ICRA Limited ($ICRA)

Ladies and gentlemen, good day, and welcome to the ICRA Limited FY 2026 Investor and Analyst Conference Call hosted by ICRA. [Operator Instructions] Please note that this conference is being recorded. Joining us today from the management side, we have Mr. Ramnath Krishnan, Managing Director and Group CEO, ICRA Limited; Mr. Venkatesh Viswanathan, Group Chief Financial Officer; Mr. L. Shivakumar, EVP, Business Development and Chief Business Officer, ICRA Limited and CEO ICRA ESG Rating; Mr. Abhishek Dafria, Head of Group Strategy and Business Transformation; and Mr. Shailendra Mruthyunjayappa, MD and CEO of ICRA Analytics Limited, to discuss the performance of the company, followed by a Q&A session. Before we begin today's conference call, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve some risks and uncertainties. Please refer to Slide #23 of the investor presentation for detailed disclaimer. ICRA or any of its subsidiaries or the directors, officers or employees of ICRA or its subsidiaries shall have no liability whatsoever for any loss howsoever arising from any forward-looking statement or use of the investor presentation or its contents or otherwise arising in connection with this conference call. Now I would like to hand the conference over to Mr. Ramnath Krishnan, Managing Director and Group CEO, ICRA, to commence the proceedings. Thank you, and over to you, sir.

Thank you, operator, and good afternoon, everyone. Welcome to ICRA's earnings call for the fourth quarter and for the year ending 2026. I'll take you through the key highlights for the quarter and the year, share some important updates and then outline how we are positioned getting into this financial year FY 2027. Let me begin with headline financial performance for the last quarter of the previous financial year. We delivered a strong Q4 performance with consolidated revenue increasing by 28.4% year-on-year. Growth was led by the Research and Analytics segment, which recorded a 56.8% year-on-year increase, driven by acquisition of Iinntelix and sustained demand for risk, data and compliance-oriented analytics solutions. The Ratings business also continued to see steady growth of 10.6% year-on-year, supported by improved credit activity and deeper market engagement. Consolidated PBT before exceptional items and tax stood at INR 72.8 crores. For FY '26, ICRA reported a strong all-around performance with revenue increasing by 20.4% year-on-year. Rating segment continued its steady trajectory with 14.2% growth, while Research and Analytics delivered a sharper growth of 29.8%, supported by the consolidation of Fintellix and increasing traction in risk and compliance solutions. As a result, PBT grew by 10%, reflecting the growth in revenues and improved benefits from scale, while we continue to invest in talent, technology and integration of the acquired businesses. For better comparability, the PBT reported above excludes onetime exceptional charges arising from implementation of the new labor code and so on. Our Ratings segment continued to demonstrate margin expansion driven by steady revenue growth and improved operating leverage. In Research and Analytics, revenue growth was strong across key areas such as risk, regulatory and data analytics solutions. The Knowledge Services business, what we now call Notch, while stable across its core areas, saw some moderation in growth due to discontinuation of certain engagements and increasing automation trends. This has led to a shift in the overall business mix with a higher contribution from non-Nnotech businesses, which structurally have a different margin profile, resulting in some moderation at the segment level. We remain focused on scaling product-led offerings, driving efficiencies and expanding our global footprint and client base to support margin improvement over time. Some of the key nonfinancial highlights. Last year marked a significant milestone as ICRA completed 35 years of operations, reflecting a long-standing track record of credibility, analytical rigor and market relevance. To accommodate this milestone, the Board has recommended a dividend of INR 105 per share that includes INR 25 per share of special dividend, consistent with 35 years of our existence. So this is subject to shareholders' approval. During the year, we completed the acquisition of Fintellix and saw leadership transition in our analytics business with Mr. Mukujapa taking over as the CEO of ICA Analytics and also as the Head of our entire Research and Analytics vertical, which comprises 3 entities: ICA Analytics, Fintellix and D2K Technologies. Mr. Mruthyunjayappa succeeds Mr. Jona Chatterjee, whom we thank for his contributions. Joentu retired in the month of January of 2026. Alongside this, we have structurally realigned our Research and Analytics segment businesses into Notch, BankTech and Captech, supported by a unified IT and product engineering organization to enable scalable technology-led growth. We continue to make steady progress on our AI road map with focused initiatives aimed at enhancing operational efficiency and driving sustainable productivity gains across the organization. We have begun deploying AI-powered agents and select processes as well as integrating AI layer into analytical tools offered by our subsidiaries to strengthen our client value proposition. We expect AI to augment and sharpen our capabilities while the deep domain knowledge and human expertise we have built over decades will remain at the core of our decision-making. We were also pleased with the award given by the Institute of Company Secretaries of India during the year, recognizing our efforts in the area of CSR. Looking ahead in terms of market outlook, with the ongoing West Asia conflict, India's GDP growth is estimated to have slowed down in the last quarter of FY '26. However, a large part of the adverse impact of the surge in global energy and commodity prices is expected to manifest itself in early FY '27, which will weigh on GDP growth and macroeconomic outcomes. Given the uncertainty around the resolution of the conflict or the timing of it, elevated energy prices for an extended period of time, we all pose a downside risk to growth in the near term. Besides the potential development of El Nino conditions and weak monsoon forecast, for this year have dulled the agricultural outlook and rural prospects for the second half of this financial year. Assuming average crude price of $95 to a barrel, ECA currently predicts the GDP growth to moderate to 6.2% in real terms in FY '27, and this translates to roughly about 12% in nominal terms. In FY '27, looking at the credit environment, credit markets are expected to remain somewhat dynamic with bank credit likely to retain its competitive position over bond markets given current inflationary pressures and liquidity conditions. Higher hedging costs will make foreign currency borrowings relatively less attractive, further supporting domestic credit. Overall, the environment remains evolving with both opportunities and risks across different segments. Specifically on the Research and Analytics business, key regulatory developments, including Reserve Bank of India's transition -- we're expecting banks to transition to an expected credit loss framework effective 1st April 2027, along with the evolving capital market regulations are expected to sustain demand for risk modeling, data infrastructure and compliance-oriented solutions. The company continues to align its offerings with these trends. Our outlook remains act in structural drivers with rising regulatory intensity and accelerated Gen AI adoption reshaping client expectations. We are focused on strengthening our position through deeper global engagement and continued enhancement of our portfolio. Ongoing investments in analytics platforms, compliance capabilities and scalable delivery frameworks will support evolving market needs and drive long-term growth in the research and analytics business. This is the update I have for all of you. Thank you very much. And I now hand over the call back to the operator.

