Onward Technologies Limited (ONWARDTEC) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Onward Technologies Ltd. Q2 and H1F527 on your conference call, as hosted by GoIndia Advisors. As a reminder, all participant line will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation conclude. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your test phone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Love Gupta from Go India Advisor. Thank you, and over to you, Love.

Thank you, Dhanush. Good afternoon, everybody, and welcome to Onward Technologies Limited Learnings Conference call to discuss the Q2 and H1 FY27 results. We have on the call Mr. Jigga 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. Jigamehta 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. Thank you, love.

Good evening, everyone, and thank you for joining us today. I appreciate your continued interest in onward technologies, and I'm very pleased to share our Q2 and H1 FY27 performance. Q2 F527 marks an important milestone in a transformation journey. We delivered our highest ever quarterly revenue at 170 crores, representing a 22.4% YOY growth and 13.2% sequential growth. Total income for the quarter was 171.2 crores, while EBITDA grew 33.2% year-on-year to 26.5 crores, with margins expanding to all-time high at 15.6%. PATH increased also to 41.2% by OI to 16.8 crores. These results reflect the operating leverage we continue to build into our businesses. What is particularly encouraging for me is the quality of the growth. It was driven by deeper engagement with strategic customers, improved utilization, higher productivity, and strong offshore execution. This was wanting a moment to congratulate my entire team for a very disciplined execution and operational management. Our focus as an organization remains firmly on delivery-led growth and converting execution excellence into sustainable profitability. The U.S. and Europe regions continue to be our primary growth engines. We also increased the number of customers billing for $1 million annually from 16 to 18, demonstrating our ability to expand wallet share within our existing clients. A major highlight this quarter was a renewal of a three-year digital engineering engagement valued at approximately 44.5 crores with a global construction and mining equipment leader. The contract value increased by over 70% compared to the previous term, reflecting a customer's confidence and our ability to deliver quality and long-term partnership approach. This was very important because the earlier contract file was also sizable. We were getting the, while we had the statement of work and the contract, we were getting POs on a six-monthly or annual basis. The standard customer has awarded us the entire contract. And as we speak, we are participating and bidding for a number of large RFPs in our existing customer. We are also seeing a lot of encouraging opportunities across U.S. and Europe for digital engineering, AI-led transformation programs, We will be very happy to share more in the subsequent quarters. At the same time, we continue to invest big and hire a lot of people across all our four delivery centers in India, which is in Pune, Chilnai, Bangalore, and Hyderabad to get ready for 2027. Based on the strong half-year performance and the visibility we see across our customer portfolio, we have increased our FI27 outlook. We now expect revenue growth of 15% to 18% for FI27 and an EBITDA margin in the range of 13.8% to 14.3%. While we are obviously very pleased with the momentum, our focus remains on long-term value creation. We continue to strengthen our delivery engine, improve revenue productivity, and expand offshore leverage. And most importantly, deepened our engagement with our existing customers across all the three verticals. We believe Q2 performance demonstrates the strategy that we've been sharing with you over the last couple of years, and now it's finally working. The foundation we have built is now translating into stronger growth, expanding profitability, and greater business resilience. We remain confident in our ability to scale sustainably and create long-term value. For all our stakeholders. Thank you once again for joining us today. With that, let me hand over the call back to the operator, and we look forward to your questions. Thank you again.

Thank you, sir. Ladies and gentlemen, we will now begin with a question and answer session. Anyone who wishes to ask a question may press star and one on their test on telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handlets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question comes from the line of Hitendra Pradhan with Maximal Capital. Please go ahead. Hitendra, you may please proceed ahead with the question.

Yeah, yeah, yeah. Hi, guys. Congrats on the good quarter. So, my question is related to, you know, the first one is related to the, you know, the revenue guidance that you provided. I mean, can you just, you know, double-click on what is happening in the segment-wise, and where do you see more RFQs or, you know, that order built up, and what gives you that confidence that, you know, we can sustain this revised, you know, growth guidance?

