Onward Technologies Limited (ONWARDTEC) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Q1FI27 Earnings Conference Call for Onward Technologies Limited, hosted by Go-Inda Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing start, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference call over to Mr. Love Gupta. From Go India Advisors, thank you and over to you, sir.

Thank you. Good afternoon, everybody, and welcome to Onward Technologies Limited earnings conference call to discuss the Q1 FY27 results. We have on the call Mr. Jigar Mehta, Managing Director. We must remind you that the discussion on today's call may include certain forward-looking statements and therefore must be viewed in conjunction with the risks that the company may face. May I now request Mr. Jigar Mehta to take us through the company's business outlook and performance, subsequent to which we will open the floor for questions and answers. Thank you, and over to you, sir.

Thank you, love. Good evening, everyone, and thank you for joining us today. Q1FI27 marks an important milestone on the technology's journey and represents a strong start to the new financial year. We delivered a higher term of quarterly revenue of 151.2 crores, crossing the 150 crore milestone for the first time, with revenue growing 11.5% year-on-year and 8.7% sequentially quarter-on-quarter. Our EBITDA increased to 18.4 crores, growing 20% quarter-on-quarter, while EBITDA margins improved by 113 basis points sequentially to 12.3%. Profit after tax stood at 11.2 crores, up 16.9% sequentially, demonstrating improving operational momentum, and we enter FY27. Beyond the financial performance, we continue to strengthen the quality of our business from our existing clients. During the quarter, we won a 33-crore offshore development center engagement with a leading mobile-powered and management company from North America. And also increase the number of customers, generating over a US million dollar per year revenue, annual revenue from 16 to 18 customers, reflecting deeper account penetration and stronger, steady, and tragic relationships with our customers. We do believe that majority of our customers, if not all, have the potential to get to a million dollars per year, and majority of them, in that majority of them, potential to get $10 million per year. What excites me most about these results of Q1 are not driven by a single client, a single geography, or a one-time event. These are the outcome of strategic investments we have made over the last few years in digital engineering, in ER&D, in offshore delivery expansion, leadership capability, and account mining. Today, we are beginning to see these investments transitioning to greater scale, stronger execution, and improving operating leverage. We continue to invest in subject matter experts across all the three lines of business, which is mechanical engineering, embedded, and digital, in lab infrastructure, proof-of-concept development, engineering accelerators, and reusable IT that enhance our ability to win larger, higher-value engagements across our targeted industry settings. We invest in infrastructure and competitive differentiation, improving speed to value for customers. And creating a scalable platform for future growth, deeper account penetration, and longer-term margin expansion. We are also seeing increased demand.

I'm sorry, sir, we are not able to hear you if you are speaking.

You are sorry.

Now we can hear you. Please continue.

We are also seeing increased demand from our global enterprises, investing in software-defined products, AI-enabled engineering, automation, digital manufacturing, and intelligence products. The huge expansion which is happening across North America and Europe on data centers on AI and energy are the areas where Onward is focusing now to build newer capabilities and stronger capabilities, and where we believe we are well-positioned to capture a large share of customer spending over the coming years. Importantly, we also completed our first ever buyback program during the quarter, reinforcing our confidence in the business, our cash-generating capabilities, and our long-term growth outlook. As committed, the promoters did not participate in the buyback program. As we look ahead, our focus remains unchanged, accelerating revenue growth, expanding margins, We have increased, increasing volatility within us with the clients, scaling our offshore delivery. Thank you. And we have an amazing trajectory as we deliver Q2, Q3, and Q4 of this financial year. Before I hand the word back to Love, I want to just sort of give you three key takeaways. We have delivered a strong first. We have delivered a strong start at 527 with record revenue, improving sequential profitability, and continuing momentum across our strategic customers. Second, the quality of our business continues to improve, as evidenced by the growth in our strategic customer base, increased offshore opportunities, and larger engagement wins. Third, and most importantly, we believe we are building a company that is significantly stronger, more scalable, and better positioned than ever before. Our investments in talent, engineering capabilities, offshore delivery, and strategy accounts are creating a solid foundation for sustainable growth and long-term value for everybody in our ecosystem. While we remain disciplined and realistic about the evolving macroeconomic environment, we are optimistic about the opportunities ahead. We have entered, like I told you said, in record revenues and improving operational momentum. We crossed 150 crores this quarter. Our ambition is much bigger. We are building the capabilities, captain relations, and operating platform required for the next chapter of One World's Growth Journey. And we believe the best is yet to come. Thank you again for your continued trust and support. We've been committed to delivering profitable growth, creating long-term value for our shareholders, and establishing our technology, including global digital engineering and the R&D partner. With that, I'll hand it over back to now. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hand-tub while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Yetindra Pradhan from Maximal Capiton. Please go ahead.

