Birlasoft Limited (NSE: BSOFT) Q1 2026 Earnings Call dated Aug. 07, 2025
Corporate Participants:
Unidentified Speaker
Abhinandan Singh — Head of Investor Relations
Angan Guha — Managing Director, Chief Executive officer & Member of Executive Board
Kamini Shah — Chief Financial officer and Member of Executive Board
Analysts:
Unidentified Participant
Dipesh Mehta — Analyst
Sandeep Shah — Analyst
Ravi Menon — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Birla Soft Limited Q1 FY26 earnings conference call. As a reminder, all participant lines will be in the lesson only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star G on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhinandan Singh, Head Investor Relations, Birlasoft. Thank you. And over to you sir.
Abhinandan Singh — Head of Investor Relations
Thanks and welcome everyone to our Q1 FY26 earnings call. You already have received our results or seen it on our website. Before we get started, let me quickly introduce to you the members of our team who are present on this call. Along with me here we have our CEO Mr. Angan Guha with us. Along with him we also have our CFO Ms. Kamini Shah. And as well as along with her we also have our CFO designate, Mr. Chandrasekhar Tyagarajan or Chandru as we call him. We will begin the call today with opening remarks from both Angan and Kamini as usual.
And after that we will open the floor up for your questions and responses to those. Before I hand over the floor to Angan, a quick reminder that anything that we say on this call on 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 the disclaimer that appears in our investor update which you would have received and is also uploaded on our website as well as filed with the stock exchanges. With that, 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 everyone wherever you are. And thank you for joining us today as we share some perspectives of our performance during the first quarter of the financial year FY26. As you already know from our announcement a couple of weeks ago, Kamini, who has been serving as our company’s CFO since April 2023, has decided to move on for personal reasons. I would like to take this opportunity to thank her for her contribution over the past two odd years in driving the efficiencies and ensuring strong cash flow generation. So thank you Kamini.
I’m also pleased to welcome Chandru who will take over as our CFO effective Tomorrow, which is the 8th of August. Back to Birlasoft. As many of you may recall, he served as the company’s CFO earlier during the period of 2020 to 2023. Chandra is a highly accomplished and seasoned finance leader and is also very familiar with our business. We are therefore pleased that we were able to find in him the best possible person to step in and take on the role of the company’s next cfo. So now with that backdrop, let me delve into our Q1 performance.
You may recall in our last earnings call I had mentioned that we were witnessing some ramp downs as well as some insourcing amongst few our customers which was likely to affect our growth performance in Q1. That was mainly on account of the prevailing macroeconomic environment where customers are still focused on cost optimization, cutting back on discretionary spending and are maintaining a hold and wait approach with regard to large transformational programs. Consequently, the revenue for Q1 has been sequentially lower by 1% in dollar terms and has come in at 150.7 million. However, three out of our four verticals have actually shown growth.
BFSI, Life Sciences and Services and Energy Utilities have delivered sequential growth in dollar terms during the quarter. However, our manufacturing vertical which is our largest vertical, has registered a very soft performance due to project completion ram downs as well as in sourcing which has more than offsetted our growth that has been contributed by the other verticals. On the margin front, we entered Q1 with a base effect headwind because in Q4 we had significant amount of margin tailwind due to some one offs that were absent in Q1. In that backdrop I believe we have managed to minimize the margin contraction sequentially and delivered an ebitda margin of 12.4% for the quarter.
Kamini will share more on margins and net earnings in her remarks. Coming to deal wins, More than half of the TCV secured in Q1 comprises of new deals that we have won during the quarter. The quantum of TCV deal wins in Q1 is at about roughly 141 million. However this is lower than what we had delivered in Q4 because as you know the second half of the financial year, which is the third and the fourth quarter are very renewals heavy. So traditionally the Q3 and Q4 deal wins are higher. In addition to that there was one deal that got right shifted to Q2 which is why you saw a little bit of softness in signing deals in Q1.
But we are hoping that we will cover it up in this quarter which is the quarter in concern in Q2. But I would also like to point out that we have secured some marquee deal wins that demonstrate our enhanced tech capabilities, particularly in emerging areas such as Genai. For instance, we have partnered with a leading player in the US Energy sector to deliver cutting edge agentic AI use cases within the supply chain, accelerating intelligent automation and operational resilience. Similarly, we won another engagement with a global technology leader for a landmark enterprise wide quality Engineering Transformation program wherein we will be integrating agentic AI driven automation.
