational developments, very focused people-based initiatives, which have helped reduce our transition to its lowest, which is below 15%, again, a record for us. We are at 14.85% for last financial year, and we continue to see a lot of room for improvement and employee engagements and improving customer satisfaction, which will keep improving this percentage as we move forward over the next, in FI 26, 27 and in the future as well. Looking at the overall perspective and looking at the overall amazing performance of the year and the bright future that we believe we have with what we have seen so far in the client's budgets, the board has looked at the capital allocation budget as well and recommended to increase the dividend to Rs.8 per share. This will be 11 consecutive year of dividend, and this 8 rupees per share will be the highest that the board has recommended, which is... Shows the commitment that we have to return back to the shareholders.

As we look forward, we are increasingly

confident about the next phase of our growth as well. We have finalized our roadmap covering both revenue and EBITDA, which I've shared before. We believe we have everything in front of us today to execute, to deliver double-digit revenue growth and double-digit EBITDA. And our newly formed global GLT or global leadership team that we are setting have recently set up, comprising of business leaders and corporate function leaders will drive the day-to-day operations and execution. While the external environment remains dynamic, the demand outlook for digital and engineering services, especially new initiatives on AI projects, continues to be very positive. With the right clients, stronger leadership, their depth and a more focused business model, we remain comfortable reiterating again our guidance for sustainable, sustained double-digit revenue and EBITDA. Overall, as a summary, FI26 was a year of strong delivery and structural progress. As we move with FI27, we are focusing on deepening our role as a trusted digital engineering partner. We continue to strengthen our teams in US and Europe. And we are very excited in terms of what we are seeing forward with our existing client engagements. With that, I'll hand it over back to the operator for questions. Thank you again.

Thank you, sir. We'll now begin the question and answer session. Anyone who wishes to ask questions may

press star and 1 on their touchtone telephone.

If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assemble. The first question is from the line of Buraram Shakti Suresh from Buraram Financial. Please go ahead.

Sir, good evening, sir, all of you. Sir, you were told the business model and your growth is, you can present good, good, sir. But stock market side, price will be continue, decrease. Generally, on the investor side, I am asking, sir, I am so many years, I am the shareholder in non-world. Continue, results will be good, but price will be, every quarter will be decreased price, sir. Any aware of your stock price. Sir, I know a little bit English, you can try to understand.

No, I appreciate, hi, I appreciate the question. It's something we are working towards. While we don't control the stock market and what the reactions are, we want to make sure that as Onward Technologies Management team, we at least articulate our story well, we share all the information transparently, and we are extremely positive. As I said, last four years, we have grown both revenue and EBITDA CAGR, and I think next three to four years is going to be even more exciting. But on the IR side, it's something we have to do on a much better job, and that's the management team, including myself, is working on. We hope to show you improvement very soon.

Sir, actually, Anthropi Cloud tools and the AI developments really affect the company's future business. This is a total industry problem. You can explain that.

No, it does not. It does not affect us. It does not affect engineering companies, not yet. But if it does in the next few quarters, we will definitely share more information with you. The impact today with what has come up is more for BPO and IT companies. Again, so to reiterate, Onward is an engineering services company, not an IT company.

And actually, Anthropic Cloud product, Onward is a product company also. Anthropic Cloud product companies, any effects?

Onward Technologies, again, just to clarify, Onward Technologies is an engineering services company. We don't do any product development. We don't sell products in the market. We are a pure place services company focused on U.S. and Europe clients. So, Onward and to...

I'm sorry to interrupt Mr. Bram Sethi.

Could you repeat the question?

Please, sir.

Sir, at all, sir, please. Anthropic Cloud has disturbed the product companies, sir?

I would not, I would, I would not know.

We are, Onward Technologies is not a product company. It doesn't affect us yet. As I said, we will definitely share with you and all our investors if we see any impact from Anthropic Cloud and or from other AI. We have not seen any impact on us as on a services business, on the engineering services business.

May I request you to rejoin the queue, please? Thank you. The next question is from the line of Madhur Rati from Counter-Secretary Investment. Please go ahead.

