Cyient Limited (NSE: CYIENT) Q4 2025 Earnings Call dated Apr. 24, 2025
Corporate Participants:
Krishna Bodanapu — Executive Vice Chairman & Managing Director
Sukamal Banerjee — Executive Director & Chief Executive Officer
Prabhakar Atla — President and Chief Financial Officer
Analysts:
Karan Uppal — Analyst
Sandeep Shah — Analyst
Moez Chandani — Analyst
Sulabh Govila — Analyst
Shradha Agrawal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4 and FY ’25 Earnings Conference Call of Scient Limited. 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 the conference call, please signal an operator by pressing stars and zer on your touchstone phone. Please note that this conference is being recorded. I will now hand the conference over to Mr Krishna, Executive Vice-Chairman and Managing Director. Thank you, and over to you, sir.
Krishna Bodanapu — Executive Vice Chairman & Managing Director
Thank you very much and good evening, ladies and gentlemen. Welcome to Scient Limited’s earnings call for the 4th-quarter of financial year 2025. I’m Krishna, Executive Vice-Chairman and Managing Director and present with me on this call are Mr Sukumal, Executive Director and Chief Executive Officer; and Mr Prabhakar Atla, President and Chief Financial Officer.
I would like to mention that some of the statements made in today’s discussions may be forward-looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available on our investor website, which has been emailed to you and is also posted on our corporate website. This call will be accompanied by an earnings call presentation, the details of which have already been shared with you. As we drill into the highlights for the quarter, can I will first share a few brief updates with you.
Our Q4, as you would have seen the numbers, was a tad bit lower than what we had anticipated. I just quickly want to provide some color on this. The quarter has started-off quite well. We were quite confident of a reasonable quarter. The good news still continues that a lot of the deals that we have won are — continue to be in a ramp-up phase. A lot of the existing customers are doing quite well, which is also reflected in the growth of the top-10 and the top-20 customers.
Having said that, we did have a bit of a bump in — in the third month, which is March. March was softer than what we anticipated, given some of the global uncertainties that are going on. Excuse me, given some of the global uncertainties that are going on. We do not see any significant challenge in fact because of this. Our customers still are very committed to their programs. The programs that have been awarded will continue to start during the course of the next few months. But what that has done is put a little bit of a in our Q4 numbers and will also lead to a softer start to the quarter in Q1.
Again, I want to assure you and Sukumal will talk about the details, but I just want to assure you that there is nothing that is of significant concern and we are very, very confident that the strength of relationship with our customers and the quality of wins is as good as it has always been. I just wanted to address that issue upfront on the Q4 number, given that it was a tad bit lower than what we had originally anticipated.
Also, I do want to take a minute given that this is the end-of-the year to highlight the strength of the Group on three vectors or three parameters. The first aspect is that the group revenue is — the Group revenue momentum is there. We have delivered the highest revenue ever for the company and the revenue has doubled in the last seven years and has grown three times in the last 12 years. There is — this gives us a significant momentum and this is a platform, which I’m sure we can grow or continue to grow on. Also, with the choices that we’ve made, I’m very proud to say that we have a very balanced portfolio around along — sorry, along three parameters. The first, as you know, is or the engineering services business or the traditional engineering services business, which as you know, is now evolving into digital engineering technology.
The second vector is the semiconductor business, Science Semiconductor Private Limited, which has been one-off and we’re seeing tremendous interest in terms of what our customers want to do and also what our potential customers want to do with us, with their turnkey aid projects and the requirements for semiconductor design. And the third axis, of course is the DLM business or the design-led manufacturing business, which continues to do well. And you may have seen that business grew about 27% year-on-year last year.
So the first thing I want to — the second thing I want to highlight after the growth momentum is the fact that we have a well-diversified business around three vectors. The third element I do also want to highlight is, even within the DAP business, the diversification in the portfolio are working out quite well. We are not dependent on any single industry, any single geography, any single capability. I believe we have built a good set of capabilities. And I believe — and the reason why I wanted to take a minute to highlight this is, as we transition to Sukumal Banergy as the CEO, I believe he has a — he has a tremendous platform to grow the business, especially as it relates to the part of the business and I wanted to quickly highlight that as we go-forward. I also want to give you an update on the semiconductor business. As you know, we got the permission or we got the approval from the Board to spin-off the semiconductor business as a different entity. We have appointed Sumant Narayal as the CEO of Science Semiconductors. Suman is an accomplished professional in the semiconductor industry. He comes with a proven and tremendous track-record of managing large organizations and scaling businesses. His expertise is in the semiconductor industry and I’m quite confident with Suman’s leadership that business will grow. And like I said, we’re seeing tremendous interest from our customers and more importantly from our potential customers in terms of what they want to do with us. Also, I do want to highlight two key wins and these are — the reason why I want to highlight them is they are in very interesting areas and growth areas. The first is, I want to say we’re very proud to have received a very large order from — for the engineering and of the first-of-its-kind green hydrogen production project, which will be used for marine transportation.
