Birlasoft Limited (NSE: BSOFT) Q3 2026 Earnings Call dated Jan. 28, 2026
Corporate Participants:
Abhinandan Singh — Chief Executive Officer, Managing Director and Member of Executive Board
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Chandrasekar Thyagarajan
Analysts:
Unidentified Participant
Sandeep Shah — Analyst
Dipesh Mehta — Analyst
Abhishek Shindarkar — Analyst
Ravi Menon — Analyst
Presentation:
operator
Sa. Sam. Sa. Sa. Ladies and gentlemen, good evening and welcome to the Birlasoft Limited Q3FY26 earnings conference call. 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 Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhinandan Singh, Head of Industrial Relations, Birla Soft Limited. Thank you. And over to you Mr. Singh.
Abhinandan Singh — Chief Executive Officer, Managing Director and Member of Executive Board
Thank you and welcome folks. By now we have received or seen our results that were announced earlier today. Those are also available on our website www.birlasoft.com. joining me on this call this evening are our CEO and MD Mr. Angan Guha and our CFO Mr. Chandrasekhar Tyagrajan or Chandru as we call him. We will begin the call today as usual with opening remarks from both Angan and Chandru. Before I hand over the floor to Angan, a quick reminder that anything that we say on this call and the company’s outlook for the future could be a forward looking statement involving significant uncertainty and therefore that must be heard or read in conjunction with a disclaimer that appears in our Investor update which you’d have received and is also uploaded on our website as well as filed with the stock exchanges with this, Let me hand over the floor now to Mr.
Angan Guha, our CEO and MD. Over to you Angan.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Thank you Abhi. So good evening and good morning to all of you wherever you are and wish all of you a very Happy New Year. Thank you for joining us today as we share some perspectives on our Q3 FY26 performance. Our performance during the third quarter, which as all of you know is a seasonally weak quarter, demonstrates our ability to hold our revenues steady, secure solid order, book drive operating efficiencies and generate strong cash flows. Our revenue for the quarter grew 0.3% in constant currency and 0.1% in dollar terms to 150.8 million.
We have delivered a stable performance despite it being a seasonally soft quarter which is usually a quarter with a lot of furloughs. Growth in our manufacturing vertical, which reflects some ramp ups in projects that I won earlier, enabled us to offset the impact of furloughs and weaker traction in other verticals including bfsi. On the margin front we have done much better recording a quarter on quarter expansion of 212 basis points in our EBITDA margins which now stands at 18.2%. You will recall that this comes on the back of a similar expansion. Even in Q2. The margin expansion has been driven by several contributing factors including improvement in the quality of our revenues, ongoing efforts to optimize our cost structures and some one offs.
We have seen our cash collections and as a result our cash balances have risen as well. Chandru, our CFO will provide more color on all of this in his remarks on the deal front too. The story has been much better in Q3. You would recall that on the last call we had called out that a couple of deals that were committed to us but we couldn’t sign it in Q2 had moved to Q3. That has now shown up in our third quarter results. As a result, our PCV for the third quarter stands at $202 million which is up 89% quarter on quarter, which is nearly half out of the 202 million.
Nearly half of it is New engagements. Many of these deals were won on the back of our domain expertise and AI led capabilities. For instance, in BFSI we won a strategic engagement with a leading payments and card client to build conversational AI and agentic capabilities for its EGRC platform. Similarly, we have secured a multi year engagement to design, build and deploy AI agents across a customer’s business ecosystem in the manufacturing vertical, encompassing end to end business analysis and the development of scalable packaged AI solutions in the manufacturing vertical. Again, we’ve deployed an AI enabled smart manufacturing material tracking solution driving real time inventory control for a large global company.
These will add to our growing base of engagements where we are already deploying advanced AI capabilities and we will continue to make investments that are necessary to build a differentiated value proposition in the marketplace. Now, in terms of the outlook going forward, as all of you know from our perspective we have not seen any material change in the demand environment and we’ve discussed this even in the past. Customers continue to focus on optimizing their spends and discretionary spending therefore remains constrained. While some verticals such as BFSI and ENU are steadier than others, our exposure is higher to manufacturing led customers across both manufacturing and life sciences and services vertical.
In this backdrop our focus is on shoring up our deal pipeline driving order book while we are building on our capabilities on domain and technology. At this point I would like to request Chandru, our CFO to share his perspectives for the quarter. Chandru, over to you.
Chandrasekar Thyagarajan
Thank you Angan and a very warm welcome to all of you joining us today on this call, allow me to take you through the financial highlight for 3 FY26. As you would have all seen, we recorded consolidated revenue of $150.8 million for the third quarter representing a dollar term growth of 0.1% and a constant currency growth of in rupee terms. The quarter three revenue was rupees 13,475 million or 1,347.5 crores. A growth of 1.4% quarter on quarter. Sequential growth in our manufacturing vertical enabled us to offset the impact of furloughs and softness in some of the other verticals resulting in a stable revenue performance during the quarter.