Hi, Tim. I hope I'm audible. Yes, you are. My question is, you know, with respect to the auto segment specifically, so what is our growth expectations this year for our, you know, auto projects and all? I mean, we hear a lot of mixed kind of commentaries from the industry, like the European OEMs are struggling, U.S. there are green suits. So, if you can, you know, give us some kind of, you know, comment to your color on that and how we are stacked with respect to the auto segment. Thank you.

So what we are seeing this quarter since April is the spending patterns remains very selective, but customers continue to invest in initiatives which are tied to product innovation, software-defined engineering, AI automation, and cost optimization. And these are areas where onboard technologies We are well positioned, and we continue to see heavy demand. From your particular point about European Automotive OEMs, we are seeing a similar trend while there has been a lot of industry news about project cancellations and shutdowns. We at Onward are seeing positive momentum with very select customers in very select areas where we have specialization. So we remain quite Thank you. The point is about where we are with our existing customers.

So, is it fair to assume that we will be having positive growth in the segment this year? Is it okay?

Yes, we believe all, auto is one, automotive is one vertical environment technologies, but yes, the larger mobility business, our industrial business, and our healthcare business are well positioned. All three verticals to grow this year.

And the second question is slightly long-term. It's like, I mean, just wanted to get your view and, you know, in terms of the strategy that you have. So what gives us the confidence about winability in this domain? Because as far as we understand, the competition seems to be really good. I mean, and some of the new platform or the things that companies are trying to do, they seem to be even the tier one and the OEMs are also struggling. So, you know, what gives us, what is our approach there, what is our view? You briefly mentioned and touched upon how you've been investing into, you know, digital stuff and, you know, building some kind of platform. But if you can give us some broad color on your strategy from medium to long-term point of view, that would be helpful.

Sure.

So to clarify again, on the technologies, we have 73 live customers today, and we are focusing only on those customers where we have existing master services of medium science, where there are existing client relationships, where we are working in one particular design center or office location or a factory of these customers. So we are not afraid of the organization chasing new customers. So our confidence is based on our conversations, our discussions with our customers, right? So that's fundamentally that gives us the biggest strength. There are no unknowns from that perspective. Number two, the feedback that I'm sharing with all of you today is the feedback that I've been sharing for the last several quarters. And I continue to maintain what we are seeing is a very healthy opportunity for a company of our size to continue to deliver robust double-digit revenue and double-digit EBITDA year-on-year. And we remain continuing to focus on that. And we have selected three broad verticals, which all the three broad verticals continue to, as I said, it's... It's It's not going to be that every vertical we grow every quarter, but on an annual basis, on a three-year basis, we do believe all these three verticals have huge potential for us with the projections that we have shared with all of you.

Thank you. Ladies and gentlemen, before we take the next question, a reminder to all the participants, if you wish to ask a question, please press star and 1. We will take our next question from the line of Rehan Syed from Tri Netra Asset Manager. Please go ahead.

Yeah, hello. Good evening. So, sir, I have a couple of questions. So, first on healthcare verticals, would you please provide me the color on the healthcare vertical? Are any clients close to crossing the $1,000,000 in revenue mark, and how should we think about its contribution over the next $2,000,000?

This is my first question. Sure.

So in healthcare, we don't have client yet, which has cost $1 million. But in healthcare, the way I'm looking at healthcare businesses, it can grow anywhere from, let's say, 20 to 50% year on year. It's all about execution. Q1 was this quarter, in particular, was a very good quarter for them. The team did a fantastic job. I think we have to maintain the momentum. I shared last year, the best part about our healthcare life sciences vertical is we have already won the class. We hired several people, both in delivery engineering and also in our safety in Chicago. So I think it's all about just executing. Continues to invest in the business and grow with our existing customers, because when they added up, they added an income bid to challenge the current suppliers, which are all American companies. And I think the potential is massive in terms of what we can achieve with healthcare.