So taking from the previous speaker's question, so I definitely appreciate that you have increased the dividend and the recent growth is also pretty encouraging. So but then if you see our stock price, 21 years back in 2005, the stock was at 120 rupees and today it's at 240 rupees. So basically, shareholders have not really made any wealth. So, but this is an opportunity because now we have over 125 crore of net cash and our market cap is around 550 crore. So, which means that almost a quarter or a fifth of our market cap we have in cash. So, why aren't we doing a big share buyback so that the equity base can reduce and whatever growth comes in future will get divided on a smaller equity base. So, basically, the earning per share will increase disproportionately. And recently, in the recent budget, the taxation on the share buyback has also become pretty attractive. Since the promoter shareholding is in corporate structure, then only 22% taxation is there. And if the promoters choose not to participate in the buyback, then the shareholding of the promoters can increase.

So, any thoughts on that?

Thank you for the suggestion, recommendation.

It's something the board has been actively considering, and definitely the price is very attractive, both for the company and for all the investors. But yes, it's an exciting time, and we hope to make the right decision, which will create a lot of value for all our shareholders.

Right, sir. And, sir, again, sir, now that, so, especially for layman investors like us who don't have a technological background, if you could just give some comments on reassuring us that what exactly, I mean, are we user of AI or AI can substitute our business and maybe the products, Claude, etc., that are present in the market right now, maybe they are not impacting us. But the direction that things are moving, what makes you think that we will be net beneficiaries instead of the business going redundant?

So, great question.

This is something that we are actively always monitoring. Today, it is AI. Tomorrow, it could be some other technology disruption. So far, I can share with you from our customer perspective. Especially the new version of Claude and some of the latest version of ChatGPT, we have not seen any disruption that our customers have brought to us. We have not seen our pipeline decrease and neither have we seen any impact when a customer is actually asking us to use AI tools, right? So to address your point more directly, we are not using AI tools today to deliver client-based projects which are available. We are not. So far, customers have not brought to us or asked us to use any particular AI tool, but what we are doing, I hope I address the first point. So, so far, it's affecting what we understand from the same news that you are reading, IT companies and BPO companies. It's not affecting engineering companies because engineering companies is not about hiring freshers and just… Doing some basic application maintenance work, right? We're doing new product development work, we're doing robotics work, we're doing model-based development. It's a very high-end work which needs deep domain experience, it needs industry experience, it needs factory experience, software experience, right? So you cannot overnight replace that. We all hope it's coming, and I think we will create a lot of value with it once it starts coming. Now on the onboard technology side, what we are doing is we have bought a lot of licenses where our delivery teams and R&D teams are studying how we can create value for our customers using the AI tools where we can bring down the number of hours or it can improve the productivity. And that R&D is going on as we speak. We hope to go to the market in the next several quarters with more and more value-added solutions when I say market is akin to our existing customers. Which I think will create a lot more value and eventually much higher revenue for us in the future. I have also clarified that we are as an organization, as an engineering company today. Understood, sir.

Since you made the point that we are not any run-of-the-mill IT company, if you could just give us some peers on the listed side which are relatively comparable like-to-like from us, since you made the point that the TCSs and infotuses of the world are not exactly the same business that we have.

So, I didn't say IT companies are run-of-the-mill.

IT companies are amazing companies, amazing success stories, the best in India, I think. They've put India on the global map, so they're the best companies out there, and I think they'll all do fabulously well with the resources and the amazing teams they have running India businesses. Coming back to Onward Technologies and who are the, like, other companies in our space that have done a fabulous job. Obviously, you guys know L&T Technologies, you guys know… KPIT, you guys know, Scient, these are all multi-billion dollar companies creating amazing engineering services companies which have done amazing work for their clients. The best part about us and all of them is we all don't compete with the same clients. We all have our niche clients that we focus on and we are growing with them, right? So we are an engineering services company. Our recent company, Tata Technologies, which is Kula-based, which is owned by Tata Motors. These are all engineering services companies. Understood, sir.

And so lastly, sir, what kind of... Sorry to interrupt Mr. Ratti, sir.

The management is... Thank you. The next question is from the line of Ethan Pradhan from Maximal Capital. Please go ahead.

Hi, sir. I hope I am audible. So, my first question is with regards to the transportation, the auto segment. So, if the calculations are correct, then it is kind of, you know, decrown in this year. So, if you can give some commentary on that segment and when are you expecting the turnaround?

Yes, hi.

So yes, our transportation vertical, which comprises of both automotive and rail, we had a revenue or we had a degrowth of 1%. This was due to two main factors. First factor was we exited, which if you remember, we had shared with you if you look at our earnings call about a year, year and a half back, where we exited all the tier 1s and tier 2s across India, Europe and US. And so that revenue growth, but we were hoping to increase the revenue from our OEM customers enough that will get us to 10, 20, 30% revenue, top line growth. That did not happen at a speed that we would have liked for the overall slowdown in the automotive sector and several other factors. But we are seeing the momentum now. We are continuously working on improving the vertical growth. And I think the automotive and the real vertical have enough group for us to grow 5x to 10x from where we are right now. It's about getting the strategy right, making sure that we're investing in the future. And we have the client engagements already, but we just have to do a much better job in terms of execution.