Moving on to our EBITDA performance, this is the second consecutive quarter of healthy margin expansion. Even after excluding the benefit from exchange rate tailwind and some one off, we’ve been putting in a serious effort over the past few months around our cost structure and continue to do so. This is clearly diluting results for EBITDA for the quarter under review increased by 14.8% quarter on quarter and by 49.8% on year on year basis in Rupeeda to rupees 244.8 crores and up 13.3% quarter on quarter 42.1% year on year in dollar terms to $27.4 million. Consequently, EBITDA margin expanded 212 basis points quarter on quarter from 16% in Q2 to 18.2% in Q3.
The significant margin expansion was led by a combination of factors. We have seen the quality of our revenues improve which is the outcome of a conscious effort to focus on a more profitable engagement and delivery model. We have also benefited from favorable shift in our revenue mix with a rise in fixed price business and offshore work. In addition, better operational efficiencies and gains from Exchange rate tailwind about 70 to 80 basis points as well as some one off about 110 basis points in Q3 helped us in our EBITDA story on a steady state basis and taking into account some accelerated investment we will be making going forward.
EBITDA margin will be about 15%. Our EBIT performance for the quarter under review reflects the impact of a one time provision that we’ve taken to conform to the changes in the Labor Code with regard to gratuity and Leaven catchment. That provision, which we have called out as an exceptional Item amounts to $4.6 million or rupees 40.7 crore. As we had mentioned on our earlier calls during the current financial year our effective tax rate has increased on account of a provision made for higher tax related to U.S. federal taxes. You will recall that we had said that this transitionary trend will sustain through the course of the current financial year before settling closer to historical ETR levels in the next financial year.
The ETR for Q3FY26 reflects the same without the additional federal tax impact that we have seen Q1 onward, our year to date ETR would have been about 28% adjusted for an incremental provision for tax and a one time provision made on account of changes to the Labor Court normalized pact for the quarter was $20.2 million up 20.4% quarter on quarter and rupees 180.2 crores in rupee terms up 22.1% quarter on quarter. This translates into an adjusted basic non annualized EPS of rupees 6.44 per share. We also maintained our robot track record on collection and cash flow generation during the quarter with the highest quarterly collection so far this financial year.
As a result, our DSO has improved quarter on quarter and now stands at 54 days which you will agree is amongst the best in our industries. Cash and cash equivalents at the end of Q3 increased to rupees 2,491 crores up 6% quarter on quarter and 21% year on year. We will continue with our efforts to enhance our operating efficiencies and improve our quality of revenue while also making the investment and capabilities that are necessary for future growth. Thank you very much. With this let me open the floor for questions.
operator
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 the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants, you are requested to use handsets while asking a question. We would also request participants to limit themselves to one question in the first round and come back for follow ups in order to allow others to also ask their questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of Sandeep Shah from Equitas Securities. Please go ahead.
Sandeep Shah — Analyst
Thanks. Thanks for the opportunity and congratulations on a great execution in a difficult time and a quarter. Sir, first question is if I look at the offshore revenue mix, it has jumped materially in this quarter. So is it fair to assume volume growth is materially higher versus the headline growth in constant currency terms? And this shift to offshore is a deliberate Attempt where we want to diversify beyond staff augmentation business to manage services kind of a business.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah. So Sandeep, thank you for your question. So your analysis is exactly right. As you would have seen even in the last quarter and this quarter, our endeavor has been to move away from Star Fork and do more outcome based work. Our clients are also challenging us to do more outcome based work. And some of the deals that we have won last quarter as well as this quarter are really fixed priced work. As a result, moving to offshore is easier for us and that is reflected in the results that we have delivered from a volume perspective.
Mathematically, yes, you’re correct. The volume growth is higher. But since the offshore ratios are higher, that obviously suppresses growth but improves margins.
Sandeep Shah — Analyst
Okay, okay. And sir, just second question. In terms of vertical mix, which vertical you believe still carries some demand headwinds and which vertical is giving you confidence in terms of a better growth starting from 4Q and next financial year?
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah. So Sandeep, you know, though manufacturing has shown the growth this quarter, we must not take that as a winning story. Quite frankly, in my mind the manufacturing business will continue to show headwinds even in 4Q. There will be softness. You see the growth in manufacturing and also ERP because both businesses are quite related because of some deals that we had won earlier and we got to ramp them up now. And as a result the revenue realization is higher happen, but that’s more one time sustainably. I think manufacturing will continue to face headwind at least for one more quarter.
And I expect the manufacturing business to turn around sometime Q1 or Q2 onwards for the next financial year. We strongly believe that EMU and financial services will be will continue the growth momentum. As you know, this was a furlough quarter. So optically you’re seeing a degrowth in financial services services. But I believe financial services will be steady in 4Q and next year. Definitely we will see growth. Similar goes for emu. Manufacturing will be a lot of headwind. Similarly, like we’ve always said that our life sciences business is more a med devices business which is also really manufacturing.
So that holds true for life sciences as well. Life sciences. I feel there will be headwind in 4Q and hopefully in the next Q1 of next financial year we should see it stabilize and then grow Q2 onwards.