Okay. And my second question is around just more than understanding regarding the ODC beam that we have recently and continue that. So given the recent ODC beam and continued focus on large accounts, so how should we think about the evolution of deal sizes and the potential for more such multi-year engagements going forward?

So this will reinforce between the same point. All 70 plus customers that we have are large customers. Each of these customers have massive opportunity, right? When I say massive opportunity, each of them has anywhere from 100 million to billion dollar outsourcing budget in the space and on the technologies operates, right? So what we are seeing is increased opportunities across mobility, across industrial equipment, across healthcare. Um, and across our software-defined product engineering space. The ODC deal that we've won this quarter of over 23 odd crores is only a starting point. And this is just an example of, we believe, um, there'll be several large multi-year engagements, um, and RFQs that we are participating in today and where we are invited to compete. So our pipeline today is broader.

My last question is on your offshore mix. So, your offshore mix has moderately slighted this quarter. So, what led to this change and when do you expect offshore leverage to resume as a margin driver? And just continuing this part, and so what epidermis we are expecting for two to three, four quarters going forward?

So, again, to reinforce our commitment and the

projections that we have shared, the number of customers that we have with million-dollar-plus revenue is increased this quarter. Several customers will increase on-site, several will increase offshore, and I think it's all about timing. But year-on-year, you will see an improvement across all our customers because companies in US and Europe are companies that are on the technologies to leverage the offshore advantage, right? That's where the real strength is, that's where the real value play for them and for us is. So you will see improvement in that part. And in terms of EBITDA, we have shared before, it will be continuously. We are confident that it will be double-digit, and we will keep improving quarter-on-quarter, year-on-year, and I think we have quite a reasonable pipeline for that.

Okay, thank you, and good luck for coming on.

Thank you. Next question is from the line of Madhur Rati from Counter-Cycical Investments. Please go ahead.

So, thank you for the opportunity. So, firstly, I wanted to understand regarding our aspiration of improving revenue per employee between 30 and 40 lakhs. So, that would mean that our revenue on the base of 2,500 employees moving mostly to 750 to 1,000 crore levels. So, what kind of So, when is this aspiration? Do we expect to achieve this? And, sir, what kind of upskilling or what kind of contracts will be required to reach these levels? Because it seems that our employee cost is currently upwards of 75% of our revenue versus 65% for larger peers. So, if you could help us understand this trend.

So what you are talking about is an aspiration, what the

benchmark in the industry is with, let's say, the top three or five companies in the world. So that's an aspiration that we have shared. We don't have a particular timeline where we will hit that, but we have a very clear timeline which we have shared with everybody is that we will deliver, we are confident of delivering double-digit revenue and bottom line, right? Last year was a solid year. We delivered that in the first year that we shared, our bottom line grew substantially higher. I think this year our top line will be substantially higher than the 10% class that we grew last year. We already have the order book for that as I shared earlier. I think on the run rate, we are already at 150 odd crores, we're giving a run rate of 600 crores for the year. So that's where our focus lies, right? And as overall numbers improve from our existing customers, that is a reasonable personal increase as well. To add the last point on revenue per person, to increase the revenue from current 22 lakhs per employee that we have, let's say 25 lakhs, I think it's only about adding more and more on-site people in the U.S. and Europe, which currently doesn't exist, the H1B program, but we do believe based on what you and me are reading, it will open up because the demand continues to be very high. The shortage of panic in the U.S. and Europe is extremely high. But, at least for companies like OnBit Technologies, we are not focusing on that today, like we did two, three years ago. Offshore is where customers want us to focus on. I think our team is doing a fabulous job in delivering that. The last contract that we won last quarter was, again, some of the biggest companies out there in the world. We got a new entrant. And we are very excited with that, and we similarly see similar deals coming up where we are participating, which will again improve both top line and bottom line.

Got it. So, our target of achieving the high mid to high teams EBITDA, so what will it require from our end to scale our EBITDA margins going forward?