And so most of our clients in the auto segment are US-based, EU-based OEMs or catering to the Indian AMs as well?

So we, as Onward Technologies, are 100% focused only on US and Europe. So if you look at our revenues, 70% comes from North America and 30% comes from Europe, right? That percentage can change every quarter. I'm giving you an annual basis perspective. We have zero clients in India.

And this is across

all the verticals.

Right. And so when the auto segment, you know, the accelerates, is it fair to expect that, you know, the margins improvement will be faster? I mean, or, you know, that depends on the kind of projects we are doing and, you know, the very general supporting. I mean, if you can give us some kind of, you know, right answers to. You know, the margins and the data across the segment specifically.

Absolutely. And your point is very valid, right? When all the three verticals grow at the speed, let's say at 20, 30, 40% year-on-year, the overall gross margins, overall direct margins, operating margins will expand as well, right? So today we have one vertical growing, one vertical with investing, and one vertical which did not do a great job. We didn't execute as well as we should have. So, it's still at the highest of 13.2%, which I'm still very pleased at. You know, the start of the year, when we started the year, we assumed that we'll be at 11% EBITDA margins for the financial year. It's been a couple of good quarters. Q3 will be a slowdown because of the furloughs and that's best in world slowing down but Q3 was a record quarter for us because a lot of positive things happened and overall we balanced things out and I think it became a 13% plus year for us. So very excited and pleased with that performance by the entire team. The day all the three verticals will start delivering as per The potential, I think the margins will keep expanding and expanding even faster from where we are today.

Got it, sir. And sir, any comment on the Q4 margins? I mean, they've kind of, you know, came down. So anything to call out there?

Nothing in particular. I think it was a good quarter. As I said, for us, we're looking at annual number. We will have some quarters where there'll be some peaks from existing clients, some quarters where we're Investing a bit faster. But overall, I'm very pleased with where we are at. So you will look at Onward from an annual perspective and you will see that next year as well, right? We have amazing visibility, we have very strong visibility for delivering much better than what we did this year on an annual basis, both on top line and bottom line. And we expect that to be resulting in our cash reserves as well. Got it, sir.

Okay, sir. Thank you and all the best. Thank you.

Thank you. The next question is from the line of Mihul Panjwani from Fort Peasense. Please go ahead.

Hello, sir. Thank you so much for the opportunity. Sir, our SY26 margins are expanded to 13.2. How sustainable is this level, and what are the key levers that will drive our margins in SY27?

Hello, am I audible?

Yes, yes, absolutely. So from a revenue, from a gross margin perspective and an EBITDA margin perspective, I think it's, again, it was a super view for us, much better than we expected. Q2 and Q3 were outstanding. And we do believe that these numbers are sustainable and are not only sustainable, I think we can grow much, we can do a much better job as well. There's a lot of operating leverage that we have. With revenue growth coming in, and as I said, revenue growth from all the three verticals, which we think we are going to be able to deliver this year. And keep in mind, our GNA costs and other costs usually remain the same, right? Because we have invested that much in automation, we've invested that much in internal systems and tools. So we're able to scale much faster. So we do believe there's a lot of room for improving both in the water cross margin and at the EBITDA level.

Right. So my second question is, how much is the current DEAL pipeline and what kind of visibility do we have for conversion in FY27, especially in our top five accounts?

Very positive, and that's why we are comfortable in sharing. We see that visibility from last one year. We saw that last year as well. We see that this year, and we see that the next two years going forward, because when we sign agreements with our customers, they're usually long-term in nature. They're not transactional. So we definitely see double-digit revenue opportunity across all the three verticals, and we definitely see margin expansion with more offshore delivery, more better utilization, and bench discipline, and absolutely like any other offshore company focusing on a pyramid organization or optimization so we can deliver value to our clients.

Wait, sir. Sir, how much of an F.27 revenue can you say that it is already committed or in advanced stages?

Majority. I don't have the exact percentage, but I mean, if I just have to give you a number, how many will come from existing clients? I would say 95 to 98% will come from existing clients as per the budget from the existing 75 live clients that we have. Yes, and we're commenting on the deal pipeline.