So we upgrade our guidance based on our

H1, on a strong H1 execution, and the improved visibility that we have from our existing customers, especially across North America. It's the momentum that we have with the customers, the hiring that we have done in the last six months. We've onboarded net about 430-plus employees, and the RFQs that we are participating in, especially with the large demand in the AI data center space. So most of our manufacturing customers in the industrial segment have been growing very rapidly. There is a huge talent need across the U.S. and offshore, and we have been building up this over the last many years, and now we are finally seeing the clear visibility towards that, and hence we feel comfortable giving 15-18% revenue guidance.

Understood, understood. And on this DI, DC opportunity, can you just give us some color on, you know, what exactly that we are doing? Because if my understanding is correct, I mean, usually the system integrators kind of, you know, do the kind of services that probably we are doing. So what is our, like, you know, value addition or what kind of projects that we do there? I mean, if you can give us some color and what is the scope of that opportunity?

Sure. So we view, I've shared this earlier, but we view AI both as a productivity enabler and a growth opportunity, right? So one is we are embedding AI into our engineering workflows, you know, in our software development and delivery processes, and why they're also helping our customers accelerate their own digital engineering initiatives. And we have the skill sets, as I said, we have now almost 3,000 plus people in our team, employees, and all of them are focused only on few customers, understanding the customer's products, which eventually are going into building those large data centers, right? So whether it's power generation, cooling systems, and that's where we have the skills only in-house. Our employees, our engineers are well trained from a domain perspective. And that's where we see the advantage in terms of when we participate in the RFQs.

And these are U.S. customers or India, like India plus U.S. customers?

So Onward Technologies only has U.S. and Europe customers, right? So we have no India customers.

Got it, got it. And the final one is like any impact from this new regulation, the POM regulations on our, like, you know, on-site delivery model? I mean, if you can just give us some color for that.

We are definitely a bit cautious about that. We do need to ramp up substantially in the U.S., and we are hiring local people, which we've been doing for many years. There is definitely an impact on that, and the guidance that we are given is post the new regulatory, the external environment which is out there. Understood.

Thank you, Jigal. I will join back to you.

Thank you so much. Our next question comes from the line of Abhijit with Paul Lissett. Please go ahead.

Thanks for the opportunity. Am I audible?

Yes, sir, you are.

Thank you. So, first of all, congratulations on the great number. My question is regarding the unbuilt receivables that increased in the first half. So, can we give some light on the reason behind the setup and when can we see these converting into the inverses and cash? Sure.

So, unbilled receivables went up marginally to 80 days. Our DSO has gone up to about 80 days and I think it will come down very quickly. We had a very quick ramp up and there were some instances where the POs were delayed or at the same time there were some customer payment delayed, but all that has been rectified. September itself was one of our highest month and we will see in Q3 and Q4

And the other question is regarding the margins. So even if we exclude the R&D credit of, I think, 2.9 crores, the margin is still expanded sequentially. So, the first question is, this 2.9 crore of R&D credit, can you explain of which period it was, and can you expect some further credit in the upcoming quarters?

Sure. So, the credit was through the normal course for the last 12 months, but for the current period, it is for F526. It's not just a credit for us, it's for every other company which operates in the UK. So, since the number is material for us, hence we report it as a special line item, but all engineering companies get that. Second, the margin expansion for us was driven predominantly by four factors, right? So, one was high utilization for our offshore engineers, improved leverage of offshore, especially with the earlier question. When the new policy came out, it was anticipated for many months, customers started ramping up offshore more without the dependence on site. And that changed as well for us because then we could start projects much faster. And third, it was, again, just very strong delivery discipline, focusing on few customers, investing behind the few customers, keeping ready capacity, training, the whole LNOD that we have been investing in for many years. I think it's just slowly now settling in beautifully in terms of what our customers expect from us and be able to ramp up at the speed that they expect from us.

Right, great. As the revenues will grow, we will see the benefits.