Sandeep Shah — Analyst
Okay. Okay. I have follow up will come in the second round. Thanks.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Thank you, Sandeep.
operator
Thank you. We have the next question from the line of Dipesh Mehta from MK Global. Please go ahead.
Dipesh Mehta — Analyst
Yeah, thanks for the Opportunity and Congress on strong execution particularly on margin side. I just want to understand if you can provide some margin work. Last quarter in quarter two we have some one off of roughly around 150bps. This time you indicated around 110bps. So from quarter one onwards whether one should take is almost 250 to 60bps kind of one of benefit which is in there in the quarter three margin trajectory. That is question one so broadly margin work and one off related some explanation what is driving this one off and how long is this to sustain.
Second question is about the revenue growth side whether furloughs were similar to last year or we have seen higher than usual furlough this quarter. If you can provide some color around intensity of furloughs. And last question is about Vijay, any decision we make on veg. Thanks.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
So Dipesh, I’ll ask Chandru to take the margin question first and then I will attempt to answer your other two questions. Chandra.
Chandrasekar Thyagarajan
Yes. So depression turns off the one off. Correct. So you’ll recall that both in quarter one and quarter two we did call out some of the some of the overall one offs and therefore the steady state EBITDA margins. Right. So if you look at third quarter and if I were to do that math from the second quarter onward, second quarter we spoke about a steady state margin of about 13.5% 14% if you recall from then to where we are today, I would believe that net of somebody one off there is a forex impact of 70 to 80 basis points that we spoke about.
We spoke about the 1 off of 110 basis points. If I were to remove those, my steady state EBITDA margin from the 18.2% is down to 16.5% and then what we believe is that the 14% has gone up to the 69%. There is a 200 basis point improvement from a steady state standpoint. And from there we do expect that we will continue to invest in our business and our business I think requires an investment on a regular basis. And if I were to provide say 1/2, 150 basis points on that, we believe that 15% EBITDA margin should be sustainable run rate margin as we go forward.
Depesh, I hope this answers your question.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Depish on the wage hike bit. Look, we’ve already taken a decision that we will do a wage hike next financial year. We are doing promotions this year, this quarter and we will affect a rate hike between Q1 and Q2 depending upon what level of employees there are in the Organization. But that’s a decision we have taken and we’ve already communicated. Dipesh. On the growth question, can you repeat the question? Because I didn’t quite catch the growth question.
Dipesh Mehta — Analyst
So quarter three, whether we face furlough in line with last year or furloughs were higher than last year. And second question is yes.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
No furloughs were in line debate.
Dipesh Mehta — Analyst
Okay. So broadly, if I refer to your last quarter earning commentary, you said if furloughs were in line with last year, you expected some kind of revenue growth to continue in this quarter. Now this 0.3 percentage, what we deliver, whether that was the expectation or it is higher, lower than what you anticipated at the beginning of quarter and how one should look. Quarter four to play out. Thanks.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah, so the bash, it is exactly in line with what we had anticipated. Because as you know, if you recall, even last year we had furloughs which were to the tune of about 0.5 to 1% and that held even for this financial year. Now it is hard for me to predict Q4 from a revenue standpoint, but our focus will be on generating pipeline and signings. What we are confident of is we will deliver better signings than Q3 and Q4. Now how much out of that will be playing out on the revenue? We’ll have to wait and watch.
But like I’ve always said, our problem, or rather the focus of the management team has to be on revenue growth. But before that we have to get the signings done. So as a management team, what I can commit is our order booking for Q4 will be better than Q3.
Dipesh Mehta — Analyst
Thank you.
operator
Thank you. We have the next question from the line of Abhishek Chindarkar from ncred Capital. Please go ahead.
Unidentified Participant
Hi. Thank you for the opportunity and congrats on a good execution. My question is related to the standalone business. If I look at the two quarter number for the standalone business, the revenue has.
operator
Sorry to interrupt in between. Abhishek, your voice is breaking.
Unidentified Participant
Yes. Okay. Is this.
operator
No, still your voice is breaking.
Unidentified Participant
Okay, one minute. Is this now?
operator
No, we are still able to hear an echo. I would request you to please rejoin the queue again.
Unidentified Participant
Okay, fair enough. I’ll do that. Thanks.
operator
We have the next question from the line of Priyank Cheda from Vallam Capital. Please go ahead.
Unidentified Participant
Yeah, I hope I’m audible. Congratulations to the management team for walking the talk about a growth in Q3 and Q4. I’ll first start with my first question on the. On the verticals, Data and digital has been the story across the sector, across the IT companies with respect to the modernization as well as the digital revenue. So in this segment we have seen a decline after a growth, after a growth that was reported in H1. What has been the readings through this? How should we read this decline? Is it one off or related to furloughs? And the related question on the infra which is again a 10% of the revenues and I’m sure we had given up some pass through revenues and given up some businesses over here in H1.
But again when I see Q3 we have seen a strong growth and I suppose this is coming from the ROW market. So how should we look across the growth in Data digital which is segment number one and the last segment which is infra over a speedy state?