More and more offshore. It's just about mining, right? So currently, top 25 customers deliver 87% of our revenues. More and more customer engagements, we have to... Bid for larger projects, win larger deals, which we are doing now. More of pure, the margin improves, and that's where we will see the margin expansion happening from each of our existing customers. Each customer goes towards from $1 million to $3 million per year, $5 million per year, $10 million per year, and that's where the margin expansion will happen. Just keep in mind, the fixed cost for each client remains the same. Today, Onward Technologies is investing substantial capital up front. Two, behind these customers. So we will not need to keep investing more. Eventually for 70 clients, we'll only need 70 account managers, same number of G&A staff, same number of offices. So it's more about growing with the customers and executing and broadening our engagement with them.

Got it.

Sir, if you could help us understand in our main segment of heavy engineering and industrial, so how has been the R&D trend of our customers? So you don't like tell what your customers are, but if you could help us understand the top five customers that we have, how has their R&D budget moved over the past three years? And how has their R&D budgets have moved over the past three years? Out of that R&D, how has the outsourcing work shifted? And how much has been awarded to onward currently versus what it was three years back?

Sure.

So, just to clarify, our industry and equipment and heavy machinery segment is the oldest vertical of all of it. We have been doing it for 15 years plus, and most of our client engagements are 10-year plus. So, we have very stable, long-term engagements with these customers. The difference was, pre-pandemic, Onboard was only focused on the India market and the GCC business. Now, we are expanding with them in the global markets, and that's where the revenue growth and the margin expansion will come. To answer your second point, these customers are all flourishing. They are doing record revenues today, they are doing record profit today, record cash generation today, and if you look at their market cap as well across North America and Europe, the industrial segment, the agricultural segment, the power generation segment, the oil segment, everything is at an all-time high. So that's where, and when the revenue goes up, obviously the investments in technology, innovation, R&D goes up even higher. So the outsourcing budget is very high. And with them, we are growing as well. I believe the momentum will continue. The deal that we signed this quarter is an example of that. We have been supporting this customer for more than five years already, I think four and a half years. And it's not a new customer for us today, but they've been testing us, doing pilots with us. Giving up a lot of different small small opportunities to improve our capabilities. We have done that, and they invited us for this deal, and this is just one deal. Post this deal, they only invited us for several new RFQs, which are part of the same customer. So it's all about executing and then bidding for larger and larger contracts with these customers. So each of these customers have outsourcing budget. Their onboard is not even, I would say, 0.5% or 1% of their outsourcing budget. That's the kind of potential we're talking about.

Got it. Sir, here's a final question from my end. Sir, so does the outsourcing budget... Rather than outsourcing budget, a portion of R&D budget that is outsourced increases in companies that are going through a down cycle. So like automotive OEM out of EU whose balance sheet is already stretched. So are these players more open to outsourcing to a player like Onward or a player in industrial and heavy machinery who might be making turbines or who might be making many equipment? He's more willing to outsource The software, the ER&D work to a player like Onward, if you could help us understand.

Customers which are growing very quickly. Customers that are growing exponentially, customers that are buying companies, they're doing a lot of acquisitions, that's the sweet spot, right? Those are the companies that outsource to us more. When customers are downsizing, definitely they look at, there's an opportunity there as well, but that's not what Onward technology that my team is focused on today. We are focusing on customers, which are the biggest brands, which are at the forefront of innovation, and it's all multi-billion dollar companies.

Got it. And so, have we had discussions, because we see that this time and material contract will become less and less relevant going forward with these AI models. So, have we had any discussions with our customer about how these, our contracts should move going forward, if you could help us on that front?

Every day, as I said, these are customers, the majority of our customers, we are working for more than 10 years, we have a large number of engagements more than five years, and we have very few customers who are new customers. So we are talking, me and my team, me and my employees are talking to customers every day. And so far, there's been zero conversation about timing material going away. Actually, we are seeing timing material only increase in this quarter, in Q1 of this year. And we see similar momentum in Shoe2. AI is affecting IT companies, and Onward Technologies is not an IT company, right? We are a product engineering company. So it makes a big difference. So as of today, we are seeing time and materiality increase, where customers try to scale much faster. And I think Onward Technologies will see the benefit of that.

Okay. So that was from mine. Thank you so much and all the best.

