R Systems International Limited (NSE: RSYSTEMS) Q1 2026 Earnings Call dated Aug. 14, 2025
Corporate Participants:
Unidentified Speaker
Avirag Jain — Chief Operating Officer
Kumar Gaurav — Vice President
Nitesh Bansal — Managing Director and Chief Executive Officer
Nand Sardana — Chief Financial Officer
Analysts:
Unidentified Participant
Vinay Menon — Analyst
Sandeep Shah — Analyst
Varun Kulkarni — Analyst
Rajesh Sharma — Analyst
Mihir Manohar — Analyst
Nikhil Poptani — Analyst
Presentation:
operator
The conference is now being recorded. Foreign.
Avirag Jain — Chief Operating Officer
Ladies and gentlemen, good day and welcome to the R Systems QIFI25 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your restaurant phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Kumar. Thank you. And over to you sir.
Kumar Gaurav — Vice President
Thank you, Aviraj. I welcome all participants to our system. Quarter two 2025 earning conference call. Since our system follows the calendar year as its financial year April to June, quarter is quarter two for us. We have today with us Nitesh Benson, Managing Director and CEO CFOR Systems. We have shared the investor presentation late evening last night as well as uploaded on company and stock exchange websites. Hope all of you have received that. We’ll start the call with opening remark on the performance of the company by Nitesh followed by financial overview by Nan. Thereafter we have a closure statement by Nitesh.
Subsequently we’ll open up for a Q and A session. Before I hand over, let me read out the customary disclaimer statement on behalf of the company. Investors are cautioned that this presentation contains certain forward looking statement that involves risks and uncertainties. Company undertakes no public obligation to update or revise such statements. These statements may undergo revision because of new information, future event or otherwise actual result. Performance achievement could differ from those expressed or implied in such forward looking statements. Now I am handing over to Nitesh for his opening comment. Thank you. Over to you sir.
Nitesh Bansal — Managing Director and Chief Executive Officer
Hi, Good morning everyone. Thanks Kumar once again. Welcome and thanks for joining us for the earnings call for the second quarter 2025. Always a pleasure interacting with all of you. So I will start off with. And for those who are following the slides, this is slide number four with the financial performance of Q2.25. Very happy to report that we ended second quarter with a revenue of 462 crore rupees or US dollars 54 million dollars which is a quarter on quarter growth of about 4.4% in Indian rupees terms and 5.6% in US dollar terms. The same revenue year over year is about 6.9% increase in rupees term and 4.2% in US dollar terms.
We reported an EBITDA of about 79.7 crore rupees or $9.3 million which is an increase year over year increase of 11.7%. Our adjusted net profit stood at 46.4 crore rupees or 5.4 million US dollars. So if you look at quarter on quarter, the EBITDA as a percentage has grown from 16.5% in the same quarter last year to 17.3% this quarter which is almost similar to the quarter the last quarter which is Q1 17.4 or 17.3% this quarter. And this is adjusted EBITDA without considering the or before considering the RSU costs for RSU granted to the employees.
If we look at the adjusted EBITDA bridge we had 76.8 crore rupees of adjusted EBITDA in Q1 we got another 7.9 crores out of our standard operations, lost about 2 crores in exchange impact, another 2.9 crores because of the increment impact for employee salaries. The increments were affected during the quarter resulting in a total of 79.7 crore rupees of adjusted EBITDA. Moving towards since this is also a half year providing the H1 numbers, we finished the first half at 904.5 crore rupees or 105.1 million dollars which is a year over year increase of 6.6% in rupees terms or 3.1% in US dollar terms.
The adjusted EBITDA stood at 156.6 crore rupees or 18.2 million dollars which is a 19.2% year over year increase in rupee terms of 15.3%. In US dollar terms the adjusted net profit stood at 89.8 crore rupees or 10.4 million dollars. From a comparison year over year perspective, last year H1 was 15.5% EBITDA percentage versus 17.3% in this first half this year. Looking at key data, total equity attributable to shareholders stood at 692.5 crore rupees, cash and bank balances at 203.3 crores and Arkansas and unbilled at 427.9 crore rupees. Looking at the financial trends over the last eight quarters, you know, except for a one time impact, one time revenue that we got in Q3 of 23 look at the last quarters.
It has been a steady growth quarter over quarter. We have grown both in terms of revenue as well as EBITDA percentage and hitting 462 crore rupees or 17 and a 17.3% EBITDA during this quarter. So that you know in as we have talked about in the previous earnings calls as well we continue to build the momentum, a positive momentum, giving us the platform to be able to continue to grow as we move forward. We look at the margin and EPS analysis for this quarter the revenue stood at 462 crores as compared to 432 crores in the same quarter last year which has 6.9% growth or 442.5 crores.
In Q1 which is a 4.4% growth. In rupee terms the adjusted EBITDA stood at 79.7 crores compared to 71.4 crores in the same quarter last Year. That’s 11.7% growth or in terms of percentage 17.3% versus 16.5% which is a 74bps growth year over year. Compared to the Q1 numbers of adjusted EBITDA of 76.8 crores, this is a 3.8% growth in adjusted EBITDA over the last quarter. From a PAT perspective, our adjusted PAT came to 46.4 crore rupees in this quarter compared to 30.3 crores in the same quarter last year which is a 53.4% increase year over year.