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah. So Priyank, thank you for that question. So Priyank, look, our data and digital business fundamentally strong. I don’t think there is any structural issue in the business. The reason why you see a little bit of degrowth is because it is in line with financial services which is affected by furloughs. So furloughs have dented the growth a little bit. We are reasonably certain that growth will be back in Q4. As far as data and digital is concerned, structurally there is no issue with that business. As far as infrastructure is concerned, as you can see, the major growth of infrastructure is because of the deal that we signed in row, which was an infrastructure deal which we are now executing and that has contributed to the growth.
If I were to look forward, I continue to feel that digital and data will be steady. They will show growth. Structurally there is no issue. Infrastructure will be a strong growth area. Our ERP business will continue to lag though it has shown some growth this quarter in line with our manufacturing growth. But we will see softness in the ERP business for another quarter at least before that turns around.
Unidentified Participant
And just to appreciate the readings between the infrastructure segment, can we, can you get a details around what kind of work we do in the infrastructure as a broader vertical?
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah, so we do all kind of work. We do dev site services though dev site services is not a big focus area. But we have won some business on the dev site services. We also do data center management within data center. We manage the middleware, we manage storage. So all kinds of infrastructure that runs a business we manage. We’ve also forayed into the cyber security business where we’ve started to serve our customers on the cyber security side. So all in all it is a growth oriented business for us. Priyank.
Unidentified Participant
Got it Coming to the deal wins and I am congratulating the team for the $65 million to deals. Suppose that has been reported now from the signings that were pending in Q2. But if I have to carve out that deals which have been flown through from Q2 to Q3, the net new after excluding that again has not been that great. How do you read through this? And when I have to take a view on a YTD deal which is there at around $450 million and still it’s far away than our aspirational numbers of 758, $50 million for us to get a confidence around the growth for the coming year.
How should we think about ending this year in say next three months at what size and number we are looking out to end? And. And then given all the background around the sales engine that we are deploying now, what would be the growth outlook on the deal wins and the targets for FY27?
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah. So Priyank, you’ve asked three questions and let me try and attempt to answer all three. First of all, the two deals that were supposed to get signed and slipped from Q2 to Q3 finally got signed in Q3. So from that perspective you are correct that those T2 deals had to get pushed out but now finally got signed. But Priyank, you must also remember both the deals were net new deals, right? They were not renewals. So that’s point number one. Which is why out of the total signings of $202 million, $94 million, it’s net new which is 46% almost of our signings is net new.
What we are confident of Priyank, is our four Q signings will be better than Q3 signings. Now whether it will be 210 million, 250 million or more, I don’t know. But from the looks of it, based on the funnel, based on our conversation with our clients, we are pretty confident that our Q4 signings will be better than Q3 signings. Now as far as revenue targets are concerned, it is a little too early for us to think about that. We have to first execute Q4 on all the parameters that Chandru spoke about. Operational rigor, signings, revenue management, et cetera.
And sometime towards the end of March, we will be able to put our head together in terms of what would be our outlook for Q for FY27. But look, we don’t give a guidance. Our job will be to execute for the quarter and take one quarter at a time.
Unidentified Participant
I get that. And when you say Q4 would be better than Q3, is it based on net new number that we should focus on? Because Q H2 is generally very heavy on the renewal. So maybe a renewals is something that you would want to call out. And if I have to remember my notes in last quarter call, you did mention that the new renewals will come at a lower margins and this is what is baking around our guidance of 15% versus what we have been delivering now.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
That is correct Priyank. So you are absolutely correct. So look, renewals are important because as a company, as you know Priyank, we have discussed it in the past that we have faced a lot of headwind in terms of the key bucket. So from that perspective renewals are important. What we can say is that all the bad news is behind us. I don’t think we will lose any existing business but they will get renewed at a lower margin because we see pricing pressures which is why Chandru talked about a steady state margin of about 15% in terms of the total signings.
And the percentage of the new signings within the total signings is something that we can on guide at this point in time. I can only say that our Overall signings in Q4 will be better than Q3.
Chandrasekar Thyagarajan
Yeah. And Priyank, if I may add to what Pangan just said, one of the big reasons why we believe that continuous exercise around, you know, it’s spring cleaning on our cost structure to make sure that we eliminate waste, we prove efficiency is anticipating that we will have margin pressure and we still need to deliver strong EBITDA margins for ourselves and our stakeholders. So that is clearly an objective for us and one of the reasons why we so maniacally focused on our cost record exercise.
Unidentified Participant
If I can add to a similar follow on question, despite being a great confident on the despite being one of the good quarter on the new deal signing and also the confidence that we carry forward the number of clients that rationalization exercises yet not ending or it’s not bottoming out in terms of the last few clients we have lost a couple of clients over the quarters. So when should we see this bottoming out along with the new signings that we are doing? Is it the existing clients being minted further more in their wallet share or the strategy would be to see as the headcount on the sales has been added.