Okay, great. And sir, also for top pipelines, how many have we worked with them for more than a decade?

From our top five clients. I would like to say two or three, at least 10 years, if not a decade.

Right.

So two or three for the last 10 years, and there are the banner two, which have really grown, has come post the pandemic, so the last four to five years.

Okay, so sir, now I am new to this company, so I am just trying to understand a little bit more from whatever commentary I have been hearing with the various interactions. So what is it that did we have a couple of rough years over the last two decades or so? Because, you know, I heard that we are doing quite well. So what was it that is which has held us back kind of?

Not much. I mean, last four years has been the best years in our history.

As I shared earlier, our revenue category is 15% plus, and our EBITDA category for last four years is 35% plus. So it's been extremely positive last four years for us as an organization.

All right. So, okay, so I'll come back in the queue because I have a couple of industry-level questions for especially the engineering services industry. So I'll come back in the queue. Thank you.

Thank you. The next question is from the line of Ranjai Popli from Banyan Capital. Please go ahead.

Hi. Am I already? Yes, sir. Just a few basic questions. So how do we clock and travel? Is it based on the odds that we put in or is it more based on the outcomes?

It's based on the number of hours that we put in.

That's almost 90% plus or 88% or 90% of our revenues. And the balance is based on fixed price contracts, which is based on outcome. And that's how we're able to predict our revenues much comfortably. That's why we were confident in giving visibility as well for last year and the next two years.

The introduction of AI, where, you know, it is able to reduce the hours. So do you think you will be pushing on some of the benefits to your clients?

Again, I clarified earlier, we are an engineering services company. So far, we have not seen any impact of AI on engineering services. Please keep in mind, in Onward as a business or in engineering services as a business, none of us are hiring freshers, right, straight from college and just putting people out there and just billing for hours. Majority of our engineers are 8 years, 10 years, 15 years, 20 years. They have worked on the factories. They all have come from manufacturing experience. They have deep domain experience. Of course, a lot of certifications. So, so far, there's no impact on the overall engineering business globally, is what I understand. At least that's what we understand from our customers. There could have been impact in the IT business and the services business and BPO business that people talk about. But so far, no impact on the engineering business. Now, coming on, the second part of your question about benefit to the customer, that's definitely Onward Technologies is doing proactively. We have bought a lot of licenses, invested last year, which I shared. We hired a new CIO who's doing a fabulous job. You hired a new delivery leader who's doing a fabulous job. And we are trying to create and innovate in a way that to see where we can add more value to our customers, where we can potentially bring down the number of ours. Number of hours or speed to market for the customer. But I think that's still several quarters down the line, because it has to be tested, it has to be validated, and I think it doesn't happen at a global level, so it's not going to be an overnight thing. But we definitely see huge value going forward in the next couple of years, which will have a huge positive impact on the revenue and the gross margins of the company.

Just a basic question. So since this is a company that use IoT, that is Internet of Things, so it takes all the data from the sensors and then process it and then analyze it and gives a solution to the client.

Am I right in understanding this?

The process of what Onward does? Yeah. That's not, so that's not what, yes, your understanding is right to a certain extent, yes.

So, then the question that comes up is that, you know, if the information is being extracted out of the sensors, don't you think that, you know, AI will be able to process it much better? Of course, with the help of all the industry-leading people that you have related to 10 years of experience, so don't you think in that particular space it will reduce the billable hours?

Sure. Sure.

So, in situations like these, which you are clarifying, you know, the customer also is aware that this can happen. So, there will be no RFQ, there will be no outsourcing, right? Keep a different view about Onward Technologies. Onward Technologies is focused on the same customers when you spoke about one IoT project. Customer's IoT, let's say, outsourcing budget is anywhere from $100 million to $1 billion. Right? So, everywhere where AI can be used, or where AI benefits can be leveraged today, customers already removed that from their outsourcing budget when they started the budget this year. And they'll continue to reduce that number of hours from those projects. And they will start doing that in-house, or they'll start doing it directly with Microsoft, or Anthropik, or whoever charge you people. Onward is focused on the other side of the business where the customer is actively outsourcing the number of RFPs, RFQs, the demand is at an all-time high, right? So customers channelizing or re-channelizing the budget which potentially where they can leverage AI for normal tasks and moving it to more and more domain-based stock and that's what Onward is focusing on, right? So we would not even bid for those projects that you are talking about.