For Q1 the PAT stood at 43.4 crores which is a 7.1% increase quarter over quarter. That results in our adjusted basic EPS of 3.9 compared to 2.6 in the same quarter last year which is adjusted eps growth of 53.3%. All these numbers are adjusted because we have excluded the RSU expense as a non recurring item net of tax. The margin mean EPS analysis on a half year basis revenue stood at 904.5 crores compared to 848.7 crores in H1 last year which is a 6.6% growth EBITDA adjusted EBITDA stored at 156.6 crores versus 131.4 crores last year H1 which is a 19.2% growth and adjusted PACS were at 89.8 crores compared to 62.1 crores last year which is a 44.6% growth.
Looking at the operating metrics, our operating metrics actually have remained largely the same. From a contribution by geography perspective, Americas or North America remains the largest geography we continue to see about 74 it was 74.8 the same at 74.9. So just about 75% of our business coming from North America. We stay bullish on the North America India corridor which is the highest revenue driver for pretty much all services companies but definitely for us. Europe continues to contribute between 8.9 to 8.8% so not much movement. Southeast Asia continues to manage the 12.9% contribution to revenues and India and others making up 2.3 and 1.1% respectively.
From a client concentration perspective, our top 10 clients continue to give 24.6% so just under 25% of revenue with our top client contributing 6.1%. Again no major movement there, top three clients 13.1%, it’s 10 basis points increase and top five clients given 17.3%. Our utilization percentage though from the graph it may look slightly down but in you know we’ve basically maintained high utilization of 82 point some percentage now which is essentially 80 basis points lower than what we achieved at the peak of 83.8 3.4% if I remember it right.
Let me just quickly look at it. 83.8% was at the peak. We’ve done 82.6% this quarter and DSO which we have normally maintained in between 62 to 64 days, gone up to 68 days. But this is not a concern, this is a one off simply because we rolled out a global ERP solution for the company during the quarter and as the first month after go live with all the projects, confirmations and billings that have to happen on a new system. There was a one time delay in billing that happened this quarter and this will get arrested as we go forward. So operating metrics remain fairly tight and we are very very confident that we continue to operate effectively and leverage our operating efficiencies towards both growth as well as strong margin performance.
Looking at some qualitative commentary building for the future before I hand over to Nanji for a detailed financial commentary as well. In our go to market perspective we have improved our channel partnerships with aws, Azure and Databricks including our eligibility for E S funding from Microsoft across seven countries and five competencies. This continues to become a stronger channel for us to drive growth, win more deals and get more sizable deals as well as we entered into a partnership with Maverick for overall AI cost governance. As many of you would know that as increased adoption of AI takes place, the cost to operate AI is a major topic and major concern because it escalates very quickly and Maverick is a leader in providing technology solutions in that space and we partnered with them to provide services and offerings in that space.
From further from offerings and positioning perspective, we upgraded our finops positioning because including a Maverick solution because we were doing cloud finops and now we can do cloud and AI cost governance using our FinOps tools as well as Maverick as a partner, we have significantly increased our focus on agentic AI offerings across vertical and horizontal landscapes which is based on our deep expertise of process areas across domains. From a delivery priorities perspective, we have seen productive deployment of multiple genai tools including Copilot, Cursor and others across significant percentage of our projects that we are delivering today and we’re beginning to see client endorsements and appreciation on the level of efficiencies being delivered.
As you would remember we started Mexico operations during the last quarter of last year. Over the course of last two quarters Mexico has been scaling up steadily with now five active clients that are getting services delivered from Mexico and are engaged with Mexico delivery operations. We did not do any new leadership hirings during the quarter as most of our leadership hirings have actually been done or offers have already been rolled out and the leaders that we onboarded during Q4 and Q1 have become well assimilated and we can see how they are already contributing significantly towards our growth agenda.
I will probably take a pause over here and hand over to Nanji to provide detailed financial analysis before I go into some key wins and maybe wrapping up message.
Nand Sardana — Chief Financial Officer
Thank you Niteshi. Good morning to all. Thank you everybody for attending the call. I’ll give brief analysis our Quarter two performance for those referring to investor presentation, this is the last page on the slide. Revenue for the quarter was rupees 462 crores or 54 million dollar as against rupees 442.5 crores or 51.1 million dollars last quarter and rupees 432 crore or 51.8 million dollars in the same quarter last year. Quarter on quarter growth of 5.6% in USD terms and 4.4% in rupee terms. We had all round growth in business units in this quarter supported by large deal closers and additional billing days.
Our long term investment in data, AI, cloud and automation is helping us in creating differentiator and winning sizable deals. The Gross margin was 36% compared to 36.7% last quarter and 35.5% same quarter last year. We added 190 plus associates over last quarter to support new wins strong sales along with investment in data and AI. It has impacted our utilization for the quarter and gross margin percentage. We are committed for efficient operations and maintaining the margins. SGN expenses increased by Rupees 1 crore from Rupees 85.6 crore in last quarter to 86.6 crore this quarter. This is mainly due to higher sales and marketing spend.