This would also get reflected in the coming quarters in terms of the client’s profile on the number of clients.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah. So Priyank, look, I mean we have not lost a single client. Right. The reason why you see the total clients coming down is we are rationalizing businesses that are not profitable for us or businesses that don’t show potential for growth. So we are trying to concentrate on lesser number of clients so that we can deliver and serve those clients meaningfully. Which is why you will see the client list coming down. Now. That doesn’t mean that we are cutting a tail any further. I mean, we’ve done a lot of rationalization of clients and I think we are at an optimum number now.
Three or four clients in a quarter we add, or three or four clients we rationalize is a call that we take based on what kind of margins we can do. However, if you look at our million plus clients that has expanded from 78 to 85, which also should tell you that our focus on growing clients which have the potential very, very sharp.
operator
Thank you. We have the next question from the line of Abhishek Shindarkar from Incred Capital. Please go ahead.
Abhishek Shindarkar — Analyst
Yeah, hi. Thank you for the opportunity and hopefully this time it is better.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yes, sir.
Abhishek Shindarkar — Analyst
Okay, perfect. Thank you. Congratulations on a great quarter, sir. My question is regarding the standalone business. You know, the growth rate in that business is phenomenal. The expansion in margin is even more better. So how can you give a color in terms of what is driving, you know, this efficiency in the standalone business? And a part two question is, is it that, you know, it is being driven by, you know, any salesforce or any other particular business you know, which was predominantly the old business of business and the cost rationalization or the one off that are we reporting, are those, you know, layoff, you know, the reduction in the employees predominantly being driven, you know, in this part of business.
Thank you for taking my question.
Chandrasekar Thyagarajan
Yeah, so Abhishek, thank you for the question. Right. I’m happy that you looked at the standalone results as well. The standalone result is where a lot of the row revenues are captured. Okay, so which is what you’re seeing in the consolidated financial, this row revenue having gone up on a quarter on quarter basis. Specifically, we had a couple of customers where we achieved milestones and as a result we were able to book additional revenue in the quarter. And these are customers in the ERP space. And therefore you will find that the third quarter ERP revenue went up on a quarter on quarter basis.
So very precisely that’s the reason also the impact of Forex benefit, that pretty much fits in the standalone financials. And that’s the other reason why you’re seeing the bottom Line uptick on a big time in the standalone financial. Abhishek.
Abhishek Shindarkar — Analyst
Perfect sir, this is helpful. So just the second part of the question. Can we relate the reduction in the employees to the standalone business and is this, you know, any service line which is driving this business? You mentioned the geography but any color on the service line would be helpful.
Chandrasekar Thyagarajan
Yeah, service line I spoke about ERP Abhishek. I said this geography specifically the ERP service line is where we saw a growth right in the, in the third quarter. I also want to hasten to add that you know, there were specific milestones that we hit that allowed us to book some revenues in row. We still need to steady our ERP business. As Angan earlier mentioned, the manufacturing and ERP businesses and you know, that is a work in progress as we speak. That’s the short answer to your question on the service line part of it in terms of the headcount reduction.
The headcount reduction I you rightly said is, you know, to a big part in the offshore side of our business. Having said that, not all offshore headcount actually gets accounted for in the standalone. Right. Because you know, a lot of them work for our global businesses and therefore the accounting will be in the respective, in the respective P and L of the, of the country from which the business accrues. That’s point number one. Point number two. We do, you know, as you know we’ve seen business shifting from on site to offshore and so there is some rebalancing within this, within this headcount portfolio as well that happened during the quarter.
Abhishek.
Abhishek Shindarkar — Analyst
Perfect, thank you.
operator
Thank you. Participants are requested to limit themselves to one or two questions in the first round and allow others to ask their questions and you may come back for follow ups. We have the next question from the line of Prabhuar Singhal from Nuama Equities. Please proceed.
Unidentified Participant
Yeah, hi, thanks for taking my question. And then just one question, a couple of questions. Actually one question was on the healthcare segment. If you look at the healthcare segment right now, it’s going undergoing a turmoil. Even day before yesterday the US government spending on the healthcare was increased very marginally year over year whereas it has historically been around 5%. There were challenges from the big beautiful bill also which came into the foray sometime back. So how are our conversations with the clients in this vertical looking like at this point of time? And what is the outlook that you have for this vertical maybe over the next two to three quarters.
Second question is on the deal means part as you mentioned this quarter dealings had a couple of large deals because of which that number got boosted. So if I let’s say look at the last three quarters we’ve done approximately $150 million of demons every quarter. Now this number used to be in the 250 range some time back. You mentioned next quarter we are looking at better than Q2 4 better than Q3 which should be north of 200. But the pipeline that we have, do you see us let’s say post Q4, do you see us maintaining that 200 plus trajectory and possibly reaching 250 also in the coming quarters your outlook on that will be.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah. So before first on the on the LSS business. Right. Like I’ve always maintained for us the majority, almost 80% of our life sciences revenues coming from med devices and the balance from pharma. So from my perspective I don’t see an issue from from a market standpoint. Right. Our issue was the tariffs that the manufacturing companies in med device companies faced. And as a result you know we had little soft quarter. Not only this quarter but even if you remember Q1, 1Q2Q was okay but 1Q also we had a soft quarter. I personally believe that one more quarter we will see some softness.
