Orient Technologies Ltd

Good afternoon, ladies and gentlemen. I am Manav Makhija, moderator for this conference.

Welcome to the Conference Call of Orient Technologies Limited arranged by Concept Investor Relations to discuss its Q4 and FY '25 results.

We have with us today, Mr. Ajay Sawant - Chairman and Managing Director; Mr. Shrihari Bhat - Chief Executive Officer and Mr. Gaurav Modi - Chief Financial Officer. At this moment, all participant lines are in listen only mode. Later, we will conduct a question-and-answer session, at that time, if you have a question, please press * and 1 on your telephone keypad. Please note this conference is recorded.

I would now like to hand over the floor to Mr. Ajay Sawant. Thank you and over to you, sir.

Thank you, Manav. Good evening, ladies and gentlemen. Thank you for joining Orient Technologies Limited Q4 and FY '25 Earning Call. We sincerely appreciate your time and interest in our company.

Firstly, I would like to give you some background about our Company, then move on to highlight how we have fared since our listing back in August 2024. This is our first full fiscal year results, which we have reported post April.

Firstly, a brief background of our company:

We are an IT asset lifecycle management partner since 1997. We helped our customers in digital transformation. We have Pan India presence with 1500 plus employees. From this year onwards, we are going to segment our business in two lines of businesses: #1. IT Infrastructure Solutions. #2. Application and IT Infrastructure Services including Cloud, Digital Transformation and Infrastructure-managed Services.

So these are the two LOBs that we are going to go ahead with rather than three as of last year.

Now, we are moving towards the financial performance summary:

Page 3 of 13 Let us look at the entire year FY '25 highlights:

So the company’s total income grew by 39.45% year-on-year and now it is totaling to Rs. 846.29 Cr. Revenue from operation has rose by whopping 39.25% to Rs. 839.53 crore. EBITDA stood at Rs. 74.35 crores, reflecting a 22.71% increase with an EBITDA margin of 8.79%. Profit before tax has increased to Rs. 68.01 crores, translating to PBT margin of 8.04%. Profit after tax increased by 21.69% to Rs. 50.44 crore with a PAT margin of 5.96%. Earnings per share for the year rose to Rs. 12.85 up from Rs. 11.80 in FY '24.

As far as Q4 of FY '25 highlights are concerned:

In Q4 FY '25, Total income rose 42.93% compared to Q4 FY’24 and jumped from 183.64 crores to Rs. 262.47 crores. Revenue from operation increased by 43.97% from 181.06 crores in Q4 FY’24 to Rs. 260.68 crores in Q4 FY’25 and this is the highest revenue in any of the quarter so far in the history of Orient. EBITDA for the quarter stood at Rs. 21.03 crores with an EBITDA margin of 8.01%. Profit before tax grew by 8.40% compared to Q4 FY’24 and rose to Rs. 19.02 crores with the PBT margin of 7.25%. Profit after tax is reported at Rs. 13.44 crores, making a 9.49% growth over Q4 FY’24 and a PAT margin of 5.12%. EPS for the quarter stood at Rs. 3.42.

Coming back to the operational highlights of FY '25:

We have collaborated with AWS India to offer advanced GPU and AI services by leveraging AWS cutting edge GPU AI services and expansion ecosystem in line with our commitment to accelerate AI development and enabling India to create world class technology. We have also been awarded to contract for managed service providers for AWS workloads by Digital India Corporation, a Section 8 Company under the Ministry of Electronics and Information Technology, MeitY, Government of India. Under this agreement, we shall manage, optimize and secure critical AWS Cloud workloads supporting key national digital initiatives. This is where our digital transformation helped the entire nation.

For FY '25, our revenue distribution reflected a strong and balanced industry presence. The mid-market and other segment remain the largest contributor, accounting to 48.41% of our total revenue, driven by demand across sectors such as healthcare, manufacturing, logistics, infrastructure, real estate and education. The BFSI vertical delivered a solid performance with 21.63% supported by increased digitization and cloud adopting. The government and PSU segment contributed to 11.21% benefiting from key IT infrastructure and digital public sector projects. Communication represented 10.25% of the revenue, while the ITeS vertical contributed to 8.50% highlighting stable growth in managed services and outsourcing engagements.

Our partnerships, we have tied up with Tableau. Tableau is a leading data visualization software company to enhance our capabilities in creating interactive dashboards and visualization. We

Page 4 of 13 also partnered with CheckRed, which is a cyber security firm specializing in threat intelligence and detection. This collaboration will provide our clients with comprehensive solution for threat intelligence, vulnerability, assessments and incident response, enhancing their protection against cyber threats.