The adjusted EBITDA was 17.3% compared to 17.4% last quarter and 16.5% in the same quarter last year. The company has been able to report consistent margin despite investment in new technologies and sales and marketing activities. The RSU cost under management incentive plan is rupees 4.9 crore compared to rupees 6.2 crore last quarter. The reduction is due to 2 up during the quarter. EBITDA net of RSU expense is 16.2% as against 16% last quarter. Getting down to depreciation amortization, the total expense was rupees 15.8 crore compared to 14.6 crore last quarter. This include rupees 6.3 crore for intangible capitalized on account of valuation and scale was acquisition.
The depreciation expense is higher due implementation of new ERP plus additions during the quarter. Further this quarter we had a non recognized income of Rs. 49 crore mainly on account of profit on sale of land, building and certain other assets located at company Noida office. Interest expense is rupees 2.1 crore compared to rupees 1.5 crore last quarter. Other income was rupees 1.4 crore compared to rupees 2.3 crore last quarter. This quarter we had an Exchange loss of rupees 35 lakh compared to exchange gain of rupees 71 lakh last quarter mainly on mark to market or forward covers.
Further the other income comprise of interest income of Rupees 97 lakh this quarter compared to Rupees 1.1 crore last quarter. During the quarter the average rate for USD was 85.56 and for Euro 96.99 as against last quarter average of 86.58 for USD and 91.06 for 0. These are the two main currencies for our system. As at quarter end we have total Forward cover of 36.75 million dollar with average rate of 86.77 and Euro cover of 1.64 million with average rate of rupees 96.05 which have already been marked to market at closing date of 06-30-2025. Our tax expense was Rupees 23.3 crores this quarter as against Rupees 18.1 crore last quarter.
Our effective tax rate is around 24% due to capital gain taxation on sale of building. Excluding this our effective tax rate is around 28%. Net profit after tax was rupees 75.8 crore or $8.8 million compared to rupees 38.5 crore or $4.5 million last quarter. However, adjusted RSU expense and non record expenses, the net profit after tax for Q2 was 46.4 crore are $5.4 million as against 43.4 crore or $5 million in Q1.25. Adjusted EPS was 3.92 in Q2.25 as against 3.66 last quarter and 2.56 in Q4.24. Getting down to assets and the balance sheet, the total receivable including unbilled at the end of quarter worth 428crore compared to 340crores at the end of 12-31-2024.
DSO is 68 days as against 61 days as at 12-31-24. This is mainly due to timing, reason and start of the global erp. As Nileshi just now explains, it will be normalized in a quarter or so. Our cash and bank balance net of short term borrowing as a quarter was rupees 203 crores compared to rupees 196 crore as in 24-12-31. We have been constructing generating cash from the business with this. Let me hand over to Teji for his closing remarks.
Nitesh Bansal — Managing Director and Chief Executive Officer
Thank you. So you know, let me talk about some of the key wins in the quarter and this is the part which I get really excited about because the nature of the wins, the kind of kind of projects that the customers are interesting us with and even you know, the size of those projects all have been giving us quite a lot of encouragement in terms of how we have built our credentials over time with data, AI, cloud and other things and leading to gaining more customer confidence and momentum in the market. So some of the key wins that we’re highlighting one, it’s a leading AI driven work management platform that has partnered with us to strengthen its digital ecosystem by leveraging our digital product engineering data analytics capabilities.
And so this is an organization which has multiple products in doing work management, whether it’s project management, project planning, costing, reporting and a bunch of those things. And these are all platforms that are powered by AI and we are now actually helping them consolidate, enhance, modernize and even build some of the new tools around them, integrating a lot of AI. And data analytics into it.
Second example, a leading Europe based tech company which is actually a subsidiary of a very large, you know, Fortune 100 organization which specializes in so this company specializes in secure data collaboration with automotive ecosystems and they’ve engaged us in their digital transformation journey where we will be involved in putting together the Azure infrastructure, develop a very simplified platform based on Kadina X standards and integrating AI capabilities into their existence system. This is in response to a regulatory framework that European Union is going to implement or is implementing around safety of hazardous materials and the whole discard and waste management side of things, but heavily data driven and AI enabled.
Third is a US based provider of data driven educational solutions. So it’s an edtech platform focused on healthcare which has partnered with us to extend its development capabilities and accelerate product innovation and speed to market. Fifth, we’ve got one of the world’s leading financial institutions, it’s actually one of the global large insurance companies which has partnered with our systems to modernize its reporting infrastructure and we are using generative AI to streamline all the migrations, modernization of reports and accelerating the platform adoption. And last but not the least, a globally renowned beauty and skincare brand has engaged us to implement Microsoft Dynamics based Microsoft Dynamics Business Central and LS Retail solutions to optimize and digitize its end to end business operations with the aim of yielding financial visibility and operational excellence across their enterprise.
And we will be responsible for of course building that solution, rolling it out across their countries wherever they have operations. So all of these indicate larger kind of engagements, more ownership, full end to end and each one of them has elements of integrating a lot of data and AI. They are cloud based and some of them of course also have an element of partnership with Azure and AWS and others that we’ve talked about in the past. Moving on to the last slide, which is usually the summing up and looking ahead type of statements. Last quarter earnings I talked about how we’ve seen large deal momentum build up during Q4 last year and Q1 was very busy responding to those deals, defending the bids and RFPs and winning a few.