You got it. Yeah, that's all from my side. Thank you and all the best.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question, we press star and 1. Our next question comes from the line of Rashid Javadi with CB Asset Managers, LLP. Please go ahead.

Hi, am I audible?

Yes, you are.

So, sir, first question would be, sir, what would be our growth in terms of constant currency terms across segments?

So, the YOY constant currency growth will be 17.7%.

Okay, and segment-wise, if you can provide?

Sorry, what is segment-wise?

It means, do we have the bifurcation by the industry by constant currency terms?

No, I don't have it right now, but I'm sure my team can share that.

Okay.

And second, sir, I'll scale up on the… Q&Q is 13.5%. You can reach out to Love of GI, they can share that with you. But Q&Q is 13.5% and BioWai is 17.7%.

Okay, sure. And one more question I will scale up on the previous part is on the AI. So, what is the update on the Chennai AI lab, and how do we plan to slowly and gradually take it as an opportunity across industries?

So, we started building on it. We started hiring a lot of people in Chennai. Would love to welcome all of you guys. I think we'll be up and running by Q4, early 2027. It's going to be a lab, right? It's a lab which we can showcase. One is we can train all our engineers, all our managers. Second is where we can showcase all the innovative work that we are doing for our customers. Third, we can actually dedicate for customers who are looking for an AI lab to test their own products. So there are a lot of amazing opportunities towards that when we make this kind of an investment. So I think in 2020 is when we will see the first benefit of it.

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

Thank you. Our next question comes from the line of Amit Thawani with Clear Blue Capital Advisors. Please go ahead.

Hi, thank you for taking my question, and Jigal, congratulations on a fantastic set of numbers. My first question is, is there an upside to the guidance? Because the numbers that you've delivered this quarter kind of, I think, justify a higher guidance.

So, we've already increased the guidance, right? Based on the visibility we have today, we obviously prefer to remain prudent and execute rather than get ahead of ourselves. So, so far, we are very comfortable and happy that way we are at, and I think there's definitely a huge potential out there in terms of what we can do. So, revenue is not a challenge, right? For a company of our size, execution is a challenge, right? Ramping up that quickly is the main thing, and that's what we are doing as we speak.

What is actually stopping us from getting, I mean, these are huge, our customer base, they are huge, and, you know, they have, so what is actually stopping us from getting a higher, much higher wallet share from them?

So it's both, right? So it's capacity, ready capacity, and second. Capacity is the people and the infrastructure. And number two is the capability, right, where we are executing large programs. And that's what we've been investing in. So I think it's a gradual process, and I think you will see that over the next couple of quarters, how we as an organization get ready towards that.

And my last question, what is our...

Opportunity is there, and customer expects the same from us and all its suppliers. So we will keep ramping up towards that, and we have our substantial cash reserves where we can proactively invest behind each customer engagement and opportunity out there.

Thank you. And my last question is, what is our hiring schedule for the next two quarters?

So Q3 hiring will be a bit slow.

It's a holiday period. We continue to onboard people, and we have released a lot of offers out there. So in Q3, we are prioritizing bringing in a lot more subject matter experts getting ready for 2027 and 28. In Q4, we will add, I think, another few hundred people is what we are anticipating. The market is getting competitive, and also our design centers are getting full. So we have opened our fourth design center in Pune earlier this month. which is already expected to get full by end of November, December. We have signed a lease to add more seats in Poonas. We're building up capacity as well. We're hiring people as well. So more and more in terms of Q4 is going to be a critical quarter for us and Q1 in terms of adding a few hundred people.

And when you say 100, you meant net 100 or hiring of 100? Net. Thank you.

Thank you. Our next question comes from the line of Madhurati with counter-cyclical investments. Please go ahead.

Sir, thank you for the opportunity. Sir, I wanted to understand regarding the 3 crore R&D expense that we have incurred during this quarter. Earlier, this was absent, so if you can help us understand more on that.

So, this is not for this quarter.