We have won various orders. Few of the orders that we have won are two major projects in the BFSI and public sector segment. The first project involves a comprehensive data center reference for a large financial institution focusing on modernizing both primary and disaster recovery data centers. Secondly, a VDI deployment for a public sector organization, this initiative will streamline end-user computing through a virtualized desktop environment, offering centralized management, heightened security and increased flexibility for users. With this, I come to the conclusion of my opening remarks and open the floor for question and answers. Thank you.

Thank you very much, sir. We will now begin the question-and-answer session. We have our first question from the line of Kunal Sharma from SP Capital. Please go ahead. Hi, sir. Good evening. Good evening, Kunal.

Hi. Sir, my question, during the quarter, our toplines have grown very well, but that hasn't reflected into our bottom-line. So if you could throw some more light on it?

So Kunal, you must have seen that the topline has really grown 43.97% in this quarter. We have strategically chosen to reinvest in talent, service delivery and OEM alignment to build a future in the business. These are all short-term margin trade-offs with a long-term value-created mindset. As our annuity contract matures and delivery stabilizes, we expect improved operational leverages in the next 2-3 quarters. So yes, we accept that our EBITDA hasn't grown to the tune of total revenue, but this is a short-term trade-off that we have taken.

Noted. So these are like, we can see some good picture in the coming year?

Yes. So from 3rd Quarter onwards, we will see definitely a good picture.

Noted. Sir, my second question on the stock purchase that actually has gone up sharply and you rightly said that we might have some talent acquisition that we did during the quarter. But as a result, the margins have also been corrected sharply during the quarter as well as full year.

So you highlighted earlier that is because of the billable employee leads to the same if I am not wrong, right. I believe that going forward that will remain the same. So how we will able to achieve a double digit margin going forward that you have guided in a couple of quarters back during the call and that we have a longer-term horizon?

Page 5 of 13 Kunal, if you see DRHP, we mentioned about the deployment of money from the IPO will be for the SOC as well as DaaS business. Now, our SOC premises, unfortunately slightly getting delayed till July 2025 and our stocks will be ready by September 2025 and the business will start flowing from October onwards. And that is where we see that the good amount of margins will get generated because these are all services revenue. That is number one. Number two, the majority of DaaS deployment is now happening in the Q1-Q2 timeframe and you will see the revenue coming from our DaaS also from Q3 onwards and that is why we are very sure that our EBITDA margin percentage will be far better in Q3 onwards.

And if you could throw some light on the DaaS as a whole as a category that how it has grown so far and what was the order book over there?

So we have taken our shareholders poll by March 31st because when we put it into the DRHP that is for a particular model that we are able to do that. But as you know that the technology keep on evolving, those models has become outdated model, and we have to utilize people's money for a right cause and that is why we have taken shareholder’s approval, and we got the approval now with DaaS business to do for any kind of a customer and any kind of a model now. So that is the change. With that change now, the marketing team has started going out in the market and now we are getting a good response from the customers for the new set of models in the market, and we will start deploying it right now. Currently, we are doing it mainly SD-WAN as a service, we are doing the notebook as a service, so all this DaaS is happening on various devices and that is where the IT infrastructure business, which is the CAPEX driven business, we are trying to move towards the OPEX driven business as a DaaS.

Noted. Sir, in the IPO fund that I think Rs. 33 crores is yet to be utilized, so any comment on that?

So we couldn't utilize this primarily for two reasons. The property which we have taken it was unfortunately not ready and it will be ready by July where the SOC will come in July and the entire infrastructure for SOC will start deploying it after July onwards. So hopefully by September, the stock will be ready. And that is where the majority of the application of the money will happen from Q1 and Q2 perspective. Other is from the DaaS perspective, now we got the shareholders’ approval, so now that money will start getting deployed in the buying of those equipments and deploying it at the customer.

And eventually we get the results during Quarter 3 FY '26? Absolutely.

And one more question on, sir, during FY '25, we have grown tremendously well 40% FY '25. So are we proposing the same growth rate for FY '26 and in terms of margin too?

Page 6 of 13 So Kunal, ‘Yeh Dil Mange More’ so ideally yes, but very honestly, I will not be able to predict or commit any numbers. But yes, I think the India growth path is there, India is growing and so are we.

And on a conservative side, if you could throw some light, it is not partly? I am not supposed to.

No worries. And lastly, if I may, sir, lastly on the product mix, we intend to take up our enabled and cloud business to 55%, right? But this year actually it came down to 45%, so I am assuming that is because of the billing that we recognized during the quarter 4, is that correct?