Okay, got it. So would you say that AI brings operating leverage to you rather than, you know, replacing you?

Absolutely. And that's our job. That's why we have to make sure that we build the best delivery organizations, best domain experts. Deep domain experts. We have a lot of people from attending across the US and Europe. We're almost 125 employees now outside India. We'll take that up to 200 to 300 in the next few years. So it's a very exciting time in what AI can do and how it can benefit our customers, how it can create more stickiness and how we can add more value to the customers. Absolutely.

Thank you.

Thank you.

Thank you. The next question is from the line of Abhijit from PSF. Please go ahead.

Thanks for the opportunity, Amri, Audible.

Yes, sir.

So, has AI significantly compressed the time required for development and coding? So, are you seeing any re-neverification of contracts, and

has there been any such instances?

No, I clarified earlier, we are not seeing any of that so far.

We are actually only seeing our customer engagements which were, you know, again, let me clarify or let me sort of reinforce what Onward does. So we have several engagements pre-pandemic where we were supporting the customers for more than 10 years. These are all customers that we should support on the mechanical engineering side, right? That's the Onward bread and butter. That's our DNA. That's what our history is. All the customers now, we're more on the digital side, and we're continuously doing more and more quality work for them there. They're still at a very, very nascent stage. The moment that expands with the customers outsourcing budget, I think they all have potential to get to $10 million per year. That's why for me, that number is very exciting. That you mean something to the customers. Coming back on renegotiating of contracts, the new customers that we have signed since the pandemic are already on the digital side. That's on data analytics, that's on just data engineering. And we are trying to make more sense of that and see how we can build more and more capabilities because that's not onwards expertise for more than four, five years. But the good part there is everybody, all other tech companies much better than us as well. The engineering companies have similar capabilities. So Onward has to, we have to keep investing further. We have to keep making sure we are front-ending back to our customers in US and Europe. And that's where we will see a lot of leverage. So the opportunity or the discussion of renegotiating contracts does not exist. We don't have those $50, $100 million maintenance contracts where customers are saying, okay, come now, let's reduce the cost or reduce the number of hours. We've not even reached that stage. And that's what excites me the most. Our journey from 550 crores, let's say next.

The year is going to be very exciting.

You mentioned about operating leverage previously, so can we generate a higher revenue from the same type of employees by leveraging the AI?

That's our hope. We have not seen that yet.

For us, it's constantly about we definitely spend a lot of time in the last two years in training, reskilling our employees so we can move on the value chain, increase the revenue per person. So if you see the revenue per person is now almost close to 22 lakhs for us because that's 8-9 lakhs four years ago. So it's been a beautiful journey in terms of what our HR team has done, Illinois team has done, our delivery organizations have done. Now we have to go to 30, 40 lakhs per revenue per person, and that's what we will keep investing in. Will AI help us there? That's the hope, that's the goal. But as I shared earlier, we have not seen it on the engineering business side yet, but we hope to see that as we keep evolving and keep investing in this area.

Got it. And regarding the employee extension in this quarter, there was slight increase that we have noticed, and if we look at the last six to seven quarters, it was kind of stagnant. So, this increase was, was it because of the, you know, high cost hiring or any year-end bonus?

It's, so I year-end, just to clarify,

again, it's a quarterly numbers for us. 13% plus EBITDA has been, is what we said, we were hoping to get leveled at 13%. So some quarters, the teams, the vertical heads might invest more. Sometimes the onboarding happens in XYZ quarter. It's not something that we have shared consistently in the last four quarters that we are trying to micromanaging quarterly game, right? We're trying to invest, we're trying to grow faster. Like while the revenue grew 10%, I would like the revenue to grow 20-30% every year. And we have the potential, we have the clients, we have the teams. We have all the right investments in place. It's all about making sure that we execute better. That's the real goal, right? On the second part of the question on year-end bonuses, we don't have year-end bonuses. Our commission plans, our variable pay structures, our bonuses are all quarterly divided and it's strictly based on the KRs and KPIs that we have. So we don't have cyclical payouts for our employees.

Understood.

That's all from my side. Thank you and all of you. Thank you.

Thank you. The next question is from the line of Aditya Javar from AK Investment. Please go ahead.

Yeah, thanks for the opportunity.