These engagements will add to our growing base of existing customers where we are already deploying advanced AI power capabilities including agentic AI. Now looking ahead, as I’ve observed earlier in my comments, the demand environment continues to be difficult. This has resulted not only in prolonged period of time during which customers have been reluctant to take up long term transformational projects, but also in delayed decision making and cut in their discretionary spending. As a result, while our pipeline remains strong, conversion to deals have been relatively tepid. While we expect sequential growth in Q2, we do anticipate that the challenging marketing the market conditions will reflect in our performance through the course of the current year.
At this point, I will ask Kamini, our Chief Financial Officer, to share her perspectives on the quarter under review. Kamini, over to you.
Kamini Shah — Chief Financial officer and Member of Executive Board
Thank you Ankan Good day everyone. Thank you for joining us. It’s a pleasure to talk to you again. Let me take you through some of the financial highlights for the first quarter of FY26. Our revenue performance for Q1 reflects the challenging demand conditions that we are operating under. On our last call we had indicated that we are seeing some project closures and ramp down and on account of that our revenue for the quarter declined 1% quarter on quarter in dollar terms to 150.7 million. As Angan has observed in his remarks, three out of our four verticals have registered sequential growth during Q1 in dollar terms.
Energy and utilities sustained its growth trajectory during the quarter under review, growing 1.9% quarter on quarter. BFSI has also grown a bit marginally and life sciences and services verticals have returned to growth during Q1, recording a 1.4% growth quarter on quarter. The manufacturing vertical however, witnessed a 4% quarter on quarter peak growth, which is for the reason that Angan had mentioned. If you really look at our service line, our ERP business saw a sequential decline reflecting its correlation with the manufacturing vertical. The infra business, which is a much large smaller piece of our overall business, also witnessed the degrowth due to completion of a project.
The digital and data business however, has registered a growth of 2.6% quarter on quarter. This is on the back of new engagements and incremental revenue from existing accounts. You would recollect that in the last call we had mentioned that our Q4 25 margin performance had some one time benefits pertaining to currency benefits, leave and cash mints, and variable pay for our senior executive amounting to about 200bps. We had also indicated that we were confident of offsetting half of the margin headwind coming into Q1 to operational efficiencies. We have been able to minimize sequential margin contraction in Q1 despite a subdued top line and delivered an ebitda margin of 12.4% in Q1.
The effective tax rate, which for us has historically been in the 25 to 26% range, saw a rise during Q1 to 35.9% on account of a provision made for higher tax. We have been engaging with tax experts and are transitioning our terms of engagement with key customers to more accurately align with our operating model. With this, we expect to limit the impact of the incremental tax to the current financial year. Thereafter, we expect the ETR to come. Back to our historical levels. Adjusted for the incremental provision for tax, pat for the quarter would have been at 14.4 million and basic EPS at 4.39 per share. We have begun the new financial year with a robust balance sheet. Our cash and cash equivalents at the end of Q1 stood at 266.6 million. This is up by about 16% year on year and 2.8% quarter on quarter. Our DSO was at 58 days. While it is higher than what we normally reported in the earlier quarter, this has been primarily due to delayed collections that have come in earlier July. Had these collections come within the time frame of June, our Q1DSO would have been at 53 days.
We remain committed to staying focused on sustained, robust cash flow generation while we are still navigating through the challenging demand environment. I believe our ongoing effort to drive operational efficiencies, generate healthy cash flows and invest prudently in the business positions us well to benefit from a recovery in demand as and when that happens. Thank you very much. Back to you, abhi.
Abhinandan Singh — Head of Investor Relations
Thank you. Kamil. Thank you. Moderator can you please open the floor for questions?
Questions and Answers:
operator
Sure, sir. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, you may press STAR and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question Queue assembles. We have our first question from the line of Girish Bhai from Bob Capital Markets. Please go ahead.
Unidentified Participant
Thanks for the opportunity. Andan, you mentioned that 2Q is going to be a growth quarter on a QQ basis. Will that continue into 3Q and 4Q?
Angan Guha
So Girish, thank you for your interest and thank you for asking me that question. So look, we are working towards a sequential growth in Q2 and our focus currently is Q2 and we are working with our teams and with our clients to see how we can deliver sequential growth in Q2. Now it will all depend upon how my order book stacks up for Q2. As I’m sure you’ve seen and I mentioned in the call Q1, we delivered about $141 million worth of orders. One order slipped into Q2 which is now getting signed. So hopefully Q2 we’ll have a larger order book Right now, if we really deliver a larger order book, then barring the furloughs, I think operationally we can show some growth.