That is right. So what happens is, these are all recurring revenue, Kunal. So the order size or the order book mainly consists of IT infrastructure services perspective, but that is a large book size that we have which is booked for a year or so.

Sorry to interrupt. But I think in the interest of time, I think we should also take other questions.

We have answered a lot of questions from you.

Sure. I will join in the queue. Thank you.

Thank you. We have our next question from the line of Vinit Mishra from SBI Securities. Please go ahead.

Yes. Thank you, sir and congrats on great sets of number. So I have one question, as the cloud and data management business witnessing from margin accretion posts the improvement in scale and how is the trajectory you are guiding in the future? And the second question is what the demand outlook given the tough environment. So those are my two questions? Thank you.

So, thank you for your good wishes and asking this question. So, cloud and data management is always the bottom-line driven business for all of us. And yes, our margin has grown from 22%-29% this Q4. So we are focusing more on cloud and data management, because of the margin that we earn in this. Replying to your second question on how the business looks like, yes, we are very positive and gung-ho about this cloud business. We feel that we have just scratched the surface and there are many more things that we can do to along with the AWS and Tableau and other cloud and data management OEMs and we can build lot many services on top of it. So we will continue to do that and we are very positive about this even in the coming quarters.

Got it, sir. Thank you and all the best in the future. Thank you, dear.

Thank you. We have our next question from the line of Hiren Trivedi, an Individual Investor.

Thank you for the opportunity. Sir, I have two questions. Firstly, you’re Security Operations Center and the Network Operating Center facility just, would like to know whether they are operational. I think you mentioned in earlier question you get operational by July, I suppose and when will it start contributing to the revenues? And also you mentioned about 2 orders that you won and one with Tableau. So can you just expand more on these orders and how and when they will contribute to the revenue going forward?

So coming back to first question on integrated SOC and NOC. The builders will give us the OC by July 2025, so we will get in complete totality of premises in our custody in July and then we build the SOC. So by September, we will be able to build the shock infrastructure perspective all ready. The business will start flowing after that, so Q3 and Q4 is where we start getting the business. So, this is the answer to your question number one. Question #2 on the orders that we spoke about, Tableau was a partnership that we had in Q4. The orders that we have received is from the Digital India Corporation, which I said, which is a part of MeitY, Government of India, where we got the contract from them as a MSP contract. That is the managed services provider on the AWS Workload. So, we are getting a lot of work loads posted on the AWS which is a hyperscaler and there we are getting OHMS that is the Orient Hosted Managed Services. So, we build our services on top of that workload and this business is a quarterly revenue business. We have already started building that business and this is a long- term 3-year contract that we have. So that number one. Number two is the VDI contract that is the Virtual Desktop Infrastructure where we have worked with one of the PSU, which is a more of an Infrastructure Solution contract plus IMS, Infrastructure Services contract on top of it to manage that infrastructure. So these are the two orders that we have won last quarter.

And revenues are billed in partly or that will be coming in?

Yes. It is a quarterly billing because being a services, it is a quarterly billing area. Thank you for your answers. Thank you. Thank you.

Thank you. We have our next question from the line of Nikhil Thakur, an Individual Investor. Hello, good evening, sir. Good evening, Nikhil.

Page 8 of 13 Sir, I have two questions. My first question is, what is Orient’s estimated market share in cloud and data center service within India?

So cloud business is really a multibillion-dollar revenue in India.

And what will be your estimated market share compared to the peers?

So currently, I will not be able to understand the market share perspective because lot many hyperscalers which are not declaring their total revenue in the market. So very honestly, we are not able to be judgmental on what the revenue happening. But we are too small compared to most of the hyperscalers who are doing business of cloud in India. And that is why I always say that we have just scratched the surface. There are many more things to do.

Thank you, sir. Sir, my second question is, you have secured a Rs. 3.9 crore project for cybersecurity. So are you planning to expand more in cybersecurity or can you give a more detail about cybersecurity?

So, that is our first step. So Rs. 9.3 crore is what we are going to deploy from the IPO money which we are going to get it and that is the initial investment that we will do. And as and when this business keeps on scaling, lot of investment will keep on pouring once you start getting the revenue as well. Sure. Thank you.

Thank you. We have our next question from the line of Amar Maurya from Lucky Investment.

Yes. So, sir, in terms of this AI India mission in Q1, we will book some revenue for AI India mission?

So very honestly, Q1 will not be able to book any revenue from India AI mission because still there are a lot of clarities required from Government of India and that is where, I feel Q1 will be difficult to give.