The project is called Bode represents a major step-in Norway’s renewable energy ambition. And essentially this is the generation of energy for the ferries that go between islands. The project win is in a critical sector like hydrogen power is a testament to our very strong expertise. And now we’re very confident that we will see that the growth momentum that we have in our energy business will continue. I also want to highlight the alliance with navigations in the mobility space.
This partnership will deliver some very interesting solutions for intelligent mobility focused on same sustainable smart transportation system. And again, I wanted to highlight this because this is in the area of intelligent mobility, which is a growth area. And again, when shares of at, we share the results, you will see that the automotive sector has shown good growth for us and has continued momentum. I want to also now take a moment to welcome Sukumal Banerjee. As you know, as I’m sure you know, Sukumal joined us as the Executive Director and Chief Executive Officer of Science about six-weeks ago.
This is the first time that we’re formally introducing him to our investors. So I just will first say we are very, very — at least I’m very, very excited to have Sukumal on-board. I think Sukumal comes at a very interesting point where the base business is positioned very well. But as you know, we’re also looking at how we can accelerate growth through this — through the convergence of technology through the convergence — sorry, through the convergence of technology and engineering, and this is something that Sukumal has done and has done it at a significant scale earlier.
As many of you know, Sukumal, Sukumal is an accomplished professional and an acknowledged leader in our sector. He spent much of his career with HCL Technology is finally in the role of a Corporate Vice-President responsible for the engineering business. And most recently, he was the CEO and the member of Board of Zorient, which is a leading engineering company. So as we strengthen our core offices of core offerings and build a technology-led intelligence solutions, I think Sukumar’s experience will be a tremendous asset in transformation and in accelerating this phase of the growth. With that, I will again — once again take this opportunity to welcome Sukumar to Science. Again, like I said, I — we as an organization are very, very excited that we have a leader who will — who will lead us through this journey of acceleration and transformation and hand it over to Sukumal for his perspectives of where things stand and how he is going to take the business moment.
Sukamal Banerjee — Executive Director & Chief Executive Officer
So thank you, Krishna. Thanks for those kind words. Firstly, I would want to thank Science Board to interest me with this journey for Science on the go-forward basis. I am personally very excited and honored to get this opportunity. So just to give a perspective, as Krishna mentioned, for the last first six-odd weeks, my initial weeks have been spent in traveling across four continents, meeting 1,000 plus of our employees as well as quite a few of our key customers, almost 100 of them. And if I have to summarize my takeaways. Firstly, it is extremely impressive to see the quality of our customers, not just in terms of who they are as organization, but also the partnership and their care for their partnership with Signed over the years, some almost 30 years, some 20 years, some 15 years and their commitment to continue to work with going-forward. I’m equally impressed with the quality of the engine talent that Science possesses and the fashion of this team to make it successful from a company perspective.
Not to mention, like Krishna highlighted with a couple of examples, our deep knowledge in the vertical markets that we operate in, which again is of significance as we build for the future. However, I will acknowledge that there is some good amount of work to be done in the near-future from an execution perspective and that is going to be important for us to make sure that we make it happen and I also want to add that this is something which has already started in all earnest over the last five, six-weeks. So I would like to first start by sharing that we will be stopping guidance for now.
Given the current macro-environment, we believe it is prudent to utilize FY ’26 to build strength, predictability and stability across our portfolio. We will be working and have already started working on reassessment of some of the areas of work and bring focus into the same. We will make sure that we are harnessing the investment which has happened into the technology area as Krishna highlighted and making sure that these bets on digital and AI play-out and become an engine of growth for us and of course to reenergize the organization to make sure that we are aligned for the road ahead.
This should provide us a good platform to build our organization for medium and long-term growth. And of course, in that vein, let me now share a few updates. Firstly, we have been working on boosting our leadership team and I’m delighted to share that we welcome K Prabhakaran to the science family. She joins us as a Senior Vice-President and Chief Technology Officer for our DET business., as you fondly call him is an engine leader with a tenured career at Honeywell across aerospace, industrial process and other product areas, where he has worked both on product development, technology adoption as well as digitalization of these products and services.