Thank you. Thank you. Next question is from the line of Omkar from KCP. Please go ahead. Omka, your line is unmuted. You may please proceed with a question. Omka, your line is unmuted. Since there is no response from the current participants, we will move on to the next question. The next question is from the line of Abhijit from Paul Asset. Please go ahead.

Thank you for the opportunity. Am I audible?

Yes.

Yeah. So, in the last call, you had mentioned the real setting of the Digital AI Lab is in May. Can you share an update on its progress, and have you started rolling out projects from there?

Yes, hi, absolutely.

The Chennai office has been amazing. The center is fully operational. We have 200 people working from there. We still have some more small capacity left. I think we should get filled very soon, and we will start looking for even bigger expansion in Chennai as of now. Our focus today for this quarter. We are opening our fourth design center in Pune. We have three offices, which are fully functional and occupied, so we decided to open a fourth center, which is coming up in August. So our focus lies there. Once this center gets full, our focus again goes back to Chennai, which will become again a big growth focus or investment for us.

Got it. And the other question is regarding the rising price next. In this quarter, I think it was somewhere around 16%. So, is this a deliberate pivot or how is it? And three from here going forward.

Sorry, you are not very clear. Can you please repeat?

Yeah, I was asking regarding its price, Nick. So out of the total revenue, it was around 16% in this quarter, right? So was this, sorry, is this one off or was this a deliberate pivot and the trajectory from here?

No, there's no such difference in terms of fixed price versus tagline material. We have maintained that 80% plus of our revenues will be tagline material. I clarified in the earlier point as well. I think what we are seeing from our customers is more and more tagline material engagements. We saw that in Q1 as well. But again, it could be cyclical, it could be some projects which are fixed price, could be in this quarter, but overall, we do believe it will continue to be at 80 to 90% of time immaterial, at least for this financial year. That's what we are hearing from our customers.

80 to 90 percent. Understood. And regarding the 33 crore 4dc win with the power management company, so... How do you see this trend going forward? Are we seeing a strong pipeline for power and thermal management engineering?

Sorry, can you please say the last line?

Yeah, so how do we see the pipeline for power and thermal management engineering going forward?

How do I see the pipeline? Is that a question? Yes, yes. Okay. It's very robust. As I said, it's very strong right now because all the power management companies are focusing towards data centers. And as you know, data center business is booming. There's a huge shortage of capacity. There's a huge shortage of technical capability. And they need very strong manufacturing engineering. They need very strong robotics. And all the The technology already has that. So we have the capacity and capability. Now we have to just take it to our existing customers, which are ramping up across the board. And we are already participating in a number of RFPs. And I do believe we will see significant progress and scale up in this particular area at least over the next three years.

Got it. Thank you. That's all from my side.

Thank you. A reminder to all the participants, if you wish to ask a question, please press star and 1. Next question is from the line of Suresh, Buram Shattis from Buram's Financial. Please go ahead.

Thank you. Thank you, sir, for giving the opportunity. Actually, revenue will be increasing, sir. But profit of the tax margin will not improve. In further, double-digit revenue growth will guide to you in the presentation, in the results presentation. In future, profit of tax margin will improve the chances, around 12% or 10%.

Hello, how are you?

Hello. Yes, sir, here, Rajapur.

Yes. So, while PACT was lower on year-on-year basis, sequential performance is brewed significantly. Our PACT actually grew 16.9% quarter-on-quarter, and our EBITDA grew 20% quarter-on-quarter. So, margins did improve 130 basis points. The focus from a short-term, long-term perspective is profitable growth and long-term margin expansion, which you will see going forward.

You guide me how much you will improve in the future. So we've already shared our projections.

We are committed and we are working very hard to deliver double-digit revenue growth and double-digit margin editor growth. We want to remain consistent for that for the next few years, and we will deliver that as we did last year.

Thank you. Next question is from the line of Omkar from KCP. Please go ahead. Oumka, your line is unmuted. Hi.

Hi. Sorry, my colleague is not there. Thank you, Anwar team, for taking the questions. Actually, a couple of questions which I want to ask have been answered. But still, I'll ask for the question. So my question to management is, what is the inflection point, Jigar, and your team sees where the investment will slow down into the manpower, building capabilities and building clients or acquiring talent? And when this, you know, will start submitting to profit. What are the timelines of investing? And when you write in terms of getting you the larger benefit? So slowing down and increasing profit margin. Is it 18 months away, 12 months away, or you think there's no timeline?