And the projected number which government talks about a very big number. So do you see that kind of demand actually generated by now requirements coming from the various government entities for that kind of GPUs, which government was targeting?

So this is not literally only from government entity, this is the platform provided by Government of India for any even startup for that matter. Correct.

Page 9 of 13 I see there is a huge potential, but how this will get consumed is what we need to see, because the entire ecosystem has to be ready. Currently, the number of use cases which are getting deployed are too less compared to GPU as a service requirement board, so Government of India meeting has provided them the platform, but the ecosystem is not yet ready.

So do you feel that like, what gives us the confidence that what kind of pickup we will see in this particular business, let us say, in this year as a whole because the Government speaks about a very large number of deployments and all those things. So what is the ground reality about this whole subject?

So very honestly, India has a potential whatever the Government is talking about, the number of GPU's they want to deploy, whether it is on premise or on cloud, there is a potential. The ecosystem is developing slightly slowly and that is where the delay is happening in terms of revenue.

So meaningful revenue we can see in 3rd Quarter in your business from India AI mission?

Probably. India AI mission perspective is how the use cases get developed. It is totally based on the use cases being developed.

But, sir, what I understand is, see there are two policies, right? One that government is giving the budget for developing their own sovereign flight that is one, and then the rest I think the Rs. 10,000 crores is earmarked for basically the GPU deployment and what I understand is that the initial GPU deployment will happen in, let us say, IIT, DRDO Labs and other things, so where they were having already the requirement right? So I am not understanding when you say the ecosystem has to be developed because already the requirement was there. That is the reason government has allocated this much of the budget?

No. So the ecosystem means, how do you reach the government portal? Now, please understand the integration between the India AI mission portal vis-a-vis the AWS portal or even in some cases who are the private data center provider who has built in their own data center.

Their portal has to speak to the India AI Mission portal and that is how you get connected to the probably the organizations like IITs and other research organizations that you are talking about. So all this integration is taking time, and we can always say it is an API, you just call for an API and you can get this. Technically, it looks simple, but there has to be security has to be in place in the commercial transaction which is happening on that. So lot many things need to get bridged between the two and that is what is taking time. But very honestly, Amar, we are concentrating on Government other AWS workload other than GPU where I am seeing that Digital India Corporation, which is the business which is already flowing in. And that is the quarterly good amount of revenue, which is for the next 3-5 years is already with us. So we are more waiting there.

Page 10 of 13 So this is GPU business, or this is the CPU business?

No, this is a normal Intel based business. But not only the CPU, only it is more of a storage, it is more of other ecosystem on the cloud.

And normally, sir, what kind of revenue share agreement we have with AWS business, whatever business we bag, how does the revenue get shared between you and AWS?

So number one is more of an MSP that we work as. So we work more from a service provider and the revenue which was the AWS revenue which is going to AWS and we just take the same margin on top of it.

So the sales margin would be like in the range of?

I will not be able to share the exact share percentage of the sales margin Ok, Got it. And the private cloud business, how do you see the demand in private cloud enterprise business? And what I understand here is that there are 4 companies dominate the large market share into this, how that piece of the business would be growing in the overall India business for them?

Amar, today it's a hybrid world. So there is enough business for public cloud providers like hyperscalers, like AWS, Azure, Google and Oracle. Similarly, most of the people who went on those cloud, they realize that cloud is no more cheap. So, some of the customer has come back and trying to check up their private cloud. And they are building their own private cloud as well.

So, there is a hybrid way I look at it this business is going to be there and most of the customers build the hybrid environment.

Got it. And as people go for the hybrid, we have the business because we are ultimately the?

Yes, whether it is public or private, we are in both the business.

Correct. Perfect, sir. Thanks a lot, sir. I will come back in queue. Thanks, Amar.

Thank you. We have our next question from the line of Rahil S from Crown Capital. Please go ahead. Hi, sir, good evening, can you hear me? Yes, Rahil, go ahead.

Page 11 of 13 Sir, first question was if you can give your order book test and the split between the vertical?

So Rahil, our current order book is to the tune of around Rs. 135.32 crores and we will be building Q1.

And if you can also highlight your key growth areas going ahead for FY '26, which particular area that we will be targeting the most?

