DC Infotech halved its services revenue target and walked away from margin guidance
A 2025 target to double the services mix within three years is now a more modest 25%. EBITDA guidance is gone entirely.
What's new
- FY26 revenue grew 32.6% to ₹737 cr, and PAT rose 46.3% to ₹21.2 cr.
- Services revenue target for the medium term is now 25%, down from a prior goal of ~38%.
- Management refused to provide a quantitative EBITDA margin target for the coming years.
- Geopolitical tensions in the UAE/GCC are deferring deal conversions for the Sangfor partnership.
Themes from the call
Credibility
The services mix target has been halved and the margin target walked back in the same call, eroding confidence in multi-year guidance.
Business model
Management is pushing a shift from transactional product sales to recurring services and subscriptions, but the revised 25% services target suggests a slower journey.
AI opportunity
The core pitch is AI infrastructure integration across networking, security, and compute, but commercialisation is on a three-year horizon and full AI spending visibility is still 1-2 years away.
Guidance watch
- Services revenue mix target cut from ~38% (double 19%) to 25% in the medium term.
- EBITDA margin target: management explicitly refused to quantify, despite previously suggesting near-double-digit was 'achievable' by FY26.
- AI infrastructure commercialisation estimated on a three-year horizon, with full spending pattern visibility taking another 1-2 years.
Risk flags
- The services target reduction is unexplained. It may reflect execution reality or a softer market, but the silence is the problem.
- Samsung accounts for ₹150-175 cr of revenue, creating meaningful customer concentration.
- Geopolitical tensions in the UAE/GCC are deferring deal conversion for key international partnerships.
- A transaction-heavy model means each fiscal year starts from zero, making recurring revenue a strategic necessity, not a nice-to-have.
Key quotes
-
"Doing individual transactions to reach the Rs 737 crore we did is challenging because every April 1, you start from zero."
— Chetan Kumar Timbadia, CEO -
"I may not quantify it in numbers today, but we will put in all efforts to continue the journey of improvement over the next couple of years."
— Chetan Kumar Timbadia, CEO, on EBITDA margins
The brief
DC Infotech delivered strong growth in FY26 (revenue up 32.6% to ₹737 cr, PAT up 46.3%) but the forward guidance told a different story. Two targets were walked back in the same call, and management offered no explanation for either.
The first retreat was on the services mix. In May 2025, management told investors it wanted to double the share of services revenue from ~19% within two to three years, implying a target near 38%. This quarter, the number is 25%. That is a 13-point cut to the aspiration, delivered as if it were always the plan.
The second was on margins. CEO Chetan Kumar Timbadia said in May 2023 that achieving 'nearly' double-digit EBITDA by the end of FY26 was 'achievable'. At the FY26 results call, he said he 'may not quantify it in numbers today'. The company missed the prior margin target and has now declined to set a new one.
The strategic logic behind the shift is clear enough. DC Infotech wants to move from transactional product sales (where every fiscal year starts from zero) to recurring services and AI infrastructure integration. The revenue pillars have already rebalanced, with networking down to 30% from over 50% historically, unified communications at 36%, and cybersecurity at 27%. The AI infrastructure pitch is 360-degree integration across networking, cloud, and security for greenfield data center buildouts.
The problem is the credibility gap. Management is asking the market to trust a three-year AI story while simultaneously reducing a medium-term services target and refusing to quantify margins. The two moves pull in opposite directions. A more cautious services ramp and a refusal to guide on margins should prompt a harder look at the recurring revenue economics, not just the aspiration. Geopolitical tensions in the UAE/GCC are deferring international deal conversions, and Samsung's ₹150-175 cr exposure is a concentration worth watching.
The numbers are solid. The story is shifting. The explanations are missing.
DC Infotech is asking for patience on a three-year AI story while cutting the targets that would prove it is working.