But that will all depend upon how the Q2 order book looks like. It’s hard for me to say whether Q3 will really be a growth today because of the uncertainty that we are facing. But our job is going to be to focus on order book and deliver higher order book which will make sure that the revenue growth comes in subsequent quarters.
Unidentified Participant
Okay, and in the previous calls you’ve been saying that you would want to lower the exposure to discretionary business from what I think was 70% to about a 5050 mix. Where are we on the journey? And is the new business coming at lower margins compared to the discretionary business that you’ve been getting?
Angan Guha
Yeah. So Girish, you know our. Okay, so here is how I’m seeing it play out. Right. And as you know, our quarter one and quarter two are quarters, which generally is a little lower in terms of order book because that’s how our seasonality works, right? Q3 and Q4, the renewals are very heavy. We are not anticipating at this point in time. And again, I stress at this point in time that our renewals will be at a lower margin. Our renewals will be at our current margin at the minimum. And in certain cases we may get a little bit of an extra margin even in our renewals business.
However, what will happen though is in our new deals and I also talked about two or three big deals that we are working on in the range of about 30 to 50 million, those deals will definitely come at a lower margin. So for us as a management team, it will be important to first of all win those deals, secure those deals and deliver and also work on our overall cost theme so that sustain the margins at the current levels.
Unidentified Participant
Girish, just two more questions on salary hikes. When will they happen? And the quantum and the impact from a basis points perspective, which particular quarter will it hit you?
Angan Guha
So we have not taken a decision on salary hikes just yet. I mean, we’ve just started the first year and as you would recollect, even last year we gave the salary hike only in Q3, 3Q of our financial year. So it’s just been about a quarter. So we have not taken a decision on that yet. Girish.
Kamini Shah
Yeah. And just to add to that, Girish, our senior leadership salary hikes were done at the beginning of this year, around January. That is quarter four of last year. So at this point of time, we will review the situation and take a decision on whether we would do it.
Unidentified Participant
Lastly, I had a question on the industry and there’s a lot of talk about H1B visa process change that may happen from a lottery to something else. Should it change from a lottery process, from an industry standpoint, would that be an additional margin pressure that the industry is going to see?
Angan Guha
Yeah. So, Girish, we’ll have to wait and watch in terms of how it shapes up. Currently, we don’t have a comment on that because we’ll have to see the new regulation the way it comes out and only then we can assess the situation. But currently, for us, the way our business is shaping up, we have enough H1B resources ready to travel if needed. And we are also localizing our workforce by hiring locally. So I think we are covered at this stage unless the visa situation changes dramatically, which we can’t comment on at this stage. Girish.
Unidentified Participant
Okay, thank you.
operator
Thank you. We have our next question from the line of Priyank Chera from Vallum Capital. Please go ahead.
Unidentified Participant
Yeah. Hi team. Hi Angitji. Thank you for the opportunity. I’m sure in this challenging times, there are a lot of things that outside the macro, something that Birlasoft as a team and the management team would implement so that we emerge out much more stronger. So I would want you to highlight few of the key learnings that you have had in this last one 12 months or four quarters which have been more challenging and any corrective action plans that you have undertaken from those learnings.
Angan Guha
So, Priyank, again, thank you for the question and thank you for your interest in our company. So look, one of the biggest learnings for me and my management team in the last one year has been the fact that our order book has not been very strong as you all know. Right. So there is an enormous focus on building the pipeline and driving more order book. I think if you remember in FY24 we delivered about $850 million worth of orders which came down to almost 750 last year. Right. So one of the big learnings is unless we have an order book, obviously the revenue growth becomes a challenge.
So one, the entire team is focused on driving order book. So that is one second is we also realize that we need to be more domain orientated. And as a result our new hiring that we are doing is building on more domain oriented hiring rather than generalist hiring. So that’s number two. Number three and we talked in our commentary, how do we drive a lot of delivery through our agentic AI platforms? And we have some maki platforms which are really truly amazing platforms if you will. How do we use those platforms to deliver to our customers and win new deals? And we are focusing on that as well.
We have also undertaken a company wide transformation on all parameters. Whether it is customers, how do we serve customers better, what are the capabilities we build. And finally on the cost side and in a situation where there is so much uncertainty, we will obviously work a lot more on the cost. And again, I want to make it very clear it’s not that we will fire our employees or anything, that’s not the idea. But the right roles need to be done in the right geographies, which is what we will focus on number one. And number two, we will continue to invest in the areas that we see growth.