This is a normal benefit any company that operates in UK that gets it. This is for FY26. It's for the entire last financial year. Okay, so if you see the pandemic, it's about investing in the UK, investing in R&D, in engineering programs, research programs, AI programs, anything which is technology disruption, which UK does not have. So they encourage foreign companies to actually do that. So all engineering companies, all IT companies are benefited from that for investing in the UK region or UK market per se. For ours, because it is the larger, I mean, larger companies don't have to do it because it's not material, but for us, it's important that we share with you guys, and hence we have put a note in the results as well.

Got it.

So, do we get 100% subsidy or this reversal for the whatever R&D that we do on, so, you know, how does the accounting treatment work for this, going forward, if we can help us So it happens once a year.

It's usually about 10 to 15% of your revenue. There's a long process. You claim for it with all the projects that you've done. And then there's an evaluation and that's when it comes in. So once it, we got the approval in September and hence it was booked in the quarter and it's net of employee expenses because the expenses were already incurred last year. So, when you collect the money or when you receive the refund or subsidy from the government, that's where you adjust it against the expenses.

Got it. And another question was, there has been a substantial jump in our revenue from North America. So, what led to this?

We've been sharing the similar guidance for the last many quarters, right? For the last 18 months when we sort of fine-tuned our strategy further for account management and existing customers. And if you see our customers, majority of our customers come from North America, or majority of our revenue comes from North America. And this is the ramp-up that we are seeing, and we were ready at the right time. This ramp-up actually started in Q4 of last year, when we started winning programs, larger programs, with very quick ramp-up. And we had already had the people trained, the right infrastructure in place, where we could actually invoice So, it's not a one-off thing. It's a sustainable thing which we see over the next many quarters.

Got it. And just a final question from mind. In the case study we have given, it seems that we have replayed the legacy SaaS our customer was using. So, is this a new sort of work order that we are getting or we used to do this earlier? It's just that we have highlighted this during this quarter.

We have highlighted it this quarter. We just want to share more and more engineering programs, more and more projects that we are doing successfully for our customers. So again, right, so just to summarize, onward at 70-plus customers, we are an engineering partner to them. Historically, we would just be doing mechanical engineering. Now we're doing a lot of work in a lot of other areas. The new technology destruction is key to our future growth and success while we continue to invest behind it, right? So, we are looking at this opportunity when we share the earnings deck to share new case studies, new areas where we've been building capacity and capabilities and the customers are valuing us. So, we're just going to try and do this a few times a year where we keep sharing more and more stuff with you guys.

Got it. Thank you for the opportunity and all the best.

Thank you. Our next question comes from the line of Amrish Kekar, an individual investor. Please go ahead.

Thank you for the opportunity, and congratulations to you and your team for a stupendous performance. First question is on the revenue by industry. If you could just provide some color. I'm just looking at – you provide the percentage breakups, so I'm just using that percentage to look at the revenue by industry. And industrial has been, for the last year's quarter, has been doing nearly 20% growth. It looks like transport mobility is turning around, so it seems to have had a good year-on-year growth this quarter. Health care is a little difficult to know, but it seems like it's in the right direction, but still very small. So if you could give some color on transportation and mobility as to whether we're now going to see this growth continue, plus health care, is there anything you could talk about? We're around, I think, five crore a quarter. How and when does this get bigger?

So, the transportation and mobility vertical has two sub-verticals, automotive and rail transportation. Rail transportation has been growing meaningfully for the last many quarters. Automotive business, last year, as you knew, there was a lot of furloughs and shutdowns and across, especially across Europe. Now, I think that has bounced back and I think a lot of places We're seeing positive momentum, but I think it must be industry broad-based, so there is a lot of opportunities coming up, both in the automotive side. We've invested a lot more in our rail vertical starting earlier this year, and we continue to invest behind that. Just last month, our entire team was at Renault Trans in Berlin, so now they're planning the right conferences and making Onward Technologies brand out there with our technical capabilities that we have built across 3,000 people. So, we are seeing value of that as well. So, we do believe this business, the TNM vertical, will continue to grow and grow much faster over the next couple of quarters. On the healthcare side, we have done the team's fabulous job in terms of winning large customers, and we continue to do that. So, in a very similar spot as what we were in the industrial segment two years ago, where we had the customers, we had to just wait for the right opportunity in terms of where we start bidding for larger companies. And that's the spot that we are in. So I think the ramp up in healthcare or in HCLS will be very similar to our other verticals and maybe even faster because we're starting at a very small base. But we're just waiting for the right opportunity in terms of winning some large programs where we ramp up much faster. But in terms of customer base, HCLS has done a remarkable job in terms of opening up some remarkable brands, some of the biggest brands in North America.