We continued that momentum during Q2 as well. We have seen positive volume growth, we have seen positive revenue growth. As a result of that, we have carried out transitions of a couple of those large deals during the quarter and hence that large deal focus and momentum remains very strong and positive for us. We’ve seen significant traction in agentic AI use cases as well as the use of generative AI in ltlc. We were, I think quite early or ahead in the game because we launched our Optima AI workbench last year in August and since then, adding to it all the evidence of productive deployments and the benefits of bringing those best practices to the clients, has started acting as a differentiator and we see that developing that momentum, developing on the agent HI side as well.
If I look at the trends that we’re seeing that are shaping 2025, you know the AI adoption across sectors have significantly accelerated over last six months. Having started the journey in H1 last year, like I said, we have significant advantage visible competition where we are not only being able to talk the AI first language but we are actually able to provide our clients the evidence of having done the implementations, the benefits that those implementations are provided and and the success stories behind it. The deeper and more domain specific agentic AI use cases are being consumed to significantly change the user experience and cost to operate.
And this is we are seeing across sectors and across our clients and our years of rich domain experience coupled with our agent AI framework are setting us apart, really helping us differentiate. And despite the cautious discretionary spending which continues because of all the challenges geopolitical or economic, we are actually seeing very good traction develop on the Data platforms and SaaS platform side. Because data and SaaS platforms continue to build new features and embed more and more AI into their platforms as they strive to stay ahead of their competition. And given our focus on the data and AI side, we again are being able to capture that imagination of our clients and be a party to that journey.
So overall, quite pleased with what we’ve managed to achieve in Q2. As we’ve said, we are continuing to build the momentum and we continue to take it forward as we go along. And that is my last slide, so I’ll pause and open up for Q and A.
Nand Sardana — Chief Financial Officer
Yes Abhirat, we can start the Q and A.
Questions and Answers:
Avirag Jain
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 touchdown 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’ll wait for a moment while the question queue assembles. The first question is from the line of Vinay Menon from Monarch Capital. Please go ahead.
Vinay Menon
Hi sir. Hi. Congratulations on a good set of numbers. Just a few questions on my side. One is that we won six deals this quarter. So what could be the average deal size and what could be the run rate we could look from these new. Clients in the next year?
Nitesh Bansal
Thanks Vinay. Thanks for joining in. Vinay. Large deals as we spoken last time as well, these are typically multimillion dollar deals spread over a couple of years. So you know, without going into specifics of Every single deal. These are deals that will help us, you know, get. I’m sorry, I’m hearing a feedback from the line.
Vinay Menon
Okay, now it’s better. Hello?
Nitesh Bansal
Yeah, yeah, much better, yeah. So when I was saying these are multimillion dollar deals typically spread over more than a year. So you know, the few large deals that we won typically we’ve seen the two or three year deal engagements in these come through. So we are looking at clients who will typically make into, you know, between, you know, two to $5 million clients a year kind of a thing. But again, these are deals that will, you know, there is a committed portion and there is always a uplift that the deals can provide and some of it will be how much uplift we are able to capture, which we will continue to do.
So the upside is quite, quite good. But at the worst case we are talking about creating some million dollar customers out of these last deals.
Vinay Menon
Okay, that helps. And in our annual report we had mentioned that we did like 120/AI projects last year. So how has this year been and what is the basis of those ways? Are we seeing decent size of growth in that?
Nitesh Bansal
So Vinay, we have done over 120 AI projects. We have also added significant case studies in terms of deploying AI and SDLC across our customers. We’ve got probably over you know, 40 or 50 such client case studies and then we are significantly developing are autonomous agents in the agent AI universe. So I think the expansion on AI is rapid and it’s multifold and it is happening across all the dimensions of AI. So this is going to continue to grow and as our customers are adopting it more and more, some of it will actually become regular revenue streams.
So we have obviously turned the page from moving from earlier what was just POCs to paid POCs or pilots, to now actual productive deployments. And I think over the course of the latter part of this year we’ll see a lot of that turn into mainstream revenue. So, you know, absolutely, this will be one of the significant drivers of growth for us.
Vinay Menon
Okay, that gives clarity. So there’s one last question. Is that any update on how discretionary spends are moving? Are we seeing clients, you know, like the smaller startups, you know, who are not spending? Are we seeing any traction there, any kind of movement there?
Nitesh Bansal
You know, it has been a continuous guesswork for a lot of, a lot of people. So I’m not going to look at or try and comment that larger market. I can only comment at the customer set that we’re dealing with, which is A fair representation, I would say. And like I said earlier, the clients who are more platform companies today, whether startups or more established larger enterprises, companies that are serving AS data platforms, SaaS platforms are spending more sure footedly or more aggressively. And because they see a significant immediate benefit of integrating more data pipelines, doing more ML and AI into their platforms, some of the, you know, smaller companies which had niche offerings, they continue to stay, you know, bullish.
But then of course, you know, every company situation is different. So you know, we are seeing some companies redo or re architect their offerings which again means business for us. And there is, there is a, there is an, there is a moment of, you know, just pause and then restart kind of things that happen. But overall I think, you know, discretionary spend should open up. We hope and we wish that it opens up a lot more than it has opened up now. And then we look forward to it.