Right. So as you have seen, our digital and data business has shown a lot of growth. We want to continue to invest in that kind of business, but we need to kind of move the workforce in the right geographies where they actually need to be. So while we are looking at the cost side significantly, but keeping the long term in mind, we also want to invest in the right places. So I guess broadly, Priyank, these are the big learnings. But if you ask me, our biggest job right now is to get the order book fixed.
And if we can get the order book fixed, then the revenues will follow.
Unidentified Participant
Very clear. And should we see this implementation getting populated into order book? You mentioned from the first large bin deal that you are already working on it, which got slipped. So from Q2 onwards the PR mandate would be to first check the order book and its accretion and then so the delivery Follows.
Angan Guha
That is exactly right Priyank. I mean I’m hoping that we deliver more order book in Q2 than what we did in Q1 for sure. And then Q3, Q4 obviously the renewals come in and then if we can swing at least one out of the two large deals then clearly you know the year will be good in order book. And I’m hoping if we can deliver strong order book for the year then next year, you know, we can commit to a larger growth.
Unidentified Participant
Perfect. So for just to summarize this, this year the more focus would be on order book than the revenue recognition. So for this full year should we consider that we would be ending somewhere around mid single digit growth and then follow on for FY27 we should start accelerating to double digit growth.
Angan Guha
Yeah. You know I don’t know whether the growth will be single digit or whatever. It’s hard for me to now say because we, you know we faced enormous headwind in Q4 as you know. Priyank. Right. Our degrowth was in a much steeper than what we had anticipated. So I can’t really comment for the year. Now my entire focus is a quarter on quarter. So what we can say is we are working at least for a sequential growth in Q2 that will be our focus. And apart from that our only focus is to drive better order book.
Now mathematically it will tell you that if we can deliver upwards of $850 million worth of order then definitely next year we can show much more growth. Now I don’t know whether it will be double digit or whatever that time will tell. But this is all keeping in mind Priyank, that the uncertainty at some point in time settles down because we don’t know what we don’t know.
Unidentified Participant
Very clear. And now just last question and I’ll come back in the queue after the delivery of whatever strategic actions that you have undertaken. You also mentioned in your opening commentary that we start this year with a very robust balance sheet. At the same time when you are implementing internals, do we need to look into the external to you know, acquire a better capabilities, diversify and build a much more sustainable organization for the coming years?
Angan Guha
Supriyank we have done a lot in building a solid organization per se. As you know, we have zero debt. We are generating positive cash flows and from that perspective I think we are world class. We need growth in the company. Right now an acquisition currently at least to my mind is going to be a distraction. We will not look at an acquisition today. We need at least three or four quarters of sustained quarterly growth performance and then look at something. But you know, we always are in the market looking at assets at any point in time.
And if something really shows up which adds good value to us, then we are open to looking at it. But right now the management actions are very clear. We need to focus on building pipeline, delivering order book and at least start delivering sequential revenue growth even before we think about an inorganic acquisition.
Unidentified Participant
No problem. So just on that, it’s a request from the minority shareholder to focus better on the capital allocation for this year. Maybe I’m not talking for a permanent change, but in this year we can think for a better dividend payout or a buyback so that, you know, our return on equity and the return ratios become much more attractive. And as we start FY27 again, the capital allocations as per whatever the decided policy can go on. Thank you.
Angan Guha
Thank you, Priyank.
operator
Thank you. We have our next question from the line of Dipesh Mehta from MK Global. Please go ahead.
Dipesh Mehta
Yeah, thanks for the opportunity. A couple of questions. First about the outlook. I think last time you indicated about quarter two to be growth quarter and then I think for the full year. Also you made two observations. First about our aspiration to deliver at least positive growth in FY26 and second is EBITDA margin roughly around 13 percentage for the year. So if you can provide your broad observation on some of these two things, whether we continue to aspire to reach positive growth and 13 percentage EBITDA for the year. Second question is about, you indicated about right shifting of some deal.
Can you help us understand whether those deals are already closed or we are yet to see that closure happening and whether it would be large size in terms of the relatively chunky deal compared to our usual size of the deal. If you can answer this question, then I have a couple of follow up. Thanks.