He’ll be a great asset to us as we move towards our journeys. And as Krishta mentioned, the integration of our foundational engineering work with the new-generation of technologies and the emerging technologies and how do you make sure that we are driving these aspects across products, plants and networks, both in the physical and the digital domain. We also took a decision to break-up sustainability vertical into its constituents, which are utilities, energy and mining and minerals. This allows — allows us to be agile to respond to each sector, while there is a good amount of common leverage in these industries, we believe given the current times, it is important that we have empowered leadership close to the customer and they essentially are reacting and acting in conjunction with these different industry sub-segments and harnessing that for growth.
Our reporting formats going-forward in FY ’26 will be aligned accordingly to reflect this change from next quarter onwards. We have also taken a very important step and we are already seeing the results for it, which is focused on creating a GCC-focused view. We have a leader who is focused on making sure that we can engage effectively and in the manner that GCCs in India expect from an organization like. And I’m sure we’ll talk more about it as we go along and share our data points about the success we are seeing in this particular area.
We have also started working on, as I said, building back our talent and one of the key areas of focus that we have done from that perspective is to bring back successful ten-year-old employees of who had left us in the near past. And one of them I would want to call-out Lipas. She joined us back-in Germany and she will be leading our energy business going-forward and which also includes the team which has come from the CTEC acquisition of US PAC.
So with those initial remarks, let me just say that we are working very hard over the next few months-to create a comprehensive go-forward plan while we work on these tactical changes and realignments, which will make sure that we improve performance in terms of outcomes at the earliest and more importantly, make it stable and predictable.
With that, let me hand the floor over to our CFO, Latla. Over to you,.
Prabhakar Atla — President and Chief Financial Officer
Thank you, Mr Kumal. Hello, everyone. Thank you very much for your time today and for your kind participation in the call today. Before we proceed with the financials, a quick comment on the normal culture. The normal and segments under which we will report our Group performance today will remain the same as with the previous quarters, i.e., DET, DLM and others. The focus of this call will remain DET segment, which also includes our semiconductor business and therefore, all metrics are like-to-like to the previous quarters.
Given that this is the end-of-the fiscal year, we will also present two sets of data, one for the quarter-ending March 2025, which essentially is FY — Q4 FY ’25 and the other for full-year FY ’25., please bear with me as the commentary for this call will be a bit broader than in the previous calls. The Q4 FY ’25 dollar revenue per BET stood at $170 million, a Q-o-Q degrowth of 1.9% in constant-currency and a Y-o-Y degrowth of 3.4% in constant-currency.
In rupee terms, this revenue stood at INR1,472 crores with a Q-o-Q degrowth of 0.5% and a Y-o-Y degrowth of 1.2%. This Q4 revenue was lower than the previous expectation given the rapidly evolving macro situation which impacted the revenue portfolio and profile, especially in the last two months of the quarter. The DET EBIT margin for Q4 FY ’25 stood at 13%, down by 48 bps quarter-on-quarter and despite the revenue de-growth, we were able to mitigate the impact on margins due to tight operational control and focus on execution efficiency.
And in-part due to the early benefits from the second phase of the cost optimization exercise, which we have embarked already at the end of Q3 FY ’25. The Q4 FY ’25 PAT for DAT stood at INR163 crores, translating into 32% growth quarter-on-quarter, a degrowth of 6% year-on-year. This also translates into an EPS of INR14.81 for signed DET for the quarter. The DETFCF for Q4 FY ’25 stood at INR215 crores, one of our best quarters, resulting in an to PAT conversion of 132%. And in the following chart, you also see that our full-year HCF has also significantly improved year-on-year. In terms of the full-year commentary for DET, the DET FY ’25 full-year dollar revenue stood at $687.7 million, a year-on-year Degrowth of 3% in constant-currency and in rupee terms, this revenue stood at INR5,816 crores with a Y-o-Y degrowth of 1.6 percentage. The EBIT margin for FY ’25 stood at 13.5%, down by 261 bps year-on-year. This drop was primarily due to the movement in revenue, partially mitigated by cost optimization and efficiency measures during the year. We’ve also chosen to continue to invest in sales and technology development through the year to support our growth strategy. The TET FY ’25 PAT stands at INR605 crores, translating into a degrowth of 12.2% year-on-year. The translation of EBIT to PAT this year is much better than what we had in the previous year since we are significant improvement in items before EBIT — below EBIT. The DET FY ’25 free-cash flow stood at INR800 crores, our best-ever with an improvement of INR45 crores year-on-year, resulting from our continued focus on cash generation. Moving on to the group numbers, the Group numbers are a combination of all three segments we have, including signed DLM. As regards full-year numbers for the Group, in rupee terms, the revenue for stands at INR7,360 crores at a growth of 