But equally I’m very bullish about this segment and I think come 1Q or worst case 2Q of next financial year this business will turn out and start showing growth. Now what was your second question Vibhaur?
Unidentified Participant
I forgot the second question on the deal wins. We’ve done $1 million deal win. Do you think post Q4 we can do north of 280 touch to 15.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah. So again before so look our entire focus now is on pipeline creation, order booking and revenue growth. Right. As you heard Chandru say that rest of the business, our business is very strong. We are generating great cash flows, our DSOs are great, our margins are now have really come back. So we are very pleased with the way we’ve executed on the other parts. But the one thing that ails the. Company is revenue growth. Right. Keeping that theme in mind, what we are confident is the immediate quarter which is 4Q 4Q. We are pretty confident that we will deliver better order book than 3Q and equally we are working towards increasing our book pipeline. Now as you know one Q for us and quite frankly for our industry it is a little soft quarter when it comes to signings. So I don’t believe that one Q we will be able to deliver at the same levels as signings as one Q. But Our endeavor would be that, you know, we continue to build pipeline and win deals.
So that’s all I can say for for now. I mean we are doing a lot of investment in sales, lot of investment in capability building so that we can increase our pipelines and drive revenue. So that’s our endeavor.
Unidentified Participant
Got it, got it. Really helpful. Just one last bookkeeping question for Chandra. You mentioned that we are looking at 15% sustainable margins. So just on that part. So you’re talking about these margins excluding any one of provisions and also the provisions that we have taken in the last quarter and this quarter. Are we done with those provisions or there is still amount of provisions which are left which would probably come in Q4 or Q1. I’m sorry, if you want to answer this question. So before I probably miss that part. In the initial part.
Chandrasekar Thyagarajan
Yeah, just to clarify, we had, we had received from one of benefits in the last quarter, in this quarter, one off items we bought. So I was trying to explain what would be our steady state net of some of those one off items. And that’s why from the 18.2% reported EBITDA margin where, you know, I’m saying that this steady state margin going forward should be looked at at 15% plus. So that’s one, what it also excludes is some forex benefit that we got. Right. Because as you imagine, we do not speculate on what forex is going to be.
So what we look at is at constant currency and we are trying to, we’re trying to look at what should be our sustainable EBITDA margin as we go forward. And you know, that becomes, you know, our own internal benchmark as to how we should perform as a company. Right. So that’s, that’s really what I was trying to explain.
Unidentified Participant
Got it, got it. And no more provisions in the next quarter or you think there could still be some more provisions, reversal of provisions, I mean to say, in the coming quarters.
Chandrasekar Thyagarajan
Yeah. So on that, again, I’m not aware of any, any one timers in the next quarter unless there’s something new that comes up, you know, based on any, you know, accounting practice changes or accounting requirement changes. But right now I’m not aware of any new one timer before.
Unidentified Participant
Got it, got it. And the currency benefit in 3Q was around 70, 20 basis points, right?
Chandrasekar Thyagarajan
That’s correct.
Unidentified Participant
Got it. Got it. Great. Sir, thank you so much for taking the questions and wish you all the best.
Chandrasekar Thyagarajan
Thank you.
operator
Thank you. We have the next question from the line of Ravi Menon from Macquarie. Please proceed.
Ravi Menon — Analyst
Hi. Thank you. And Congrats on really good margin performance. Looking at the events for this quarter, looks like you actually signed up with some large customers. The payments client for example, or even you mentioned that Silat, USB and C insurer. So do you think that you’ve moved somewhat closer to your goal of trying to get into some large accounts with a huge addressable wallet?
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yes. So Ravi. Yeah, that is exactly right. I mean we are using our domain capability, the capability that we had invested in all this while. Now it is bearing some fruit and we are able to win some outcome based deals. Like I’ve said that we are moving away from the staff of work to more being more outcome based. And some of the deal wins that we have mentioned is an outcome of the investments that we have made. Now they may be large or they may be medium sized accounts. I mean we can’t comment on individual clients quite frankly, Ravi, but we have very pleased with the fact that now we are having conversations with our clients which are more domain orientated.
And most of our wins have an AI component built in.
Ravi Menon — Analyst
And the employee numbers, does that include subcontractor as well? And the shift offshore, have you produced subcontracting?
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah, I think what you’re talking about is subcontracting. I didn’t quite hear the question properly, but if subcontracting is the question, yes. Our endeavor is to continue to reduce subcontractors as a business today about 8%. 8%, right. 8% of our population is subcontractors. But our endeavor will always be to reduce that even further. But we are within the industry norm. Ravi.