Angan Guha
Yeah, thank you Dipesh. So Dipesh, first of all, you know on the Q2 I’ll concentrate on Q2 first. Q2 our endeavor will be to deliver some positive growth. I can’t commit on the quantum because because the situation is very fluid. But all I can tell you the management team is working on delivering some amount of sequential revenue growth in Q2. Now Q3 we will like I said earlier to Girish also that if I deliver a strong order book in Q2 then maybe Q3 we can continue our growth momentum for the year. It is hard for me to say whether we will be positive.
Quite strong frankly Dipesh, because we are starting from a much Lower base. If you remember last year our base was at about 160 odd million. Now you know where our base is. So mathematically it will tell you that delivering positive growth may or may not be possible. It is quite difficult at this stage. But I will not comment for the year and you know we don’t give a guidance. We would like to take one quarter at a time. That’s point number one. Point number two on your deals construct. Look, we have won two reasonably large deals.
One deal is getting signed in the month of August so we have reasonable momentum on the deal flow. The two big deals that you are referring to, like I had said even in the last call, those are Q3, Q4 decisions. We are working on it. Hopefully we will be able to close one out of the two and if that happens then at least we will be able to deliver robust order book for the year if not revenue. Dipesh, our entire focus this year because of the fact that we are starting from a huge headwind position is to really focus on quarter on quarter growth and delivering the order book rather than looking at year on year because year on year obviously will look very very new.
Dipesh Mehta
No fair point. And on the margin side also you can comment.
Angan Guha
Yes. So Dipesh, look, I mean our first quarter as you have seen that our margins were at 12.4% right. Last year for the entire year we delivered a 13% margin. Our endeavor is at least to keep the margins at that level. Now I don’t know whether we’ll be exactly 13 or 12.8 or 12.6 or 13.1, I don’t know but it will be in that range. Our endeavor will be to keep the margins in that range.
Dipesh Mehta
Understand. Now I have a couple of follow up. First about the manufacturing, if you can provide some sense how one should understand manufacturing growth playing out. There are some headwinds. So if you can give broad sense, if you can slice and dice into some sub segment how you are seeing demand trend there and whether this pain is likely to be prolonged or you expect it to see rebound entering into the second half. And second similar question for ERP segment. So ERP, if you can give some sense a couple of quarters back I think you were hopeful about recovery in erp.
Now again ERP is seeing challenges for last three quarters. So if you can give some sense there. And one question for Kamini ETR increase, I think you provided some statement but I missed it. If you can help us understand what led to this increasing effective tax rate. Thank you.
Angan Guha
Yeah, so Dipesh, I will Talk about the manufacturing and the ERP situation and then I will hand it over to Kamini for her comments on the etr. So look, manufacturing is a manifestation of what we are seeing in the market now. You know, while we work with some really marquee names in manufacturing, the reality is we also work with lot of mid sized manufacturing companies in the US as well as in Europe. Now with everything that is happening on the tariff side, you know there is also a little bit of uncertainty, uncertainty in terms of decision making and prolonged decision making.
And as you also know our manufacturing business actually sits in two areas. One is the pure manufacturing and second is in the healthcare space. Also we work a lot with Med Devices customers which is also manufacturing. Now if you look at it, I’m of the opinion that our Med Devices business is now turning around. That will continue to show positive momentum. Our discrete manufacturing is going to continue to be under pressure which is why that has an effect on our ERP business. Because the ERP and manufacturing business go hand in hand. It is hard for me to comment with the way the world is moving and way the tariff situation is playing out in terms of when this business will move around only because you know it is a wait and watch policy in terms of our customers decision making process.
So we will watch the space and as the quote quarters go by I will give you an update when the clarity comes in. But our endeavor on the ground is also to kind of turn the manufacturing business around and see if we can deliver growth in the coming quarters on the etr. I’ll hand it over to Kanji.
Kamini Shah
So Deepesh, like I had mentioned, if you look at our typical effective ETR, we’ve always been in the range of 25 to 26%. But you know, this quarter we’ve had to take it to about 36% because of the provision that we have made. What I had called out was that we are engaging today with our tax experts and we have started transitioning our terms of engagement with key customers. So our current assessment is that this impact is going to be for this financial year and then going forward we expect the ETR to come back to our historical levels.
So that’s really our current outlook at this point of time. So and we are working through this, engaging with the experts, understand so broadly.
Dipesh Mehta
I am not very clear, let’s say what led to this increase because you said certain client, you are in conversation and all those things and this 35 percentage plus kind of number is likely to be there for next three quarter at least. So if you can provide some sense, what led to increase.
