Saksoft Limited (NSE: SAKSOFT) The digital transformation specialist maintains double-digit annual growth despite a sequential revenue decline driven by top-tier client spending cuts. Management remains focused on an AI-led strategy to reach long-term revenue targets.
The company announced consolidated operating income of ₹2,507.79 million for the third quarter ended December 31, 2025, representing a 10.6% increase compared to the same period last year. While year-over-year metrics showed improvement, the company experienced a 3.0% sequential revenue decline, which was attributed to reduced spending from its two largest customers. The stock closed the period at a market price of ₹198.95 with a market capitalization of approximately ₹26,371 million.
Earnings Drivers
Quarterly performance was affected by a slowdown in discretionary spending from key clients, which weighed on near-term revenue momentum. During the quarter, the company recorded an exceptional expense of ₹48.65 million linked to the consolidation of Indian labor laws into a unified framework effective November 2025. Saksoft is also progressing with the merger of its wholly owned subsidiary, Augmento Labs Private Limited, as part of efforts to simplify its corporate structure.
Digital Engagements
Saksoft is executing multiple AI-focused initiatives aimed at expanding its digital services portfolio. During the quarter, the company secured a multi-year digital transformation engagement with a U.S.-based carrier, covering enterprise modernization, AI adoption, and cost optimization. It also established a joint AI innovation lab with a technology distributor to deploy AI use cases across sales, IT, and finance functions. In Europe, Saksoft developed a process transformation roadmap for a telecom operator to support an AI-enabled unified command center.
Financial Performance
For the quarter ended December 31, 2025, operating EBITDA stood at ₹453.79 million, a 19.2% increase year-on-year but a 10.4% decline from the previous quarter. Operating EBITDA margins compressed by 148 basis points sequentially to 18.10%. Net profit for the quarter was ₹290.24 million, reflecting a 7.4% year-on-year gain.
Over the nine-month period, revenue rose 17.9% to ₹7,583.46 million, while net profit increased 23.6% to ₹973.39 million. Basic earnings per share (EPS) for the nine-month period reached ₹7.61, up from ₹6.20 in the prior year.
Investment Thesis (Bull vs Bear)
• Bull Case:
- Proponents point to Saksoft’s long-term track record, featuring a 10-year revenue CAGR of 14% and a profit CAGR of 21%.
- The company maintains a strong Return on Equity (ROE) of 27.0% and has successfully expanded its million-dollar client base to 16 accounts.
- Multi-year contracts with established brands continue to provide revenue visibility.
• Bear Case:
- Critics highlight significant client concentration, as 58% of revenue is derived from the top 10 clients.
- The recent 3.0% sequential revenue decline demonstrates vulnerability to budget shifts within this core group.
- Nine-month employee benefit expenses rose to ₹38,093.21 lakhs from ₹30,069.95 lakhs in the previous year, indicating rising operational costs.
Business Outlook & Strategy
Management reaffirmed its “Vision 2030” goal to achieve $500 million in revenue. The strategy focuses on transitioning into an AI-led digital transformation provider through sustained investments in front-end sales teams and senior talent. The company targets clients with annual revenues between $100 million and $3 billion, aiming to provide specialized vertical expertise in areas such as Logistics, Fintech, and Retail.
Demand Landscape
Saksoft operates in the digital engineering and data analytics segment, where demand is shaped by enterprise adoption of artificial intelligence and cloud security solutions. The company highlighted a shift among European clients toward smaller nearshore teams to manage time-zone alignment, which it is addressing through the development of local talent pools. In India, the implementation of the New Labor Codes has resulted in one-time transitional costs for service providers, including Saksoft.
Stock Valuation
As of December 31, 2025, Saksoft’s market valuation stands at ₹26,371.07 million. Based on the nine-month basic EPS of ₹7.61, the market continues to price the stock against its stated long-term growth targets and its historical ability to maintain high returns on capital.
What Investors Are Watching
- Client spending trends, particularly among top customers
- Sequential revenue recovery trajectory
- Sustainability of EBITDA margins after Q3 compression
- Client concentration and revenue diversification
- Conversion of multi-year digital engagements into billed revenue