Ravi Menon — Analyst
Thanks. And I saw that the pass through revenue, that’s actually now practically nil. Right. And that’s another factor that I guess that’s aided margins. But as you do more fixed price, would we expect that to go up slightly? Maybe. Is there a level that you think would be more natural? Like 2, 3% or 4%, something like that.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
So you know, we want to deliver more outcome based work for our clients. Right. And to deliver that outcome, you know, we may, we may. I mean basically we may work with technologies or we may work with tech stacks, etc. But we will have zero pass through revenues going forward outside of a one off infrastructure deal if it necessitates us to do something. But we are very clear that we are moving away from staff of work or pass through work. It will be more linear than anything else.
Ravi Menon — Analyst
Thanks. Best luck.
operator
Thank you. We have the next question from the line of Manik Talreja from Access Capital. Please go ahead
Unidentified Participant
I thank you for the opportunity. I had a couple of questions. The first question was for both Angan and Chandru. You spoken about investments and that’s where you’re essentially guiding for about 15% EBITDA margins on a sustainable basis. How should we be thinking about these investments? Because you’ve also called out certain pricing or margin concessions that you’ve given to certain top customers. So how much of that is just pricing or margin concession and how much of it is investments around sales, solution, delivery, effect, etc? Would be great to get your thoughts on that one.
That’s question number one. The second question is specific to the quarter or the quarters of Q4. How should we be thinking about the lower number of working days? If you could just help us understand what’s the exact number of lower number working days for Q4 and how does that impact you?
Chandrasekar Thyagarajan
Yes, Monik, let me take both questions. Right. The first thing you talked about is on the margin concession. Truth be told, none of the investment that we are looking at have anything to do with margin compression. Right? As a company we firmly believe that providing concessional margin is not a way to gain revenue. So that’s our stated objective. Now there will be pricing pressure is what Angan was explaining from some of the new businesses and some of the renewal. And that pricing pressure is coming from productivity improvement that we’ve already delivered and we are expected to continue delivering as we go forward.
So that’s point number one. Point number two, the investments that we’re talking about for the most part will be in people and in capabilities. So these are specific capabilities that we will continue to acquire as we go forward based on where we see our business growing and where we see our businesses coming from some of our existing and new customers. And the investments will be made in people, leadership and in training of our reporters in that direction. Monik.
Unidentified Participant
And the second question was with regards to the Q4 in terms of what’s the exact number of lower number working days and how does that impact our or is that a headwind?
Chandrasekar Thyagarajan
Yeah, there are, you know, I think three working days lower in Q4 versus Q3. Manik. Yes, that will have an impact. But as we move more towards outcome based deals, and that’s exactly why we are doubling our focus on fixed price outcome based deals where the working days should not necessarily have a direct impact. They will have some impact but they will not have as much impact as we move more and more towards outcome based work that we’ve started to major on. Manik.
Unidentified Participant
Okay. Okay, great. Thank you.
operator
Thank you. We have the next question from the line of Manish from Vallum Capital. Please go ahead.
Unidentified Participant
Hi, good evening. I have two questions. I’m so. It’s so heartening to know about the cash pile up which has happened and also the improvement in the dso. So I just wanted to know. This is a drag on the balance sheet and the rightful owners are the shareholders of the company. So what we have thought about the possible buyback and what is restricting a possible buyback which is so common with the other IT companies in general, unless until you have a plan for an acquisition and you are closer to doing an acquisition. So I would like to know the thoughts of the management on this.
Chandrasekar Thyagarajan
So Manish, thanks for the question. This is, you know, this is a topic that, you know, is for the board of directors to look at. And you know, I can assure you that, you know, there is, you know, this is a topic that the board is fully sealed off and you know, we will continue to, you know, look at, look at opportunistic, look at, you know, capabilities, investment and you know, anything that fits into our strategies as we go forward. Manish. And the capital allocation, which is the point that you’re making, is certainly part of the entire exercise for us to ensure that as we look at how we get the best outcome from our balance sheet, the board will take the right decision at the appropriate time.
Unidentified Participant
I would be glad, Chandru, if you offer a conference call with the all the board of directors and I could enlighten them that how to create a value under the current circumstances. I’ll be very glad to do that. My second question is related to the appointment of Komal and if you could add up something about the role and responsibilities related to his role and would he be a part of the conference calls going forward because he would be driving the critical relationships, the most critical market. Thank you.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah. So Manish, as you know, the Americas contribute almost about 85% of our business. And Komal has been hired to drive our America’s business. Manish, he’s just joined the company. He’s just four months in the company. He’s meeting clients, meeting people. He’s got getting the life leadership hired. So he’s doing a lot of good things right. And we are very pleased and we are privileged to welcome Komal to the team as he settles down and you know, starts driving the business. At some point in time we will definitely ask him to speak to all of you and give his strategy.
But please allow some time for him to settle down. Also Manish, you must have seen and Chandra also commented on all our investments in the row region is playing out. Row region has delivered amazing growth for us this quarter and I think they will continue to show great growth even next year. And the margin profile is also significantly improved because of the revenue up. So we are very pleased with that, with that investment that is paying off now. Similarly, Komal is going to make a lot more investments in the US and over quarters you will see that business turnaround as well.