Kamini Shah
So I think it’s also a factor of, you know, some of our engagements, dipesh, that we are looking at, which is why I said we are engaging with our tax experts at this point of time. And you know, what we really need is to just work with our customers to realign the contract terms. So which is the reason why I’m saying that. I mean, I know this is much higher than what we’ve had historically, but. We do expect to get this back. And I think our focus right now is to make sure that we take all the necessary steps to get back to this levels.
Dipesh Mehta
Okay, thanks.
operator
Thank you. We have our next question from the line of Sandeep Shah from EQS Securities. Please go ahead.
Sandeep Shah
Yeah, thanks. Thanks for the opportunity. Angel, in terms of whatever you explained till now, it looks like even after two and a half years of effort in terms of turning around the ship and the bilas of growth profile, it still looks like our restructuring and turnaround efforts are undergoing. So what is not executing as per your plan? Is it more to do with the capability gap? Is it more to do with the execution aggression or you believe it’s more to do with the macro headwinds which is impacting us?
Angan Guha
Yeah. So Sandeep, look, I mean, if I were to make an honest assessment in terms of what is going wrong with us, there are are two big things that is going wrong with us. And look, macro is where it is. I mean, that is not in our control. So I will not talk about it. It is our top 24 customers or top 40 customers, which essentially gives us 93% of our business. If you look at their performance over the last four quarters, they have not matched up to the kind of growth that we had seen probably six quarters back.
So they have slowed down. Now one can argue whether this is because their spending has been going down, which clearly it is. It is also because some of these work is becoming insourced. As far as they are concerned, some projects have got over and which has impacted us in the last six quarters tremendously. So clearly our focus needs to go back into mining these accounts, winning more in those accounts to get back the business on track. That’s number four. Number two from a capability perspective, again, you know, if you look at our digital and data business, they have done reasonably well.
Our infrastructure business has grown significantly. If you were to Compare it over 3, 4/4. Our one big issue that we are facing is erp. And ERP is very coupled with our manufacturing Business. So if I were to now look forward four quarters, what will be our plan? Like, like I was telling dipesh earlier Sandeep, my plan will be very simple. Go back to the basics on mining the 24 and 16 accounts. That’s important. So the 40 accounts we have to mine, we have to start adding more and more newer logos in that, in the bucket of 40 that is number second and number three.
How can we work with our partners like SAP, Oracle, etc. And, and invest in more leadership to turn around our ERP business? If we can do these three things, at least in the medium term, we can get back the company into a growth mode. Now, external economic factors, like I said, is not in our control. So hard for me to comment how that will move. But at least internally, these are the three things that we have thought of in terms of investments, in terms of terms of push focus to get the overall company back on growth.
Because remember, ERP still contributes. With all the headwind that we have faced over the last three, four years, it still contributes to 200 million out of the 6,620,630 million that we have. So that’s a big business.
Sandeep Shah
Okay, but Anvil, sorry to stress on this in the review process we should be having some amount of lead indicators about these things happening in the next 1/4, 2/4 or 3/4. So why the execution is more on the reactive approach rather than a proactive approach? Because this, because the way you are explaining it looks like second half could also be a difficult period for us in terms of a group.
Angan Guha
Yeah. So Sandeep, look, it’s not reactive. We know exactly what is happening. Right. And again there are a lot of specific, I can’t discuss specific customer issues but we know exactly which vertical, which account, which markets are really not doing well and we have a plan to fix them. Right. The only reason I’m not giving a forward looking guidance, one is because we don’t give a guidance and second is because the uncertainty is so much. You know, I am not being able to, to pinpoint something. But what I can tell you Sandeep, is this. The entire management team is focused on those two things that I spoke about.
One is creating pipeline, delivering the order book. And I will tell you, if we deliver the order book, the revenue will follow. And we have a plan in multiple levels. We have a plan for our top 24 clients, the next 16 clients, what we call as the attack accounts, which are 16 clients that we want to have in, in our portfolio. And there is a proper plan. Account by account, people by people, service line by service line which aligns to our long term growth strategy. Now it will be all about execution and execution from your perspective will be higher order book and if we can deliver higher order book, then the revenue will follow.
Sandeep Shah
Fair enough. Thanks for the detailed answer. And sir, I think in the last earnings call we called out, we added two large deal when each about 25 $40 million in Q3 Q4 plus we are expecting another two close which got delayed from 1Q to 2Q. And beside that you also spoke about couple of other large deals which are in the pipeline which is needed to be closed in the second half. So am I understanding this correctly?