Very encouraging. Thank you for that.

Second question is a broader question on TNM and AI. So we have 88% of our revenue at TNM, and I understand you've explained this in the past, that TNM is an outcome-based TNM. It's not just body shopping. But as you incorporate more AI into your own internal processes, presumably, you know, you will get some productivity which customers will demand. Is this something we should be cognizant of that we may have some revenue deflation from this? Or is there something different in what, on what does that, that protects us a bit?

So far, there definitely will be an impact of AI, which we have shared before. I think it's going to be an industry broad-based. Currently, customers are utilizing or asking us to see AI how to improve efficiency in the system, how to improve the workflows, but it's not reducing the workload, right? Because our business continues to be very heavy on engineering, not IT. So from that perspective, I think so far that we have not seen any negative pushback from our customers. But definitely everybody is expecting productivity improvement. We are 100% Microsoft shop. Our entire team uses Copilot. And definitely we are seeing a lot of value. We're able to showcase a lot of case studies and a lot of benefits to their customers. But eventually, customers will make the final call when they're ready to put their IT out there. Because for a product company, they have to put the entire IP on the AI system, which I don't think they're doing yet. So what we are doing is still on the periphery, on the plant side, on the manufacturing side, on the robotic side. And all the revenue guidance that we have given, the revised one, also includes, it's taken into consideration some impact from that. But we see, again, a huge opportunity in terms of the ramp up that our customers are expecting from us over the next few years. So we are pretty excited about that.

Thank you. Thank you. That's helpful.

Just one last comment. You don't need to react to this, but just to see if my understanding is correct. I'm tracking revenue per employee, which, you know, you have your own stated objective of 30 to 40 lakhs. And if my calculations are reasonable, we're already nearly at somewhere between 22 to 24 lakhs per employee. And it's been growing quite steadily. But if I just use this metric, and I use your rough estimate of how many people we expect to add, is that a wrong way to think about this? Because, you know, it comes back to the guidance looks a little conservative. But again, I understand there are a lot of other variables. But broadly, is that the right way to think about it?

It is the right way to think about it. The revenue guidance that we shared, again, 18 months back, it was an aspiration, which is a platinum standard in our industry. It's a 35 to 40 lakhs in what some of the best companies globally do, Indian and globally. And that's sort of where we would like to be. It's more about showcasing that we do the same quality work and that we are aspiring to do the same quality work, not just resource-based or people-based organizations. So that's the aspiration of the organization of the board. In terms of we are hiring people because we need to build up capacity today because the demand is that high. And number three important point, I think we had a question earlier as well, when the US visa and all the other restrictions started coming in 18 again, a couple of quarters ago, that revenue guidance, that revenue aspiration of 35 to 40 also comes down because on-site is a significant portion of that to get a blended rate per engineer. So just keep the last point also in mind when you are thinking about that. 35 to 40 lakhs per engineer is not, I don't think it's possible only from doing offshore work. It's a blended outcome of 10% on-site, 90% offshore.

Thank you for that, and all the best. Good luck for the rest of the year.

Thank you. Our next question comes from the line of Omish and Duwani with family office. Please go ahead.

Yes, thanks for allowing me to ask the question. Your current margin for due to EBITDA margin has increased to 15.1 seconds. So what is the outlook for whole year EBITDA margin? Because your earlier outlook was below 15.