Unidentified Participant
Wonderful. So nice. Thank you. Thanks a lot.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Thank you, Manish.
operator
Thank you. We have the next question from the line of Pulkit Chawla from BNK Securities. Please go ahead.
Unidentified Participant
Yeah. Hi. Thanks for taking my question and congrats on a good margin performance. Angar, my first question is for you. In the last quarter you did highlight that, you know, 3Q and 4Q will be sequentially growth quarters. I think today you’re slightly shy of saying that, you know, you, you have highlighted that you’ll see a better deal wins in 4Q but you probably slightly shy of staying whether 4Q will be a growth quarter. So if you could just confirm if that is still true. And second on the 110 bits impact, the exceptional items that you reported in this quarter, if you could just throw some color around it, is it similar to the last quarter and will it continue for the next quarter as well? Sorry if I missed out on that part.
Thank you.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Yeah, so thank you for the question. See look, we still maintain, you know, that H2 will be better than H1 as far as signings are concerned. Right. On revenue you have to give us some time. We showed solid performance in a seasonally weak quarter. Right. We hope to continue that performance even in 4Q. The only reason I’m not giving a number is because we do not guide anything. But our auto booking performance should be an indication both in 3Q and 4Q. But look, I mean I’m also acutely aware of the fact that, you know, we’ve not shown great growth over the past many quarters and our entire endeavor going forward, like I said earlier, is going to be order book and revenue growth because all the other parts of the business now is fixed.
So we will be sharply focused on that. We will execute and take one quarter at a time and we will see where we go with it. On the exceptional item, I’ll ask on.
Chandrasekar Thyagarajan
The one off that we talked about, the 110 point that I was talking about comes from a few write back that we have done based on some provisions that we are doing made in the past quarter which based on our assessment were no longer required. And that’s the, you know, that constitutes the 110 basis points and we do not expect that this will come again for us in the following quarters. And therefore I call it a one off. So the run rate EBITDA margin that I spoke about is net of this one time item.
Unidentified Participant
Sure. Thank you. Thank you.
operator
Thank you. We have the next question from the line of Sandeep Shah from Equidus Securities. Please go ahead.
Sandeep Shah — Analyst
Yeah, thanks for the follow up. Most of the questions being answered. Just one thing. Despite new business TCE being better in this quarter plus you expect it could be order intake could be better even in 4Q and there could be some recoup of furloughs. Why the fourth quarter growth commentary is a measure. So is there any headwinds in some of the verticals you foresee and what is the nature of such headwinds?
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
So Sandeep, the only reason we are cautiously optimistic, and the reason we are cautiously optimistic is because of two things. One is the manufacturing growth that you see in 3Q will not be in 4Q because it was a one off growth that we saw form deals that we had won about two quarters ago and the ramp up had not happened because there was a stop on the program which came to life sometime in October. Which is why you see the growth in manufacturing in ERP and that not continue in Q4. Which is why we feel both these segments right, manufacturing and ERP will be soft in Q4.
That is point number one. Point number two, even though we will recoup all the furloughs like Chandru was mentioning, we have three lesser working days though like Chandru mentioned that that doesn’t have a complete impact on us because we moved a lot of our business into fixed price and outcome based. But still some part of our businesses will face lesser working days in 4Q. So it’s a combination of all of this. And look again, I’m not saying that we will not be focused on growing Q4, far from it. I mean that is the management’s responsibility.
I’m just not being able to commit to what would be the growth percentage that we will work on as we go through the quarter. But I am equally saying I’m confident of the fact that we will see growth coming back in the future quarters. If we do great signings in Q4 in Q4, if I can deliver 10, 20% extra signings over and above Q3, then we will be very strong, certain of growth going forward.
Sandeep Shah — Analyst
And any anything to read about healthcare in terms of a growth headwind in the fourth quarter and if yes, then it could be volume ramp down or could be a pricing pressure because you are saying renewals are coming at a lower rate.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
So I don’t foresee any ramp downs. Sandeep what will happen though is we will see immense pricing pressure in the healthcare business because of the uncertainties that my clients face thanks to the tariff situation. Right. So I see that pressure continuing in 4Q and I see that pressure partly continuing in 1Q. But overall I don’t see any volume de growth if that was the question. Sandeep, we don’t see that.
Sandeep Shah — Analyst
Okay. Thank you. All the best.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Thank you.
operator
Thank you. A reminder to all the participants, you may press Star and one to ask a question. As there are no further questions from the participants. I now hand the conference over to Mr. Angan Guha, CEO and Managing Director, Birla Soft Limited, for the closing comments. Thank you. And over to you, sir.
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Thank you. So thank you once again for joining us on this call today and thank you for all your questions. We appreciate your interest in birlasoft. I look forward to speaking with you again next quarter. In the meanwhile, please feel free to reach out to Abhinandan for any clarifications or feedback. Thank you once again and I look forward to the conversation next quarter. Again, thank you.
operator
Thank you very much on behalf of Birla Soft Limited. That concludes this conference. Thank you for joining with us today. And you may now disconnect your lines. Thank you very much everyone.