Vinay Menon
Okay, thank you. I’ll get back into group for more questions. Thank you.
operator
Thank you. The next question is from the line of Deep Modi from iCVirus. Please go ahead.
Sandeep Shah
Yeah, hi, can you hear me?
Nitesh Bansal
Yes, Deep, go ahead.
Sandeep Shah
Yes sir, this is Hadeep Shah, colleague of Deep. Some problems, sorry for that. Congratulations on a great execution. Just wanted to understand based on your earlier comment in the last earnings call, you actually anticipated a pickup in the growth and which you walked the talk. You believe this growth momentum based on the pipeline and deal wins can even continue in the Q3 and Q4 could be better versus earlier years despite furloughs or you believe Q4 may have some amount of headwinds from furloughs.
Nitesh Bansal
So Sandeep, thanks for the question. I think as I said last time, you know, we, you know, we worked consciously and you know, together with our entire, you know, team to make sure that we get, we get better at both, you know, our operations and forecasting, etc. And last quarter when we were talking, we talked about actual deal wins which were coming in and large deals which have, which have naturally due to transition and other things which have a delayed revenue realization. So there was definitely certainty or confidence in building the momentum which we are seeing now.
And I think given that this growth is based on some of the solid wins that we talked about and continuing momentum that we see, I think without really doing a kind of a guidance kind of a thing, we think we are confident that we’ll continue the growth momentum in Q3. See, Q4 will always have some seasonal challenges due to furloughs, you know, both in India, Diwali holidays in US Christmas and New Year, etc. So that will continue. That is a standard. Happens every year. But hopefully if we have the volume momentum with us, perhaps, you know, it will still be positive.
Of course, you know, we will have the furlough impact. But from whatever we are seeing, the pipeline activity, et cetera, we have our fingers crossed and hope to continue to build on the momentum that we have started on.
Sandeep Shah
Yeah, thanks. Thanks for this. So just on the average size of the deal. So if you have to define, if you are measuring that the average size of deal bins now we have since two years back when you joined, is there a drastic difference? Is that cross average $1 million or it’s still hovering between 0.5 to 1 million.
Nitesh Bansal
So the answer to the first part is that the average size of the deal has definitely meaningfully moved and increased. And it’s, you know, it’s meaningful because it is, you know, almost like one and a half or two times what the average used to be. But you know, the difficulty with averages, Sandeep, is that, you know, when the number of deals is very large, the average actually starts getting smaller. So we have won a very large number of deals in the past. So the averages kind of get skewed. We are inching closer to that million dollar mark.
I won’t say that the average has crossed a million dollar yet, but we are. From what it used to be in the past of a few hundred thousand dollars to now, it is significantly more.
Sandeep Shah
Okay, okay. And this last few things in terms of the growth, do you believe the growth is broad based even in a direct channel, outside Blackstone channel clients, or this time the growth is more driven through the client admission which we had through Blackstone Channel?
Nitesh Bansal
No, it is certainly broad based, Sandeep. I mean, as I’ve always maintained, the Blackstone is a very important channel for us because it does give us direct access to a lot of clients. But still the contribution of Blackstone Channel on one hand is great because we’ve got over a dozen clients or actually over 16 clients from Blackstone Channel now. But it still is about, you know, single digit percentage of our revenue. So 90% or plus of our revenue still comes outside the Blackstone channel. And the growth that we’re talking about and the momentum we are kind of banking on is very broad based.
It’s not just broad based from, from a PE channel perspective, it’s also spread across, you know, geographically. Also it’s not only Americas, it’s Americas and Europe and APAC all in Proportion, but it is quite broad based.
Sandeep Shah
Okay. And sir, last thing said, on adjusted EBITDA, we can maintain that margin in CY25, but first half, we are already ahead of that benchmark. So is it fair to assume what we achieved in the first half can be maintained in the second half? And that may again be a second year in a row where margin will improve on adjusted basis. I O Y.
Nitesh Bansal
Sandeep operationally we are performing strongly. We, we continue to make investments and I think as the pace of adoption of AI and these things continue to increase, we will be accelerating our pace of investment as well. We are committed to maintaining the EBITDA level that we had said in high sixteens, etc. But we will, you know, we continue to look at the market and we are not going to be shy of making the investments that are needed. So we’re keeping ourselves, we’re giving ourselves the cushion to invest and whatever, you know, we are not investing obviously gets reflected back in the overall reported ebitda.
So we are confident of managing the and maintaining the EBITDA levels at high sixteens. But anything over 17 is essentially, you know, giving us more cushion to invest and we will continue to do that.
Sandeep Shah
Okay, thanks. We’ll come in the follow up if I have more. All the best.
operator
Thank you. The next question is from the line of Varun Kulkarni from Incarre amc. Please go ahead.
Varun Kulkarni
Hi, good morning sir. Congratulations on a good set of numbers. So just one question from my side. The board has approved a 2000 crore rupee loan. You know, so what would be the specific use of proceeds? And do we have a, you know, a timeline, sort of a timeline mapped out. Also the 275 crore NCD that was approved, or rather approved in the previous month. So what is going to be the use of proceeds of that and also some clarity around the cost of capital. So this is the only question right now.