So in FY '26, we are concentrating on application and IT infrastructure services. So that is the LOB we are all focusing on. And we have already started doing the strategic investment in terms of getting this business growth. The services line including cloud and IT-enabled services is expected to deliver strong growth in this financial year. Meanwhile, the infrastructure solution business will continue to support technology refreshed initiatives and complementary projects that we will be able to conduct. But solutions will give me always the top-line and services will give me the bottom-line. So, to simplify the line of business which we used to talk about, since forth, we are trying to do it with the two lines of businesses, so IT infrastructure solutions and second is application and IT infrastructure services.

And you mentioned earlier that you are reinvesting your profits into talent and services and all, which is impacting EBITDA. How long that will go on for?

And although you are refraining to giving a certain number guidance, but is it fair to assume that on an overall general outlook basis, this FY '26 will be much better than FY '25, is that availability?

So. year-on-year from last year to this year, we grew by around 40% and I see India growth is definitely be the main feature of our growth as well. We are 99% domestic partner. So, we will be growing as the India grows. Thank you and all the best.

Thank you. We have our next question from the line of Kunal Sharma from SP Capital. Please go ahead. Am I audible? Yes.

Page 12 of 13 Thanks for the follow up. Our receivables have gone up sharply that leads to a negative working capital and as a result, we have shown a negative cash flow, so when can we expect a positive cash flow?

So Kunal, thanks for asking this question. If you see, this is the short-term capital, negative capital. So I hope in this year, we should be very much cash positive. Just by Q2, you can see positive cash coming in.

So there is no like payment getting stuck by the Government since we are also dealing with the Governments too?

No. That is not the right way of reading negative capital.

No, on the receivable side actually, I was asking?

Yes, the receivables, but most of the billing has happened in Q4, especially in March end. To be honest, let me tell you out of Rs. 260 crores of billing, Rs. 140 crores happened only in the month of March. Now, on 31st March, all this billing will come as outstanding. And that is why it is showing this is a negative cash flow.

And the last on the export, since we have a negligible exposure in the APAC and UAE and how is that doing if you could throw some light?

See, I believe rather than US and Europe, there is a lot of uncertainty there, right. And we don't want to play in uncertain areas of the business because we have invested just in this year, we got listed this year and we want to grow, we want to give return back to our investors. And we are very clear that it is a company which is growing for last so many years and we want to continue to grow. So, we want to bet only in certain areas where we are confident that whatever investment we will do, we will get the good return and India is the best bet. And lot many things we can do in India itself. That is why currently we are not focusing internationally, but it is a matter of time we will come back to you on our international plans as well.

So we don't have any exposure in the APAC and UAE? Currently, zero. Thank you so much and best of luck.

Thank you. We have our next question from the line of Nikhil Thakur, an Individual Investor.

Page 13 of 13 Sir, I have two more questions. So my first question is what is the business strategy from the company to have sustained revenue margin and will this strategy be what will be increased, what can they include in the strategy in the coming quarters?

Our strategic priorities for FY '26 include strengthening our services portfolio, especially in cloud managed services, cybersecurity and networking. The new NOC and SOC center, which I have talked about is a key milestone targeted to go live in Q3 FY '26. We have already successfully launched our DaaS, which is a Device as a Service offering which is gaining traction and we plan to launch TaaS which is a Total outsourcing business in Q2 or Q3 of FY '26. Our market coverage stands over the BFSI, Government, communications, hospitality, pharma and mid-market. Something about TaaS I would like to mention here. TaaS is a comprehensive technology outsourcing strategy aimed at enhancing operational efficiency and fostering innovation. By leveraging external expertise, businesses can streamline IT enabled services, application support and infrastructure solution. This approach supports optimal sourcing strategies, improves vendor management and ensures sustainable win-win partnerships. TaaS helps enterprises, reduces their costs, accelerate time to market and gain access to specialized capabilities, key drivers for maintaining competitiveness in a fast-evolving landscape. So DaaS and TaaS are the key differentiator in this financial year for us to grow together.

Noted, sir. Sir, my second question is, as you are set to receive your OC of property in July or June, so your cost of operation will go up. So, what is the strategy for mitigating the cost of operation?

But, we will be getting the revenue as well. The integrated NOC and SOC is just a service and it is a profit. It is a one-time investment, and operational cost is only the salaries of the employees. Agreed, got it. Thank you, sir. Thank you.

Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you everyone, and especially thanks to Gaurav from Concept. Now, we truly appreciate all the participants for taking time to join us today. If you have any further queries, please feel free to reach out to us or Concept, we will be happy to address them all. Thank you once again for your continued support and interest in our company. Thank you.

Thank you. On behalf of Orient Technologies Limited, that concludes this conference. If you have any further questions you can send an email to Gaurav.g@conceptpr.com. Thank you for joining us and you may now disconnect your lines.