Steady 4Q; Revenue synergies to be key

研报英文原文证据摘录

Steady 4Q; Revenue synergies to be key

mine existing relationships to drive mid-

teens organic growth over FY26-29, despite the drag from Aquity, given relatively smaller

relationship sizes (Top-10 accounts at US$13m size). However, its revenue growth after

acquisition may moderate to high single digits (8% in FY29), due to a potential decline in

Trubridge's revenues, driven by offshoring and tail-account rationalization, which may offset

revenue synergies in the near term. We cut our FY27-28 organic revenue estimates by 1% to

factor in the 4Q miss and expect IKS to deliver 14% US$ organic revenue CAGR over FY26-29.

Trubridge acquisition to drag overall margins: IKS’s 260bps QoQ margin contraction was

driven by higher other expenses (+360bps QoQ - majority of which related to one-time legal

and due-diligence fees related to TruBridge acquisition), partly offset by lower employee costs

(-100bps QoQ). IKS’s workforce grew 5% YoY in FY26 to support new deal wins. TruBridge's

current EBITDA margins at 6% has scope for a sharp improvement from discontinuation of

ESOP costs/severance pay, as well as boost from offshoring, as also seen in AQuity business,

but this will dilute the overall margins. We expect pro forma EBIT margins to be in the range

of 25-27%, lower than 28% in FY26.

Maintain BUY: We cut our FY27-28 EPS estimates by 2-4% to factor in JV losses and lower

other income, and we expect IKS to deliver 20% EPS CAGR over FY26-29E. While we see 3-12%

EPS accretion due to Trubridge acquisition, we cut our target PE multiple from 28x to 26x, due

to the moderation in revenue growth post acquisition. We maintain our BUY with revised PT

of Rs1,950 based on 26x pro forma EPS forecasts.

FY (Mar) 2026A 2027E 2028E 2029E

Rev. (MM) 31,937.9 38,439.4 43,993.0 50,544.6