Angan Guha
Yes, absolutely correct, Sandeep. One deal as you know we closed in Q4 already. One another deal we closed in Q1, the deal that got shifted into Q2 will also close. Had it not closed then our order book would have come in at about 160, 165 million, but that will close in Q2. And the two large deals that you’re talking about are in the offering. But those like I had said in the earlier earnings call, are a little bit of a long shot. And the closure date is also more like Q3 Q4. We will absolutely work on them and we will see how we can convert.
But more importantly, we also have to build our pipeline. We have to get more deals on the table which the team is also working on.
Sandeep Shah
Okay. And just last few things in terms of EBIT margin target, which we have said last time, we are not changing that this year we could be flattish plus or minus in a small range and then from FY27 there could be uptick in the margin. Is it the right way of understanding?
Angan Guha
Yes, Sandeep, because look, I mean at the end of the day if the revenue is so muted, see from the cost side, of course we have done a lot on the cost side and we will continue to do a lot right on our overhead side and the cost side. But at the same time we will invest in the right areas. So our going in position right now is that the EBITDA margins will be in the current range, give or take a few, which we spoke about. But as the revenue growth comes back, the margins will automatically improve because you know, the operating leverage will come into play.
Sandeep Shah
Yeah, and last thing, madam, just wanted to understand this higher tax rate which we expect in FY27 will have a cash flow impact or we are doing just prudent provisioning of the same in anticipation of a higher tax outflow in. The later years,
Kamini Shah
Sandeep, It’s a combination of both at this point of time. Which is why I said that there would be some cash outflow that would happen on account of it. But you know, like, we are engaging with our tax experts to see as to how we can work around it. Right. So it could be a combination of both.
Sandeep Shah
All the best coming in, ma’. Am. And welcome, Chandhu sir. Thank you.
operator
Thank you. We have our next question from the lineup. Ravi Menon from Acquire. Please go ahead.
Ravi Menon
Hi. Thank you for the opportunity. And I just wanted to ask about which side is this? Texel high tech customers. Which vertical is that classified. And so at least three of your key deal wins are from that segment. Is that in manufacturing or is that in the services side?
Angan Guha
It is on the services side, Ravi.
Ravi Menon
Okay. And life sciences, I noticed that, you know, we haven’t really seen any wins. Could you talk a bit about that? You know, what’s the outlook there is that, you know, even apart from medical devices, is that still solved?
Angan Guha
Yes. So Ravi, look, I mean, predominantly, almost 80% of our business is medical devices. While we have not seen any win in Q2, there are a couple of deals that we are working on. Even on the life sciences space that we hope to close between Q2 and Q3. We are working on them. I personally feel that the med devices industry per se, though it went through a little bit of challenge, it will turn around. But again, we don’t know how the tariff situation will play out for them. We will have to wait and watch. But at least the momentum is picking up in that area.
While we did not win a deal, we have been selected by a very large med devices conglomerate as one of their preferred vendors. And we hope that some of the deals should be coming out of that over the next two to three to four quarters. So if you ask me, Ravi, I’m feeling a little bit more positive on the med devices space. On the larger life sciences area, we obviously don’t work with any providers and we don’t have the capability to work with any providers. But we have started working with some of the payers and as we sign up some new clients on that area, I will come back to you with an update.
Ravi Menon
Ravi, thanks. A couple of wins in insurance. So look like that’s also picking up. How about the banking segment?
Angan Guha
So, Ravi, again, as you know, while we call our business bfsi, but we don’t really work with any banks, right? I mean, we work with asset managers, we work with payment providers and we work With a little bit of insurance. Insurance is a very, very small business for us. We are winning some small little deals there and we feel that will continue to show growth on the payments side. We will see some softness going forward, but it will be seasonal. I feel Q2 will be a little bit of growth again in payments. Q3 because of furloughs could be flattish, but in the long term, I think the payments as well as the asset manager space will grow for us.
Ravi Menon
Ravi, thank you. I noticed that this quarter we’ve seen a bit of shift offshore. Should we expect that to continue and will that help margins or you think that new deals, when they’re coming through, we will have to keep the on site offshore mix more or less at the current levels.
Kamini Shah
Ravi, our expectation it would be more around the current levels. I think the shift that you saw was largely because some of the degrowth had happened more on site at this point of time. And that’s the reason that we expect it to remain at the same levels.
Ravi Menon
All right, thank you very much. Luck.
operator
Thank you. We have our next question from the line of Shraddha Agarwal from Asian Market Securities. Please go ahead.