3% year-on-year. This is the highest-ever revenue for the Group and Krishna had made a comment on that already. Year, the Group PAT stood at INR622 crores, representing a degrowth of 15.4% year-on-year and the SCF at INR688 crores has also improved significantly by 6% year-on-year. And reflection of FY ’25 performance for DET, we believe that we have three significant takeaways for us. The first obvious takeaway is that DET revenue and EBIT were below the previously guided views and expectations. We had a strong FY ’24 with 12.6% revenue growth and 31% earnings growth year-on-year and with a soft FY ’25 to follow, as and Krishna has provided their views already on what we see ahead of us in terms of growth and potential. The second takeaway we have is that our cost-control and efficiency improvement playbook has been very effective in managing the impact of revenue movements on EBIT. And the third key takeaway we have is that our focus on cash conversion and cash management has worked very well for us. We have strengthened our cash balance and reduced our debt exposure significantly in this year. As you know, at the end of FY ’25, our cash position is the highest-ever we’ve had at INR157 million per DET and the for DET was INR800 crores, up by INR45 crores year-on-year. At the same time, we’ve also cleared all our long-term debts within the year, essentially meaning that BET is now a long-term debt-free business. Therefore, as we exit FY ’25, we believe that we have an efficient, stable and proven framework of cost and cash management, which we believe are critical to navigate the current uncertain macroeconomic scenario and to explore and explore opportunities as we see them under the strong leadership of Sukumal. We’re also very happy to announce a final dividend of INR14 per share, Indian INR14 per share, which translates into a full-year dividend of Indian INR26 per share. Lastly, as you’re aware, as Krishnav commented, we have recently concluded the carve-out of our subsidiary CSPL, Semiconductor Private Limited and as previously communicated, CSPL financials will be reported as a separate segment starting Q1 FY ’26 onwards. With this, I’d like to thank you again for your time and for your student support as we navigated a challenging FY ’25 and I will now hand over the call-back to the moderator to initiate the Q&A.
Questions and Answers:
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 are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles, the first question is from the line of Karan Upal from PhillipCapital India. Please go ahead.
Karan Uppal
Yeah, thanks for the opportunity. A couple of questions on the aerospace vertical. So one of our large customers in aerospace has given a profit warning due to the impact of tariffs and also US airlines last month have given profit warnings due to weak travel demand. So how is it impacting the aerospace, especially on the MRO side? That’s the first question.
Krishna Bodanapu
I think that’s a very good question. I think right now we’re not seeing any significant impact on the aerospace side. I think we will start to see some of that as we go-forward. But at least as we see because a lot of the work that we do that relates to MRO is based on flying hours. The flying hours have not really decreased very significantly. So in that sense, the impact is quite minimal at the moment.
Karan Uppal
Okay. Secondly on the green hydrogen deal, if you can comment what is the size of the deal and whether it will move the needle for the sustainability vertical. And has it already ramped-up or is it expected to ramp-up in next couple of quarters?.
Krishna Bodanapu
I think we haven’t really announced the size of the deal, but I’d say it is meaningful. It does have an impact on the system — on the energy vertical. I’ll just — also if I may just clarify to what Sukumar said, the sustainability vertical going-forward will speak about it in three pieces, which is minerals and mining, energy and utilities in geospatial because that’s the more meaningful way of looking at that business. But anyway, with that caveat, it will be significant for the energy business and the ramp-up is in the process of happening and we’re already seeing some — we’re seeing the first of the revenues. We will continue to see that over the quarters. But it is a meaningful for the — for the overall business, not just for sustainability or for — sorry, for energy.
Karan Uppal
Okay. And last — last question Vrishna, is on the pipeline. So in last couple of months due to change in the macro, have you seen any impact on the pipeline? Is it taking more time to close deals? And within the pipeline, which segments are you seeing more traction?
Krishna Bodanapu
How is will you take?
Sukamal Banerjee
Yeah, sure. So in terms of has it modified our pipeline or changed our pipeline? The answer would be no, because stress also cause creates an opportunity to create pipeline of a different nature but has it caused or created a pause in decision-making? The answer is yes
Karan Uppal
And all the best.
Operator
Thank you. The next question is from the line of Sandeep Shah from Equirus. Please go-ahead.
Sandeep Shah
Yeah, thanks. Thanks for the opportunity. Congratulations, Gumal. The first question to you, sir. I think Scient always had a very great quality of clients as well as good capability. But somehow the growth volatility on an organic basis Y-o-Y has not been so great and there are no issue in terms of predictability of the growth at the start of the year and what we deliver at the end-of-the year. So how do you see this situation and what are the corrective steps you are looking to repair this side of the predictability?
