Shares of Intellect Design declined as much as 7% following the company's December quarter results that came in below market expectations. According to reports from CNBC TV18, the stock movement reflects investor concerns over the company's profitability challenges despite healthy revenue growth. The latest decline was primarily driven by management's comments about continued investment requirements that may pressure near-term margins.
The company posted a 20% year-on-year increase in revenue to ₹732 crore for the December quarter, as reported by CNBC TV18. However, profitability metrics showed significant deterioration with EBITDA declining 14% YoY to ₹101.6 crore and margins contracting sharply to 13.9% from 19.5% a year ago. Profit after tax saw a steep fall of over 61% YoY to ₹27.4 crore, primarily attributed to higher investments and timing-related issues in licensing revenue recognition.
Management attributed the margin decline to increased investments, particularly in capacity expansion and overseas hiring, which led to a sharp rise in SG&A expenses to nearly 20% of revenue, according to CNBC TV18. During the post-earnings call, the company indicated that a similar level of investment would continue into Q4FY26, suggesting near-term margin pressure may persist despite operational improvements. The latest decline was further amplified by management's comments about continued investment requirements that may pressure near-term margins.
Despite the weaker earnings performance, management remained confident about the company's growth outlook, reiterating its target of around 20% growth in licensing revenue on a trailing twelve-month basis, as reported by CNBC TV18. The company also reaffirmed guidance of ₹200 crore revenue in FY26 from its Purple Fabric platform. Operationally, Intellect Design continued to see strong traction with the average deal size increasing to ₹66 crore from ₹54 crore last year, while the deal pipeline expanded to ₹12,038 crore at the end of Q3FY26.