Nitesh Bansal
So Varun, you know, the 2,000 crore approval is a blanket or enabling provision which basically enables us to raise appropriate financing whenever we need specifically, you know, for the purpose of acquisition and being able to make an appropriate inorganic move in the market. As you know, we’ve always stated that both organic and inorganic growth are the drivers or part of the strategic agenda that we follow. We constantly continue to look at possible targets in the market and accordingly. And since we were looking for some sizable options as well, having internal preparedness to be able to do a transaction of that kind is the driver to getting that enabling provision in.
The same thing holds good for the for the NCD approval, it’s all basically being ready in the market whenever there is an appropriate target in sight where, which we can move forward with, then we should not have any hindrance. As you know, a lot of these things take a lot of time, procedurally, etc. To get done. So we don’t want to get stuck at that point of time. Whenever we are in a position that we have zeroed in or we have something, obviously that’s something that we will appropriately present to the board, take approvals, shareholder approvals, etc.
Etc. So that will get known. But these are all in being ready in form of being prepared to be able to do that as we, as we look forward from a cost of capital perspective. Actually, let Nanji answer the specific question because you know, that’s where he would have the exact numbers.
Nand Sardana
Sure. So on the cost of it, what. What exactly is your query?
Varun Kulkarni
No, so the. Simply put, so what would be the average interest cost? So in terms of like a percentage, what do you think would be.
Nand Sardana
Sure, see we have working capital facilities. The average rate of interest is around 99.25%. In fact, the packing credit still comes at 1.5% less. So it will be like 8, 8 and a half percent is the average working capital cost of capital to us at this moment, the NCD and all that. I mean that whenever, you know, that thing happens, we’ll have to negotiate and then get into whatever best we can get.
Varun Kulkarni
Fair enough. And one last question, if I may. So what kind of acquisitions would we be targeting? So primarily in what space would it be, would it be in for AI or anything else that you have in mind at this point of time and in which geography particularly.
Nitesh Bansal
So varun. You know, I think in the past also we’ve said we’ve laid out our acquisition philosophy, if you may say pretty clearly. We are a product engineering and digital transformation service company. So that remains our main swim lane to which we are significantly, you know, concentrating on enhancing our cloud, data and AI capabilities. So our primary targets of acquisitions remain in product engineering space. Companies focused in that space and their North American business with India delivery remains the kind of primary focus. Having said that, niche companies in data space, AI space or cloud space will be very attractive to us.
We have strategically looked at Latin American delivery, opened our own center. So getting a good delivery location which is out of India, either in Eastern Europe or Latam can also be considered and would be welcome. But primarily America India corridor, product engineering space, niche capabilities, data, AI cloud are the kind of targets that we are very interested in.
Varun Kulkarni
Right, sir. And just one last thing. What would be the size? Do you have a rough ballpark estimate of the size of what would be the size of the target?
Nitesh Bansal
I mean, we’re not limiting ourselves. We obviously don’t want to do something very small unless it’s like really niche and just a tuck in then, you know, those are all special cases. But we do not want to do anything very small because it takes a lot of effort and you know, time, etc. And we are given our intentions and the backing of Blackstone and everything, we are not afraid of the size. Obviously we want it to be digestible. So we’re not going to do something which is larger than us. But having said that, we are open to doing sizable acquisition if it makes sense.
Varun Kulkarni
Sure. Yeah. That’s it. From my side. Thank you and congratulations once again.
operator
Thank you. The next question is from the line of Rajesh from Chris Capital. Please go ahead.
Rajesh Sharma
Yeah, good morning. Am I audible?
Nitesh Bansal
Yes.
Rajesh Sharma
Yeah. So my question is about the line. Item for an CSO hiring expense for this quarterly P and L. Could you. Please share any status update regarding the. Same as to what has he joined? Has there offer been rolled out and. By when should one expect some progress there?
Nitesh Bansal
Yeah, so yeah, we have, we had a, you know, search out for chief sales officer. We have identified a candidate rolled out an offer negotiating and hoping that the candidate would accept and join sometime in this quarter. And sir, this quarter has seen an increase in headcount coupled with a dip in utilization. So when should the pickup, you know, start happening in terms of the utilization, the headcount that we’ve added, I think the two are, you know, while the numbers you’re saying is right, but I guess they have to be seen in a different light.
The decrease in utilization is twofold. One is conscious investments in the AI space that we continue to make, which is a couple of basis points of utilization. But more importantly, large deal transitions where you do carry out a long, you have multiple weeks of transition before the actual delivery starts and that impacts utilization temporarily for the quarter. So the volume uptake is obviously real, which is what is resulting in revenue growth. There is a dip in utilization due to, due to free transition. And I think all of that will start getting reflected. I mean it’s already reflected now in terms of.
It came into the books in Q2 itself, but obviously will come in its full force in Q3.
Rajesh Sharma
Thanks a lot. That’s all from mine.
operator
Thank you. The next question is from the line of Mihir Manohar from Carnelian Asset Management. Please go ahead. Mr. Mehid, your line has been unmuted. Please go ahead with your question.
Mihir Manohar
Hello? Hi. Am I audible?