Sukamal Banerjee
Sure. Thanks for the question. I think, yes, there is, as I mentioned in my commentary also that there is some near-term work to be done with regards to execution and this is definitely one of those areas of focus. I think it’s from a it’s much more difficult to build client base and competency and easier, I’m not saying it’s easy to build a business rhythm with both from a sales and delivery perspective. So it is something which we will be working on together to make sure that given the current environment, irrespective of where the number goes that we are able to provide that stability and predictability in terms of what our business outlook looks like. So to answer your question, it is an area of work that has been identified and work is in-progress as we speak.
Sandeep Shah
Okay. Okay. So you are looking to restructure some of the leadership team or do you believe there won’t be major overhaul in terms of the leadership? It would be more to do with our increased focus on execution and the periodic review.
Krishna Bodanapu
Can you hear us?
Sandeep Shah
I can hear you. You can hear me.
Operator
Can you please? Operator, are we on the call? Yes, sir, we can hear you can you hear us? I can hear you, sir.
Krishna Bodanapu
Am I audible?
Operator
Now you are here. Please go ahead.
Sandeep Shah
Okay, okay. In terms of the overall And restructuring, sir, are you expecting some change in leadership or churning of portfolio needs to happen or it’s more execution focus without any major overall in the growth strategy ahead
Krishna Bodanapu
Yeah I think first and foremost, it’s a focus on execution. I will reserve comments at this point in time about any future changes that we may have to do but at the same time, there are areas of focus that we need to bring in which the organization doesn’t have, if I may call-out one of them like partnerships and ecosystem. So there will be leadership brought in, new leadership brought in to address some of these areas which needs attention. But in terms of right now, what we are focusing on is to focus on execution and in parallel, we are working on making sure that we can define our strategic roadmap, which we can work on for the next two to three years once it’s in case.
Sandeep Shah
Okay. Okay. And Krishna, sir, just a follow-up in terms of your opening remark, you called out that the month of March has been a negative surprise. So is it fair to assume it will have a full-quarter impact in the first-quarter and even first-quarter, we could be flat or declining on a Q1 value. And in that scenario, the full-year positive growth or a flattish growth could be a daunting task. Is it the right way of looking at it?
Krishna Bodanapu
So I think in all, there will be some of that impact that will be felt in Q1. I think — again, I just want to reiterate that it’s not something that’s a very significant and a sustained impact. I think it was really a few projects that got pulled out or got put on-hold to start execution on, etc. So I’ll say, there will be an impact on-Q1.
Again, I will — if you — pardon me, I will again reiterate that it’s not a major or a massive impact, it is an impact. But having said that, I think to the point earlier also, we just want to be cautious on how we look at the year ahead. So I don’t want to comment on the — on the whole year at the moment and that’s why, or I think in all fairness, I should give or we should give Sukumal the time to get a good grip on not just the business, but also how we do forecasting and how we do budgets in the business. So in that context, I’d say — I just want to say, yes, there will be an impact in Q1, but not a significant or a crisis level impact for sure. There will be a little bit of an impact. But from a year perspective, I would rather not comment because I’d rather that Sukumar gets his handle on the operations and again, no secret, our ability to forecast in the last year or so has been a bit of a challenge.
So I don’t want to forecast when I’m not confident that we’ve overcome that forecasting challenge. But from a business perspective, if I look at what our clients are telling us, if I look at our pipeline, if I look at the confidence of the sales, I’m not oversee worried on how the year will pan-out.
Sandeep Shah
Okay. And just a follow-up. Can you give some commentary segment-wise or industry-wise in terms of EET demand entering FY ’26 because tariff may lead to a supply-chain disruption in many of your verticals where you focus. So will it lead to delay in decision-making in many of the sectors?
So can you brief in terms of the growth outlook across most of your industry segment? And second, on margin, Pravatar, sir, just wanted to understand last-time you were seeing by Q4 of FY ’26, we can reach back to closer to 16% kind of a margin, which we want to sustain. So whether that assumption still remains true or it has been postponed further because of the macroeconomic issues.
Sukamal Banerjee
So I’ll take the first part, which is in terms of sub-segment-wise momentum. We definitely have some of the areas which has grown healthily in the last year. I’ll call-out healthcare as one of them. So definitely, it’s an area where we have seen momentum. We have seen growth in some of the other segments as well like automotive, like Krishna mentioned some time back. So in terms of going into FY ’26, we have a few segments which are coming in with momentum.
However, I would like to add that this is a time where there is a degree of uncertainty and will it play-out exactly the same way in terms of how we close FY ’25 into FY ’26. And while we are reasonably confident, but we cannot say for sure, it will need some work and some more time for us to be able to talk specifically about segments and their growth.?
Prabhakar Atla
But on the question of margin, three things I’ll say. The first is, pardon my repetition of what I said, the cost management framework that we had was very effective for us in FY ’25 and also in FY ’24, as you know. The second thing I’ll say is that this — we intend to continue with hikes to our colleagues and associates, which is what we will do in FY ’26. The third thing I’ll say is that we’ll be lot more prudent and focused on investments we will make in the current year towards outcomes.