Unidentified Participant
Yeah. Hi sir. We’ve seen our sales and support headcount coming off for the last many quarters and if you look at on a y basis, it’s down almost 17, 18%. So what is happening there? Is it more of overhead that is going out or are we also looking at rationalization of a sales team?
Angan Guha
Yeah. So Shraddha, our going in position is to invest in sales. So you should not take this as cutting off sales force to enhance margins. That’s not the idea. We will continue to invest in sales heavily going forward as well and you will see an uptick. But. But we will invest in specialized sales instead of generalistic salespeople. Also, Shraddha, we will measure sales productivity very, very strongly. And you know, I can’t comment today whether we are right sized in terms of sales or not. That will be driven by productivity and there is a big exercise that is going on.
But the larger point that I made earlier, I think to Priyank or Dipesh is we will have the right roles in the right geographies. So from that perspective, we are rejigging our workforce a little bit. But investments in sales in the right kind of accounts that give us growth will continue.
Kamini Shah
Yeah. And Shata, just to add to what Angan said. Right. While we continue investments in the sales area, the reason why you see a reduction is we are also looking at a lot More internal optimization and automation in our internal processes. Which is why our support headcount has also been showing a declining trend. So while it’s club together for you, from your standpoint, sales and support reduction is not in the sales area. It’s largely in the support area that we are seeing.
Unidentified Participant
Sure sir. My related question is any progress on hiring of CEO Americas after the exit of Mr. Root Singh? It’s been I think more than 2/4 that we’ve been looking for placement. So any update on that?
Angan Guha
So Shadav, we will come back to you on that. I mean there is some thought process that we are going through at this stage and at an appropriate time. Shraddha, we will come back and update you on this.
Unidentified Participant
Right. And for this last one question from Mayan. Many companies have been talking of they get gaining incremental market share in vendor consolidation deals. So what is our status on such consolidation deals that come up in the pipeline?
Angan Guha
Yeah, so some of the deals that I talked about that we have won, part of it of course is vendor consolidation. And some of the other deals are also new deals which is more agentic AI. I mean one of the deals where we are delivering to our clients with agentic AI solution is a part of the consolidation deal. So we’re winning our fair share of consolidation deals as well. Shanta. But like I said, our focus rather than just driving vendor consolidation is to kind of win new transformation deals for our clients which is more AI centric and where I will be able to use my AI platforms to deliver.
Unidentified Participant
Right. And so just one last question. ROW saw steep decline. So the manufacturing decline and ROW decline are related.
Angan Guha
Yeah, it is related because there are some manufacturing clients spend and these clients are really global people. So we cannot classify whether ROW or in the us but you are absolutely correct, Shweta, that aligns with the manufacturing decline. But overall ROW outside of manufacturing has done reasonably well. In fact, the two or three deals that we are signing or about to sign are actually in the ROW area.
Unidentified Participant
Great. Thank you. Thank you.
operator
Thank you. We have our next question from the line of Sudhir Guntupalli from Kotak Mahindra amc. Please go ahead.
Unidentified Participant
Hi. Hi Anvil, thanks for the opportunity. So my question is I think follow up on what one of the earlier participants asked on Q3 growth. So you are saying the deal that was right shifted is almost signed in the month of August. And if things, especially on the macro side, I understand that the situation is very fluid. But if things, let’s assume things can status quo. And given that you have the comfort of that deal signing and the deal signings happen to be higher than what they were in this quarter. Then is it fair to assume that.
December quarter will also be a growth. Quarter despite let’s say 100, 150 basis points, points of headwind due to furlough? Is that the right mark to assume?
Angan Guha
Yeah. So Sudeep, I will break this up for you right, so that you know I communicate it clearly and I’ll also ask Kami to step in on this one. So look, if I can sign more deals in Q2 than Q1, roughly about anywhere in the range of 160 to 165 million in that range if I sign then clearly Q3 will also be a growth quarter. The only reason I am not being able to say that with something on the table is because I don’t know how much furloughs will my customers come back with. See the growth? Operationally I can tell you I will grow in Q3 but the problem is how much hit will I take because of furloughs? Is too early to comment because as you know, 30 or 40, not 30, 50% of my business is manufacturing and depending upon how the tariff situation goes for them, we don’t know how much amount of discretionary cut they will have as a result how much furloughs they will ask us to take.
Which is the only reason I’m saying this. But operationally if you ask me, we’ll absolutely grow in Q3 as well. Barring. The only caveat here is if the.