A great set of numbers. I mean, I'm following this company for last five to six years. We have done a good job in transforming and focusing on a couple of verticals, even though we had taken a hit in the revenues and margins, which I truly understand. But now, going forward, next three to five years, I mean, we are at a juncture where the AI is there. There can be a chance where a lot of, I mean, businesses can get impacted. But right now, there is no such visibility. But I just wanted to ask the management. Should we be aggressive in getting more capabilities and become a truly AI engineering services company or to scale a bit more high level, have some growth ambitions rather than, I mean, I know we are sticking to 10 to 12% of guidance, but why not acquire some of the capabilities and use market to get funds and whatever is required, but Truly go out there and build some capabilities and build some AI engineering service in the company. What is the vision that I would ask you for you for if shareholders want to stay for a long run here? What is that we are here for? This is my longer term question.

Yeah, thanks.

No, thank you for the question and appreciate the suggestion.

That's exactly what we would like to do as well. And I want to assure you that me and the entire GLT and the entire leadership team as well of One World is very focused on it. This is a very strong number of hours discussing this morning as well in the board meeting. And we are not shying away from investments. It's more about making sure we invested the right opportunity, which is in front of us. And we're doing that already. We're onboarding a lot of good people. Not to add new clients, but to go deeper into our client engagements. And we are trying more and more and more, as we are seeing in our positioning or repositioning in the last couple of quarters and years, is to move from a mechanical engineering company to a digital engineering company. So digital engineering company means exactly what you said. And we want to become an AI-ready company for our customers. And we have to find the right people, invest in the right processes and culture, so we can expand more and more towards that. And... Right, 10% is a great start because the previous year was single low digit. But we want to grow much faster and there's absolute visibility and interest for everybody to grow faster. Projection is what we have shared with you, what we believe will happen. But as I said, we're all working towards improving that and growing much faster.

So, can we expect this year to clock high teams' margin as well as numbers? Is that the visibility we can have with the customers? Because a lot of customers are going through a lot of captures because they are in the tailwinds. So can that benefit us this year?

Absolutely. That's what we are hoping for. That's what we are seeing in the month of April as of now. Yes.

So we can expect this high teams margin and high teams just for revenue.

We are committing, as I said, what we committed a year ago. I'm just consistently going to follow that. We want to under-promise and over-deliver. We want to make sure that we deliver for you guys. We deliver for everybody. We have 2,500 employees working very hard every day. So what we have shared is double-digit revenue and double-digit EBITDA. We will keep focusing on that and improving that. And as I said, this year, 11% became 13% plus EBITDA. Next year, we hope to make it much, much better. There's a clear visibility, there's a clear demand as we stand today. Sure. Thanks. All the wisdom. Thank you.

Thank you. The next question is from the line of Arjun Jawa. An individual investor, please go ahead.

Hi, sir.

Hello, can you hear me, sir?

Yes, sir, you're audible.

Sir, I want to know on a constant currency basis, how much have we grown year on year? Because there is a lot of rupee depreciation which happened in the last six months.

I don't have the number in front of me, but

please reach out to ENY, who's our IR managers, and they can share with you all the numbers, all the breakups.

Because we must have a lot of liquidity in the revenue growth, which you are currently showing. So I think you must have some numbers, right?

But you won't have any idea. Absolutely. That's what I said.

All the breakups that you would need are IR managers, E&Y, can share that with you. You can email it to them and they can get back to you right away.

Sir, there was a post-conference note arranged by Arihant Capital during March. I don't know, some management team has attended that particular conference call, and they have given a guidance of 10-12% revenue growth for FI26. But constantly, when we are attending the post-earnings conference calls, you people are shying away from giving any specific guidances, and you are just giving the investors with a double-digit EBITDA and revenue growth. But you are actually giving this price sensitive information in the other conferences. I just want to know why we are lacking transparency, because this is the priming call, which are actually, which is followed by all investors, and you are giving a specific growth guidance number to only in the conference calls of some other

investor community.

That's not accurate.

The double digit means 10% plus. So I don't believe anybody from my team would say any other number. We've been very consistent throughout. We have our IR managers. Absolutely, sir. They must have extrapolated some numbers. We have consistently maintained double-digit revenue and double-digit EBITDA. We would never share any other information, neither me, nor the board, nor any other employer onward, to anybody outside any other forum. Right? We are the most transparent company out there with the highest level of governance.

Sir, the answer is attended by your management, sir.

Sure, that's why I said double-digit means 10% plus. So I would not have the exact thing. But again, if you think there's something which is out there, please say to me and our IR managers at ENY, we will definitely have a look and make sure we take corrective steps. But I don't believe it is accurate.

Thank you.