So, just to summarize, earlier we had said double-digit EBITDA, and then we were constantly, people are asking us, analysts and investors are asking us questions on what double-digit is, 10% or close to 14-15%. Hence, we have revised, we feel comfortable giving a revised guidance for the whole year. We believe we will be between 13.8% and 14.3%.

How much is this revenue increase? 22.2 wire that's given in currency. In constant currency, how much?

Disturb, I'm sorry. Can somebody go on mute?

It's from Amish lines only. Jigar, sir, you may please proceed. Thank you. Okay, yeah, thanks. That's much better. So, sorry, the question was on constant currency? Yes. Oh, I thought I shared that detail earlier. Just one second. The constant currency for the quarter, Q1Q was 13.5%. YOY was 17.7%. Thanks.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Our next question comes from the line of Abhishek, Chaudhary, and individual investor. Please quit.

Hello.

Hello. Abhishek, there is some background noise from your end. Can you use headset, please?

Hello. Can you hear me?

All right. Good.

Yeah. Hi, sir. Thank you for the opportunity.

So, I was just checking your numbers.

So, I could understand that you are focusing more on, you know, $1 million accounts, where I can see like the number of accounts you have been dealing have increased in the last four to five years. And we have moved more towards offshore than domestic. So I just wanted to understand the guidance which you have given a bit of 14%. Could we think about achieving more as we move up the value chain? Or like, you know, could you explain me like, how could we maybe move from 14 to further? Maybe like, you know, more upwards, like, is there any possibility in which you are thinking by

entering different industries or anything like that?

Yes, we do definitely further opportunity over time. The key point is that margin improvement that we have seen is being driven by structural levers, which is high utilization, increased offshore delivery, as I said earlier, more productivity and better account mining. And I think it's going to play out over time across all the three verticals and across both the regions. So Definitely, there is, over time, a lot of opportunity to do much better or scale much faster in terms of other times.

And also on the account sizing also, like 1 million could go to probably like higher numbers. I'm talking more from the vision point of view.

Absolutely. So, we shared this earlier as well. Our vision is each customer that Onward works with gets to close to $10 million per year in terms of revenue. We are already seeing a lot of amazing fractions, a lot of customers are moving towards that. So 1 million is the, is what is the base number for us where we know the relationship and the investment that we have made over the many, many years is working. And then 10 million is the aspiration per year recurring revenue, sustainable revenue with each customer.

And also could I, can you also explain like what could be the investments you could be What are you making for this to happen? Like, you know, are you, like, investing in any, like, any new initiatives in the company?

So the investments behind each customer, each customer is very unique for us.

Each customer is a world leader in a particular product, right? So we, being an engineering company, we are building product knowledge, we are building domain knowledge, we're building manufacturing process knowledge. So every customer is very, very unique. While at the bottom of the pyramid, we could use common skills, which is engineering. At the top of the pyramid, we need very specialist, as we call them, subject matter experts, SMEs. And we have to hire them in hundreds, just for one customer, right, when we want to scale in a very big way. So that's where the majority of our investments go. Second large investment goes in L&OD or in training to train people because you can't find these skills. These people ready-made in the market and it's an engineering company, we don't hire directly from colleges. We need people from the manufacturing shop floor and then we have to train them, so that's definitely a huge investment for us as well. And third is on the front-end side, which we call it I-Cor, I-C-O-R, Indirect Cost of Revenue, which is our sales team, account management team, the presentations and the workshops that we do, participating in seminars that our customers are going, and being aware of all the new where they want to go in terms of the technology disruption coming their way so we can get ready for that. So these are the few areas where Onward has to invest proactively every day, every week, every year. So we identify a few customers every year where we see a lot of visibility, we invest behind that. I hope over the next couple of years we will be ready to invest behind all 70 at the same time. Then that's going to be very exciting as well. But we have to reach that stage in terms of Thank you very much, sir.

All the rest. Thank you. Our next question comes from the line of Aditya Gupta with AG Capital.

Please go ahead.