Nitesh Bansal
Yeah, please go ahead.
Mihir Manohar
Yeah, sure. Sir, thanks for giving the opportunity and congratulations on great set of numbers. I mean 4% growth in this kind of environment is clearly quite commendable. Wanted to understand on the leakage side, sir, has the leakage come down, let’s say over the last three months, last six months?
Nitesh Bansal
Sameer, has it come down? Yes, because you know, again it’s, it’s all comparative but given the nature of our business, which is highly discretionary, project based, etc. We’ll always have some churn. But I think, you know, we have been far more steady in the last 2 quarters than we were in, let’s say the 2 quarters prior to that. And we continue to watch our customers closely. I think some of our account management efforts in deploying dedicated resources, managing the clients has given us more early warning system and signals so as to understand when we are seeing some of those challenges.
It’s not completely, it will never completely go away because we are obviously based on discretionary spend but we probably are getting better at understanding, anticipating and managing it is the way I would put it.
Mihir Manohar
Understood, sure. The fair point, sir, what the last call we had mentioned on the GCC side, there were a couple of half a dozen inquiries which was there on the gcc. So any progress around that, any materialization on the GCC side and has the inquiry pipeline on GCC gone up?
Mihir Manohar
So the inquiry side in fact also because not just inquiries, we had formally actually started going after the GCCs both for the setup and scale side of businesses. We have, you know, actively, you know, on that go to market, we’ve been actively working so we’ve seen a lot more traction in that space. There are several GCCs which are interested in not just understanding but adopting a lot of AI tools within their setups to be able to bring the kind of efficiency and scale that we are able to deliver directly to our clients. So there are a bunch of conversations in that space and that continues to play out.
I think while those were probably not part of the significant wins that we announced or that we kind of highlighted, there have been a couple of very decent wins in the space as well. And as it continues to grow and becomes a meaningful part of the revenue, I think you will see maybe some more commentary come out on the same. But we are encouraged by the early traction and I think we continue to see it as a good channel for growth.
Mihir Manohar
Understood, sure. And last question was on the growth during this particular quarter, I mean did it came from isp, Fintech, Healthcare, I mean any specific sector or a vertical which contributed more to the growth or was it more broad based?
Nitesh Bansal
Well, it was largely broad based. But if I were to reflect back on where the large contribution came from, I think that’s reflected partly in my commentary at data and SaaS platform companies, whether in health, education, logistics, serving variety of domains, but ultimately they are Data platforms or SaaS platforms which have significantly enhanced their service offering by integrating AI into their platforms or they are revamping, re architecting the platforms to launch it afresh with the new generation architectures, etc. So those have been probably more significant contributors. Almost all conversations have an element of AI in it, including like I told you about the financial services company where we’re doing the reporting infrastructure migration.
So it’s not really about SaaS platform over there, but it’s like really using AI to rebuild their entire reporting infrastructure and do migration of legacy to the new. So broad based multi sectors. But if there was a common thread, pattern recognition, if you do it would probably be the data and SaaS platform side of things.
Mihir Manohar
Understood. That’s it from my side. Thank you very much.
Nitesh Bansal
Thanks Nir.
operator
Thank you. The next question is from the line of Modi from Icarus. Please go ahead.
Sandeep Shah
Yeah, thanks. Thanks for the opportunities. And we began. I think this kind of growth has been really broad based even in the top 10 clients. Except for revenue from top 4 and top 5 clients. Is there a client specific issue? Because this bucket has to some extent second quarter in a row has been declining. So you foresee any client specific issue in your top 10 clients?
Nitesh Bansal
No, not really. In fact based on the question I’ll probably double click and reanalyze the numbers. But I mean Overall our top 10 clients are contributing approximately the same dollar number and we at least top of mind, I don’t see any issue with any client specific issue. It could just be a, you know, a little bit of a plus one minus one here or there kind of a thing, but not really sandeep. So these clients have stayed fairly solid.
Sandeep Shah
Okay, okay. And sir, if you have to measure the growth in the pipeline and ECB maybe one year or two year back, if you had to share quantitative details, not on absolute terms but as a percentage increase, is it possible to give some color around pipeline growth and the GCD growth maybe now versus one year back?
Nitesh Bansal
We sandeep, we are Obviously, you know, getting, putting, you know, systems in place to get better at tracking these kind of things and hopefully we will be ready. But just to answer your question, on a very, very high level, our overall pipeline has probably improved to become maybe, you know, 1.2, 1.25 to 1.4 times bigger than it used to be. We want to, we want to probably, you know, once, once we have our, let’s say new sales officer or whoever else, you know, people that we are adding, try to make it much bigger. But the most encouraging part of the pipeline always is the average or the kind of deals and the size of the deals that we are going after.
I think the number of deals in that 1 million plus ACV category has more than doubled and that’s the most important metric that we are tracking.
Sandeep Shah
Great, great. It’s good to have deals around data AI as well. But we were also looking to change the growth profile not just from project based kind of a business, but also in terms of managing the product platform, maintaining the product platform. So are you tracking even the annuity percentage of revenue in our growth profile has been improving versus what it used to be and this month, sir, in terms of increase in the other assets, if you look at the cash flow statement, it is largely because of unbilled revenue which may normalize going forward.