Now what these three things will mean for us in FY ’26 in the context of how Q4 has played out is this that previously we said that we will touch 16% sometime in the next 12 months, that’s what we said in January. But we may have to recalibrate this to touching and even staying steady at 15% over the next 24 months. This is the current outlook, but as we navigate the following quarters, we will see what further updates and upgrades we can get to the margin trajectory.
Sandeep Shah
Thank you. So is it fair to assume now we are looking at 15% as a margin target over the next 24 months versus 16% earlier?
Prabhakar Atla
And all we are saying is this that these three things, we will manage the cost, the wage hikes and the investments. And we will look at it 24 months timeframe to stabilize the margin trajectory at a number that is appropriate for the growth that we will deliver.
Sandeep Shah
So thanks and all the best.
Operator
Thank you. The next question is from the line of from Ambit Capital. Please go-ahead.
Moez Chandani
Yeah. Hi, thank you for taking my question. So I wanted to discuss on the connectivity and the new growth areas because both of them have seen a sharp decline this quarter. So was that also just largely the macro impact in the latter part of the quarter? Or was there something that you saw throughout the entirety of Q4? And has there been any incremental improvement here in the first three, four weeks of the new quarter.
Sukamal Banerjee
Okay. So I think in terms of connectivity and new growth area, yes, I think we saw broad-based uncertainty in the month of March. So there is an impact for sure. In terms of the first three, four weeks, it is potty at this point in time to call-out specific trends. And that is one of the reasons we — I said earlier, we’re going to stop guidance for the time-being. So I think the way we should think about is that what Krishna already mentioned that there are challenges which are there in sports and tacticals, which does impact numbers. And in an environment where demand is there, but it’s not robust demand, obviously, it’s having impact on a quarter-on-quarter basis.
Moez Chandani
Sure. Understood.
Krishna Bodanapu
And then you also add there. Yeah. Let me also add to this to what Sukumal said. There are the six large deals we won in Q4, two were from aerospace and two are in communications.
Moez Chandani
Sure. Sure, understood. And then I also see a very strong cash balance right now, which is close to about INR1,300 crores. So what are the plans for this? Is it largely for the semiconductor business or are there any other plans that you also have with this cash balance? And also with very strong cash generation, you would think — I would think you would continue adding to this cash balance in the near-future as well?
Krishna Bodanapu
So I’ll say that there are two elements to it. One is the — of course, we want to make sure that we continue the healthy cash generation that’s been even in some difficult times in the past, we’ve always generated cash as a business and we will continue to focus on that. So to your point, yes, we will — I see that the cash piece will continue to be quite strong. And as you know, we also did a lot of work-in terms of reducing our capex spend, which at one point was almost 3% of our revenue. So we’ll continue to generate some good — we’ll continue to generate good, strong cash.
There’s two elements. One, of course, is on the usage of cash. One, of course, is the dividend that we paid out and we understand there is an obligation on payback to the shareholders and that has happened. The Board also has taken a decision to review the dividend policy to make sure that we are investing and have enough cash available to support growth, which we’ll come back with when — when that happens. But more importantly, I’ll say, one is the semiconductor business and two is, I think at least in the last six to eight weeks in a lot of conversations with Sukumal, I feel very confident that we now have a good handle on what are the elements of our portfolio that have to be enhanced and where an inorganic play could come in to enhance these elements of our portfolio. As you know , our customers respect us for the capability that we’ve built-in engineering in the domain and so on and so forth. Yes, there are some gaps in terms of our competence on technology, especially some of the emerging technologies. So we will continue to look at ways to enhance our portfolio using M&A and the use of the cash will also be for that. Of course, it’s prefer a question on M&A. I just say as with M&A, as you know, it’s too early to talk about any specifics and the only right time to talk about the specific M&A is when it happens. But I will just say that we are very, very focused on — again, it’s a great opportunity to enhance our portfolio and plug-in some gaps that we have in our portfolio, which we will be looking for. Sure. And of course, the semiconductor business will also require cash. And like I said, we’re seeing some very, very strong inbound interest from customers. So we’ll also need — we’ll also put that to good use.
Moez Chandani
Got it. And Sukamil also mentioned something about increasing your focus on GCCs. So can I get a sense or little more details in terms of what we’re doing in terms of working with the GCCs and what’s the revenue and margin profile of some of these projects that we’re doing?
Krishna Bodanapu
Sure, that’s a very good question. I think first and foremost, we now have a local leader based out of India focused on GCC, somebody who comes with established credentials in the market working with GCCs for a period of time and which extends to couple of decades. So somebody who understands the market very well, who understands the needs of the market very well.