Hello, sir. Am I audible? Yes, you are.

Okay. Congratulations, sir, on a good set of numbers. Just had two or three questions. Uh, firstly, it was about the employees. So, uh, I think, uh, we had about 250 people that we had added in this quarter and just wanted to know, uh, is like the capacity for the projects already signed for, or, uh, are we like, uh, dependent on our future demand that we are seeing, uh, what is it? And also wanted to know, how is the utilization, you know, I mean, among the employees, how much is the pressure intake and how much is the experienced people?

Let me answer the question a bit differently. Just if I understood the question right, we as a service company have to constantly hire people, right? So we hire a lot of people every day, and the number we are talking about for H1 is about 450-odd people. We have hired 50-odd employees. This is a net hiring, right? So then you add the attrition and everything else. People on leave and all kinds of other stuff that happens, people on higher education. So that's our net intake so far. Number two, we don't hire freshers. So on the technologies so far has never gone out in the market for colleges and hired directly from campuses. Because the learning curve there is very, very high. And that's why customers like us. So we have chosen the hard way that we do a lot of natural hiring. And we don't depend on external agencies for hiring, right? So we have 90 plus recruiters on our payroll, which is in a talent acquisition group. So we do all the hiring ourselves, because that's what customers value about us, our ability to find the right, the best teams, talents. Uh, from the shop floor, which pulls simply. So that's what we do. Uh, in terms of the guidance that we have given, in terms of the revised revenue growth guidance that we have given, Uh, yes, the hiring has been done for that majority of that. Now we just have to make sure there are no external factors that can, uh, delay the projects, right? There is so much happening in the world today that there could be some level element of surprise there, but we have budgeted for that as well. Okay, got it.

And there was another question. Just wanted to ask that the receivable days, I think I've stretched to around 80. And just, you know, wanted a brief on is it a timing issue? Or is it a structural issue? And what are we targeting in the future? And also, a separate question was that, you know, there is 27% jump in the depreciation. Just wanted to know, what is that number?

So, sure. So, the DSO has gone up to 80 days, and that's due to fast growth and some D-days in customer approvals. I think the sweet spot for us, as we have shared earlier, I think is about 65 to 70 days. And I think that will normalize in the next two quarters. And your second question was in terms of depreciation going up. Depreciation went up predominantly because of two factors. One is we acquired an asset. So that's, we bought an office in Bombay at Burdi. So that was one area where the depreciation went up. And second is all the hardware that we have been purchasing across our new design centers when you added 400 plus people, which is the first time we have done that over the last many years.

So that's the second part where the depreciation has gone off.

Got it. We got it. Thank you, sir. Once again, congrats.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question, may press star and one. If there are no further questions from the participant, I know I have a conference. Over to the management for the closing remarks. Thank you.

I know over to you, sir. Thank you, everyone, again, for joining us today and for the continued interest in Onward Technologies.

Q2 was a very important quarter for us. We delivered strong revenue growth and improved profitability, expanded our margins, and most importantly, our great outlook for the year, again, of course, for Onward Technologies. The results reflect the progress that we have been making over the last many, many years in strengthening our delivery engine, offshore leverage, improving productivity. And we are seeing that with some of our customers where our engagements are getting deeper and larger on a global level. We are again encouraged by this momentum in the business and the increasing interest from everybody in the onward ecosystem. We believe the opportunity out of us remains significant across all the three verticals, industrial being the most dominant and the most matured, but the TNM and the CLS vertical also are very critical to our success and future growth, and we remain very excited about it. Our focus continues to remain to create long-term value for all our three stakeholders, which is our customers, employees, and shareholders. On behalf of our entire leadership team, I want I want to thank all our customers for their trust, our employees for their dedication and commitment, and of course, all of you and our shareholders for your continued support. We look forward to updating you on our progress next quarter. Thank you, and have a great day.

Thank you so much, sir. Ladies and gentlemen, on behalf of Go India Advisors, that concludes today's call. Thank you for joining us, and you may now disconnect clients.