The next question is from the line of Madhurati from Counter Cyclical Investment. Please go ahead.

So thank you for the opportunity once again. Sir, if I look at our main segment of industrial equipment and heavy machinery, between the past four years, our revenue has grown at 9% CAGR, and there has been some rupee depreciation, so I would expect that constant currency, this number, would be much lower. And the end segment, all three, I think industrial, energy, as well as all five, every one, the major players have grown or shown some kind of thought on either doing predictive maintenance or new ER&D projects. So where is the growth lacking for onward? Because it's not reflecting in our revenue as our customers are seeing. So if you could just help us understand on that.

Sure. You said last four years, or you said last two years?

Last four years, between FI23 and FI26, yeah.

Sure. So, as I said, all the constant currency numbers, every micro detail, my E&Y can share that with you or my CFO can share that with you. But to answer your question more, to give you your perspective, over the last four years, Onward Technologies has gone from 250 customers to 75 customers. Right, so we've reduced a huge onward DNA being a 30-year-old plus company is to we have an amazing team, brand, goodwill out there to win customers and our teams are able to get customers. Build the confidence very easily. But we realize we are not an IT company, we are not a product company, we are not a services company, we are an engineering company. An engineering company is better to be something to someone than be everything to everybody. It's impossible to do that because the domains are different, capabilities are different, development requirements are different, skills are very different. You cannot cross-sell ourselves using the same, let's say, SAP person here and put them in some other client, other domain. So we realize we have to be something to someone. So in the ideal perspective, we should have only few customers. And if you see the best companies that I pointed out before and over the last three years as well, in our space have all become multi-billion dollar companies by only focusing on maybe two to 10 customers. Right? So any company more than a billion dollar market cap, up to 10 billion, has two customers to 10 customers, which gives them 90% or 95% of their profits. And probably 80% revenue. And you guys can study these companies. So from an onward perspective, we have followed that strategy. And we have gone from 250 customers down to 75, which will potentially even go down to 50 in the next couple of quarters, as I've shared before. I think 50 is a sweet spot for a company of our size, till we grow 2x, 3x, 4x of where we are today. And our customers that we select have to be, and customers who select us have to be customers which have huge outsourcing budgets. So while you are seeing a 15% CAGR or in constant currency, some other number, we are seeing much, much higher internally because the exits of the clients have happened. Now the exit part is over last year that we shared, right? So there's no more exits. Now it's all about transitioning. There'll be continuous growth from the top clients while the tail accounts will keep playing our base on where we can win and where the customers love us. So that's the exciting stage for us. Now, the second point of your question about how some other companies have grown much faster, that's amazing. They have built much bigger teams or bigger budgets. I am not competing necessarily with them, but there's definitely an opportunity for us and I think the next few years looks a bit better than the last three years.

Right.

I understand that our customers, so based on this customer pruning strategy that we have done, how do we see our wallet share increasing with customer, or how do we ensure that the customer's stickiness with Onward becomes much more than what it earlier was? Because, sir, I understand the strategy, but as a non-technical person, I would like to understand where is the company heading with these few customers? Can we expect a wallet share increase with them? Have we created some capabilities because of which we might get more orders going forward? So just a basic idea would be very helpful.

So Adun, that's an excellent question. Absolutely, our customer wallet is continuously improving. If you see our revenue and we are 250 crore revenue, our top 25 clients contributed 80% of our revenue. Today we are at 500 plus crore revenue, 550 crores, our top 25 clients contributed 88% of our revenue. If I look forward three to five years from now, I think, again, our top 25 clients will contribute 70%, 80%, 90% of our revenue. So our market share is increasing, improving. Our gross margins are increasing, improving. That's how we have gone from low-digit EBITDA to double-digit EBITDA this year, 13% plus to be more precise. So absolutely, all those numbers are in front of you for you to understand how our wallet share is improving. We have not lost any customers in the last few years. It's always been progressive. Now, to answer your second question, how do we add more value? How do we get more orders or get more access to more RFQs? That's a much better way to look at it. Onward was a popular mechanical engineering company until about a couple of years ago. Move forward today, mechanical engineering is only about 50% of our revenues. The balance of 50% is software. And I think Onward has done a decent job in investing in new capabilities on the software side. But I think you can do much, much, much better. And now the AI coming our way, I think more and more investments in AI, if we can reduce or bring speak to market for customers products, reduce their R&D budgets or reduce the number of hours, there's so much opportunity that can evolve in the next three years. I think we all are very excited towards that. And that's what will remain creating the stickiness. So investing in new capabilities, investing in new markets, investing, being present with leadership teams in US and Europe, not just being an India-based player. So making sure all the right investments happen. And I think all those are behind us. We have done that very well in the last four years. Now it's all about scaling in the next three years, where all of us on this call will see a lot of value.