Nitesh Bansal
So to answer the first part, tracking and building towards the annuity based revenues or you know, different class of revenues. Yes, we are consciously focused on it, trying to go after, you know, winning those multi year commitments from clients where clients will hand over their entire product portfolios to us for long term support and continuing reduction of technical debt, etc. We’ve seen some early signs of wins. It’s not a percentage large enough for us to kind of track separately. But having said that, the early signs, again, that all starts with a few customers entrusting us and then we’re delivering successfully using that as case studies to win more.
And that’s where I think we are headed. Definitely there is consciousness awareness within the team that we have to do that. There’s a lot more discussion with clients around that area and we are beginning to see some fruits of that from a assets perspective. I believe what you’re saying is right, but I’ll let Nanji actually comment on that. If there is any other component that you would want to highlight.
Nand Sardana
No. Yes, this is due to increase in unbuild. I think this should get normalized. As Diteshi also said, there is a slight increase in DSO also sunbuild Equally has increased. They should get normalized in a quarter also.
Sandeep Shah
Okay, thanks. And all the best.
Nitesh Bansal
Thank you.
operator
Thank you. The next question is from the line of Nikhil from Kizuna Wealth. Please go ahead.
Nikhil Poptani
Yeah, hi sir. Am I Audible?
Nitesh Bansal
Yes, Mr.
Nikhil Poptani
Yes, sir. Thank you for giving me the opportunity and congratulations on a great set of numbers. So my first question is around. Our offshore employee growth has been 5.6% for the quarter. So we still have the large deal pipeline in our process. So are we expecting the same kind of offshore volume growth going ahead in the quarter 3 and quarter 4?
Nitesh Bansal
So we continue to build on the pipeline. Of course, you know, the wins will determine exactly what we are able to achieve. But we are very positive and hopeful that we’ll continue the momentum. I can’t say exactly what percentage, but very confident that we should be able to build on the volume growth we’ve got and continue the. Continue that track.
Nikhil Poptani
That’s great to hear. Now, sir. Now we are already for the H1. We are at approximately $105 million top line. So can we expect to close the year around 220, $230 million top line?
Nitesh Bansal
Your guess is as good as mine. We will continue to push the system and our teams to do as much as possible. Right. And clearly, you know, like I’ve always said, with a little bit of tailwind, you know, we can, we can certainly be on that kind of growth trajectory right now to, you know, one, not possible for me to say this. And because we are, we are obviously, you know, currently doing our Q3 forecasting and those kind of things. And second, you know, deals have a nature. I mean, they’re binary outcomes, right? You win or you don’t win.
So while the pipeline is there and the momentum is there, we’ll have to continue to win and we’ll have to continue to make sure that those projects start in time and we get that volume, capture that volume within the year to be able to get those kind of numbers. But fingers crossed and you know, we should be headed in that direction.
Nikhil Poptani
Okay, so that’s, that’s really great to hear. That’s from my side and congratulations on the base setup number and all the best.
Nitesh Bansal
Thanks.
Nand Sardana
So do we have anybody left otherwise already 111 or. Maybe the last question we can take.
operator
Thank you. The last question for the day is from the line of Meloni from Monarch Network. Please go ahead.
Unidentified Participant
Thank you for the opportunity. So what would be the pace of RSU spend going ahead?
Nitesh Bansal
Can you say pace of meaning, you know, for the RSU expense Go up or go down is what you’re asking.
Unidentified Participant
Yeah, like what would be the run rate or like. Yeah, how would it be moving ahead?
Nitesh Bansal
Nanji, do you want to take that question because.
Nand Sardana
So the expenses for this quarter is 4.9 crore compared to 6.2 crore last quarter. This mainly due to, you know, true up of RSU expenses. You see. I mean we are giving RSU to you know, senior level guys and the important and guys. So I think you can assume that between 5.5 to 6 crore on an average would be the expense for next few quarters.
Unidentified Participant
Okay. And so just one bookkeeping question. How much was the tax outgo for the land of sale that we booked this quarter? For the land sale that we booked this quarter.
Nand Sardana
So it’s a long term capital gain. It’s around 20%. And that is the reason in this quarter our tax expenses is comparatively less because it was at lesser rate. But our broadly the tax as of now is close to 27.5 to 28% as an effective tax rate.
Unidentified Participant
Okay, thank you. Rest of my questions are already answered. Thank you.
Nand Sardana
Thank you. I think we can close now.
operator
Thank you. Ladies and gentlemen. We take the last question for a day and I now hand the conference over to Mr. Nitesh for closing comments.
Nitesh Bansal
Thanks. Thanks. You know, it’s been as usual I think. Thank you for all the questions. It’s been encouraging to hear your comments and forward looking questions. It gives us more things to prepare and we look forward to, you know, talking to all of you again in the next earnings call. And in the meantime, if there are any specific questions you want to reach out on as you’ve done in the past, you know, definitely do that through Bhaskar and to Nanji and then we will definitely try and respond. But thank you again. Thanks for joining. Have a good day.
operator
Thank you on behalf of our systems. That concludes this conference. Thank you for joining us and you may now disconnect your lines.
Kumar Gaurav
Thank you.