And we have aligned many of our accounts, which were largely GCC centric to this business unit and making sure that it operates as a independent business unit given that if not 100% — close to 100% of the revenues are actually being generated from the GCC and decision-making in the GCC. In terms of margin, when it comes to our EBIT and we would ensure that the way we are operating and managing this business that our EBIT does not get diluted because of this. There might be different mechanisms in terms of how we price and hence what gross margin we generate. But we definitely will work towards making sure that the overheads that we invest into this business is definitely significantly lower than the overage we have to do in terms of investment from a geography geography-based business. So we will ensure that EBIT is not diluted from this business.
Moez Chandani
All right, understood. Thank you and best of luck.
Sukamal Banerjee
Thank you.
Operator
Thank you. The next question is from the line of Silab from Morgan Stanley. Please go-ahead.
Sulabh Govila
Yeah, hi. Thanks for the opportunity. My first question is more of a clarification. So Krishna, just wanted to check, maybe you know, I could not hear it correctly. But in the — in the presentation, we mentioned that we expect the challenges or the uncertainties to last at least through the first-half of FY ’26. So while in the comments that were made in the opening remarks, I heard that it is only 1Q. So just wanted to check what should we consider?.
Krishna Bodanapu
I think it’s just prudent to start with 1Q. I think it’s too early right now, as you know, with uncertainties, the nature of uncertainty is it’s hard to predict. So I’d say, I definitely say in 1Q, we do have some challenges and uncertainties. But again, nothing to the level that we should be very concerned about. Yeah, the world is what it is and we just need to work-through. So I’d say we’ll start with — or I would imagine that through the quarter, things will stabilize at least from a macro perspective, from a company perspective, I’m not too worried about. So I’d say it’s more Q1 issue to start with. If that continues, we’ll come back and let you know.
Sulabh Govila
Okay. Okay, understood. And the second is that this process of stopping the guidance, just wanted to get clarity, is this more temporary in nature or it’s just going to be a permanent phenomenon from here on? And if it’s temporary, then how much time should we expect that process to get back?,
Sukamal Banerjee
Hi, this so the guidance stopping we are doing is temporary. We will come back as to when we able to restate that.
Krishna Bodanapu
If I may just comment on that from a Board perspective. I think the Board wanted to make sure that Sukumal has enough time before he can really comment and more than comment that commit on the business. I think in all fairness, we just need a little bit of time to bring that stability on how Sukumal is able to understand and articulate the nuances of our business. But again, we’re coming off of a place where we did not have the greatest — or we do not have the greatest track-record in terms of giving guidance. Therefore, we thought it was best or the Board — sorry, I’d say this was something that the Board also strongly recommended to us to Sukumal, and me. So I think we just want to step-back — just get back — step-back to Sukumal gets a complete handle, so we can be a lot more sharp and focused on the guidance or the range.
Sulabh Govila
Understood. Very clear. And then you know when I look at numbers for Q4, the segmental performance both from a vertical standpoint and geography. While from a vertical standpoint, we’ve degrown in most of the verticals except sustainability. From a geographical standpoint, most of the decline has come in from Asia. So just trying to understand are some nuances here just some clarity there would be very helpful. Thank you.
Prabhakar Atla
So, structurally, what you say is right. The impact was felt of the macro across all geographies. We were expecting to grow a lot more in North-America than what you’ve seen in the current numbers. That’s how it played out. Some part of the change in APAC was structural to that particular quarter, but otherwise, the growth in North-America was muted compared to what we thought it could be
Sulabh Govila
Understood. Understood. And if I could also check, from a top client profile perspective, top-five clients particularly, are you seeing any sort of a client-specific issue that you would want to highlight at this point in time?,
Prabhakar Atla
Not at this point in time. Actually, if any, the top-five customers grew by 4.5% year-on-year and the top-10 clients grew by about 9% year-on-year currently. So if any, this represents a very strong platform for us like Krishna spoke before and later that the client confidence, especially in top-lines remain the same way it is in what we do for them and what they expect us to do in future.
Sulabh Govila
So there is — currently there is no impact on-top five clients that you expect in the coming quarters.
Prabhakar Atla
So the impact was broad-based across the spectrum, but all I’m saying is on a full-year basis, we still had a strong growth in top-five and top-10 clients for last year.
Krishna Bodanapu
And I think to just add to that, I don’t see that there’s any structural change because I think especially in the last six-weeks, we spoke to all of the top-five as a part of introducing Sukumar and I think it’s quite clear that there isn’t a structural change. I think what has happened is in May with all the confusion, a lot of things are side trailed or sidetracked. But I think in general, at least I feel quite confident having that conversation along with that we are in a very strong place with all the five.