Right. So just a final question from Mansur. What I understood was there is a strength towards software-defined vehicles as well as predictive maintenance in this heavy engineering where due to using the same asset for a longer period of time, you are more inclined towards making your tech more efficient. So, if you could help us understand, does Onward operate projects in this area or provide engineering services to the customers in these areas, or this is something that is maybe not higher for us, or this is where we are, if you could help us understand.

Sorry, can you please clarify that last point?

Yes, sir. So, I'm trying to understand the software-defined vehicle and the productive maintenance. These two trends keep popping up for heavy equipment and engineering due to just longer replacement cycle of assets. So, does Onward provide any services in these areas or this is a technical notch higher than where we are present currently and we would like to move towards this area or this is not a focus area for us if you could help us understand.

Excellent question again. So SDVs is an area which is for the automotive vertical, not for the industrial. And that's today onward technologies is not present in. And it's absolutely where we would like to go. We are very late. Again, we're going to play catch up. It's I think about two or three years late, but we're going to play catch up there. So that's more on the embedded side. And hence, I'm trying to transition onward more and more straight to the digital AI side. While we keep investing in Embedded, I think Embedded will contribute about between 18% to 30% of our revenues for the next couple of years, but I would like to transition onward more and more towards the latest disruption where everybody around us, including our larger peers and larger, amazing, successful companies in the engineering space, everybody has a level playing field. So that's where we would like to go. On preventive maintenance, on some other projects, we have won some, we have capabilities, and I think our teams are doing a good job, and I think that will keep expanding as we move forward.

Got it.

And sir, what kind of investments will we be doing in manpower and capex over maybe next one or two years?

So on the CapEx side, we will be

doing in the next two years close to just for existing clients, and this is more for just setting up the labs, it goes to about 25 floors. We are looking for bigger opportunities to do that, and we hope to do a lot of exciting things as we move forward there. Keep in mind, we've already done a huge investment in the last few years. So this is just more about strengthening. This does not include any new large team that will potentially win. That might need more and for that we will go to the board.

Got it. Sir, that was from Man. Thank you so much and all the questions.

Thank you.

A reminder to all participants that you may press star and want to ask question.

As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thank you so much, everyone, for joining today.

Great questions. I hope I was able to clarify or articulate where Onward is today. In quick summary, Onward is an engineering services company, where 50% of our revenue comes from mechanical engineering, 50% from the software side. We are trying to transition the company more and more towards, while the mechanical engineering business will continue to grow and it's core to our success, we are investing very heavily on the software side, digital side, and more and more. We hope in the next couple of years, the entire company will transition towards AI. We had a lot of questions today about AI and how it's affecting onward technologies today. Again, to re-at-reate or reinforce, it's not affecting onward technologies today. We are not an IT services company. We are not a product company. We are not a BPO company. We are engineering services, right? So, so far we have not seen our customers getting affected. In fact, our customers have recorded the best results and the best profits in their history. Number two, there are a lot of questions about India-based customers and what we do. Again, to reinforce, Onward Technologies has majority or 70% of our revenues coming from North America, which is US and Canada for us, and 30% coming from Europe. We have no customers or revenues coming from India. The INR billing Onward Technologies does. It's strictly based on the GCCs, all these global companies, or American and European companies in India. And third, in terms of the future outlook, we definitely see very, very exciting demand. We see very positive demand from our customers. Where we do believe our top 25 clients will keep growing, and there'll be a lot of other clients from the other 50 customers, which will surprise us and move up the value chain and grow much faster. We have an amazing team in place. We have put a very strong GL team in place as well with six leaders who are taking over the day-to-day operations from me. They're learning, they're growing, and I think they'll only get stronger and better every day. Our last year was tremendous, and hence the board has recommended increase in dividend to 8 rupees per share, and we hope to sustain that and grow that for you guys, for everybody in the next couple of years as well. Companies sitting on very positive cash reserves of 127 crores, and we do believe that we keep growing as well. And we're very excited about how the next one to three years look. And we hope to create a lot more value for everybody on this call and the whole Onward Technologies ecosystem. So thank you again and have a lovely day and evening.

On behalf of Onward Technologies Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.