Thanks. So our priority is not just growing revenue.

It is building a larger, higher quality, more scalable engineering engagements with our customers, which can deliver sustainable growth, marginal improvement, and of course, shareholder value. So we are seeing that already from last year. We went from single digit 9% to 13% last year. You saw a huge jump in revenue this year, in this quarter. So we are already cleaning up. I think it's all about maintaining the momentum and growing sustainable quarter on quarter going forward. Do I see there'll be a hockey curve stick in my business? No, I don't see that coming. I think that happens, I believe, in the product side of the business. In the services business, I think it's very important for Onward to maintain quarter on I'm going to be focused both on short term and long term. Absolutely.

Okay. Thank you so much, and all the best for the future. Great results. Thank you.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and 1. Next question is from the line of Madhar Rathi from Pounder Psychical Adversments. Please go ahead.

Sir, thank you for the opportunity once again. Sir, there is a line item in your balance sheet, subcontracting cost which has increased by 36% YOY from 25 crore to 34 crore. So, what is this regarding? Are we facing employee or employee because our subcontracting expenses are increasing on one side and then we are saying that we should improve employee per person? Thank you very much.

Sure. So our subcontracting costs together,

if you look at from a, so let me clarify two points. So first point, if you look at from a ratio perspective, our subcontracting costs along with our employee cost, then the ratio for FI26 actually has gone down to compare to FI25, right? So I think you're looking at transactions from a quarterly basis. I'm giving you an annual perspective. But on the second side is that because of the macroeconomic conditions in terms of the war, in terms of everything happening in the Middle East, a lot of people couldn't travel for positions that we needed to hire in Europe and U.S. So for short term, we have hired people locally in their respective markets, which will eventually go back to that feeling with our own team members as we make progress in the year. Once we've done a project, we have to serve the customer, and that's what we have done, and I think our team has done a good job there.

Got it. Sir... So what I'm trying to understand is we do some kind of work for our project based on that we'll get a better project or a larger project. And that is where we would like to move. So based on the project that we have done or capabilities that we have built with our customers over the next. Like over the last few years, so how, what kind of new projects or if you can help us understand the trajectory of this, based on the capabilities and the project work that we have done, what kind of new projects are we able to get? And what are the new capabilities that you would like to add that? And like, if you can help us on the directionally, how they should go?

Sure.

So, I'll simplify it again. Like, our business works for us in the product engineering space, in the engineering services space. Initially, all our client engagements started on-site model, where Onward will put our best engineers working at the client site. Right? So, that's in the US, it brought up all their GPCs in India. After three months, six months, one year, the maturity model improves, the customer transitions to all these people offshore, which will become from on-site, will become offshore. That's why you have seen our offshore grow over the last five years percentage. Once the offshore team grows, let's say if it's in mechanical engineering, let's say manufacturing engineering and robotics, Then that area, the customer will, if we are identified as a niche supplier in that area, all the global RFQs of that customer, whether it's coming from Latin America, Europe, Latin America, wherever, rooted through this one particular outsourcing office of VRS, we will get a chance to participate. And then we start, once we start winning those engagements, we can start scaling it up. And each of these engagements can become 200 to 500 engineers. Offshore, in your ODC. And that's the kind of ODC that we have won. That's not the first ODC. We have several ODCs that we have won in the last 10 years. And you've seen that if you've had a chance to visit our offices at the design center, which may have been on Bangalore and Pula. So you're multiple OVG working for multiple customers. Now it's about scaling it up. That's the second part. And the third part where we are building new capabilities on the digital engineering side is where we are building capabilities and where we are positioning ourselves to get an opportunity. People are registered with our customers. When we do that, whether it's embedded technology, systems, whether it's data analytics, whether it has anything to do with the data, that's where we get opportunities to start building within four other projects. And we have started doing that as well now, and we started building settings in the last one year. And those will scale much faster as well. So that's where we see a journey where a current client engagement can go from half a million dollars to a million dollars to five million dollars a year to ten million dollars a year. Onward has to keep investing in all the new technologies for the customer as demanded by them.

Good morning.

Good morning, everyone.

Yes, sir. So that makes sense. Sir, just one question. Sir, just 33 minutes.