Sukamal Banerjee
And to further quantify that of the six large deals we have won, three came from our top-10 clients in Q4.
Sulabh Govila
Understood. Thanks for taking my questions.
Operator
Thank you. The next question is from the line of from Asian Market Securities. Please go-ahead.
Shradha Agrawal
Yeah, hi, welcome, Fukunal, and thanks for taking my questions. You indicated that 1Q would be soft, but generally we see seasonality of weakness in sustainability because of holiday in Europe. So do you expect that seasonality to play-out in this year as well? And given that you expect 2Q to be equally weak as of versus 1Q?
Sukamal Banerjee
Yeah. So I think it’s too early to talk about Q2, but you are right that there is a European holiday which plays into our numbers for Q2 and we have to work now to make sure that we work on mitigating it to the extent possible. So I would say that let’s stay with the commentary that Krishna has already mentioned about Q1. And given the decision we have taken on stopping guidance, I think we probably should leave it where we have left — I mean, mentioned so-far in terms of our commentary.
Shradha Agrawal
And on connectivity Connectivity, I understand that markets have changed quite a bit in the last few weeks. But during 3Q earnings call, you had suggested that we expect connectivity to grow in the second-half of ’26 based on the order book that you had in-hand and the execution of that was — was planned for second-half. So do you expect any defer or delay in execution of those deals that have already been awarded to in communications?
Krishna Bodanapu
I think we don’t see any major change in what our customers are looking at. I think the deals that have been awarded, there have been some timeline issues or timing issues. But in general, we see that the deals that have been awarded, et-cetera are continuing. I think we also see a good amount of fiber that will continue to be designed and rolled-out at least for the next couple of years. So we might have a timing in there, but I don’t see the shipment
Sukamal Banerjee
And could we give some color, especially with regards to March as well as to an extent Q1, we were renewing our contract with one of our major customers in connectivity, which has happened. And during that process, there was definitely some slowdown of business award — business being — new business being awarded. I think we are over that now with the contract being signed in April.
Shradha Agrawal
Thank you. And just if I heard it right, you mentioned that you are cutting down on the dividend payout. So any number that we would be looking at for the new dividend payout?
Krishna Bodanapu
No, no, I just want to say for right now, we hold with the policy. I’ll just — the Board has — will review that during the course of the year. Again, that will only happen in conjunction with our ability to invest and grow. So it’s a bit of a — or we first need to also understand that side of the equation because like I mentioned earlier, I mean, one of the great things about our business is we are a very, very solid cash-generating business. So any adjustment as they — excuse me, any adjustment that we will make to dividend will really be so that we can — we see an opportunity immediately to invest that cash, otherwise, we wouldn’t do that. So my point is, the Board is very supportive of all initiatives organic, inorganic. And the Board is also very cognizant that they will make available to us the capital to make the investment. But any adjustment to the dividend policy will only happen when those investments are.
Shradha Agrawal
Got it. Thank you. Thanks, Krishni, and all the best.
Krishna Bodanapu
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr Krishna for closing comments.
Krishna Bodanapu
Thank you very much and ladies and gentlemen, thank you so much for being here this afternoon with us. I understand that today is a busy day, so I really greatly appreciate you taking the time to speak to us. As I said, while Q4 was a bit of a challenging quarter towards the end and of course, a tad lower than what we had originally anticipated. I just want to reiterate that the business continues to be very strong. There are — and I’m also very proud and happy and very, very eagerly anticipating Sukumar’s role as the CEO of Science because as you’ve already heard from him, Sukumar has a great understanding of the business, has a great understanding of the technology business and the engineering business.
But more importantly, I’m very confident that Sukumal has a good understanding of some of the challenges that client faces that need to be addressed, but more importantly of the strengths of the organization because we are still one of the largest engineering, one of the most highly-regarded engineering and technology providers in the world and that is because we deliver a great service to our customers.
So I’m very confident that Sukumar will use that platform to significantly grow the business and significantly accelerate not just the strategy, but also the numbers. It will take a little bit of time. Again, I do want to be very that it’s not an issue of changing strategy or changing attack. It’s really an issue of just executing more diligently. So that means that the time is very short. We just need a little bit of time, but that’s not a huge amount of time in the grand scheme of things.
But I am confident where we are and I’m also very confident that we will bring back into a very strong growth mode in the coming quarters. So I just want to make sure that we commit — or sorry that we communicate the confidence that the leadership team, I and the Board have in the business. So thank you very much for your support. Again, if there’s any specific questions, we’re happy to answer them later. But thank you and we will speak again next quarter. Thank you very much.
Operator
Thank you. On behalf of Scient Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.