I want to add one more small point. Let me add one more point just for the benefit. But the cycle changes sometimes. And when the cycle changes, sometimes the clients are doing so well that they need everything on-site. So while cost is very important, offshore is very important, like what happened two years ago or three years ago after the pandemic, customers are demanding more offshore, but they started building on-site capacity in the US and Europe. Sometimes the whole body changes as well and we have to be very flexible, very adaptive to the customer's requirements. Then they can trust you that they know that you can be a global partner for them for the next decade or two.

Got it. So, there's this 33 crore contract for offshore development center. So, if you would help us understand how did we get this, like, if you would help us understand the journey with this client, what led them to give onward this, because it's, I think, 3, 3.5 million dollars of investment from our end on these fronts. So, if you could ever understand what lets the customer to give us these orders, and how should, with this development center, how should the business with this customer move going forward?

Sure. I clarified earlier, this is an existing customer of Onno Technologies. This is a customer we've been supporting for the last four or five years. We've been supporting them across multiple geographies, across multiple areas, in controls, embedded, electronics, mechanical. Digital, so multiple areas have been supporting them. They have started, they have started floating, the customer is growing exponentially, thanks to the data center boom in North America and Europe, and they have floated multiple RFPs, so multiple capacity expansion. We participated in one of them, the first one, and that's the one we have on right now, which goes live. We haven't even started billing yet. We will start billing from Q2. As I said, the center only goes live in August. And the full cup of full revenue will come in only in Q3, in terms of what we are projecting. But this is only a start. My view and what the customer has told us, they want to grow 5X. And they have the budgets in place, they have all the road laps in place for you to stabilize, you have to grow with them, and that's where all the technologies come in.

We've been meeting them for the last five years.

Got it. So, as a layman, sir, what would be the scope of work? Would it be like probably onward doing prototyping and testing for this customer or because this is a decent amount of investment. So, where will this investment go and what kind of work will be doing for this customer?

So we are not allowed to share what kind of work we do, but on the broader side, it will be mechanical engineering, electrical engineering, and electronics to start with. We are building capacity and capability for them to start with. I think there will be about 40 engineers to start with, and then we will ramp up from there.

Got it.

I hope you'll appreciate that, sir. We are not allowed to share the detailed engineering work, but we can share the broader side which they've allowed us to share.

Yes, sir, that makes sense. Thank you so much and all the best.

Thank you. Participants, you may please press star and one to ask a question. As there are no further questions from the participants, I would now like to hand the conference back to the management for closing comments.

Thank you again, everybody, for your questions and your continued interest in onboard technologies. As we conclude today, let me again leave you with a few key thoughts. Q1 was an important quarter for Onward and my team. We delivered a higher server quarterly revenue, 151.2 crores, crossed 150 crore milestone for the first time, improved our EBITDA by 20% sequentially, expanded margins, increased the strategy customer base, secured a significant offshore OEC contract, and successfully completed our first share buyback. Being at Siemens reflects the strength of our strategy and the discipline execution and the maturity our team is building has built over the last many years of investments. More importantly, we believe the quality of our business continues to improve. We are stronger today than yesterday. Our customer relationships are deepening. Our offshore delivery model is scaling. And the investments we have made in digital engineering, domain expertise, engineering labs, accelerators, and reusable IP are enhancing an ability to complete for larger and more strategic opportunities. These are building blocks, and we believe are well positioned, in position as well for sustainable and long-term growth. While we remain mindful of the broader micro-economic environment, we are encouraged by the momentum we have seen. So far, in the fourth month of the financial year, our pipeline remains very healthy, our accounts have continued to expand, our clients are being exceptionally well, and the whole excitement, the investments, the massive scale that we are seeing across North America, and a lot of the data center, AI, power generation, energy sectors, is that The reflection of where we believe the opportunity for all the technologies will be as we continue to build more and more high-end capabilities. We crossed 150 crores in quarterly revenue, but again, our aspirations are much, much higher. Our foundations are in place, the momentum is building, and we believe the most exciting phase of all the technologies journey is still like that. On behalf of my entire team, thank you for your continued trust and support and partnership. We look forward to updating you on our progress in the quarters ahead. Thank you, and have a wonderful day.

Thank you very much. On behalf of GoIndia Advisors, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.