[Operator Instructions] The first question comes from the line of [indiscernible] Panjabi with [ Banyan Tree Advisors. ]

I had 3 questions. One was on the Ratings business. So in this quarter, we saw that the year-on-year growth was materially lower than peers. So what was the reason for that? Second is on the non-rating side. I'm seeing that ex of Syntel growth is around 7% year-on-year. So if you can just break this down into how the different segments, the core segments within non-ratings has done? And third is related to capital allocation. So is there any consideration around doing a buyback given that we have around INR 700 crores plus of cash on the books?

Thanks for your questions. I'll take the first one. My name is Shiv Kumar. I'm the Chief Business Officer for ICRA. So on the Ratings business, I think your observation was that we were materially lower. No Actually, we see it this way that broadly, we are in the same band at a very broad level at a similar band as several of our peers. One needs to see they have -- we all have a different base to contend with. if you see our own performance last 4 years, once again, it's broadly in a similar band of double-digit growth. So the way we see it is that our strategy of focusing on the growth segments, which is something we've been doing very consciously over the last 4 years, that has played out quite well. We have built quite a bit of strength and quite a bit of coverage in these growth segments. We intend to continue with the same strategy. If we see last 4 years and if we see particularly this year, essentially, it's a play between bank credit and the bonds. And depending on the interest rates, depending on the bond yields, which are again impacted not only by domestic drivers, but also geopolitical drivers, which we are seeing -- which we saw last year and we continue to see. The play is between these 2 segments. We are well positioned in both. And our strategy would be to continue our focus on the growth segments. That's all from my side.

Thanks for the question. This is Shailendra, CEO of the R&D business. Your question was around the growth rate within R&D for the second half of the year, including Fintellix -- sorry, excluding Fintellix. So excluding Fintellix, we had a muted growth within knowledge services, the outsourcing services business, which was the bulk of what we do within Analytics. But outside of that, the smaller -- what we as the RMS business and market data businesses actually grew, although on a small base, they delivered growth and turned profitable. obviously got added only towards the second half of the year. All those numbers that you see reflect Fintellix numbers too.

Yes. And the third question was on the capital allocation. I think the way we are looking at capital allocation is if you look back for the last 3 years, we have consistently increased the dividend payout. So even for the current year, if you look at that, typically, we used to pay INR 60 per share, that we have increased to INR 7. I'm talking about the normal dividend. Outside that, there was a special dividend as well, and we'll continue to see how we can actually improve and keep on improving in this aspect. The second part, I think, largely your question is, are there any alternate way of looking at capital allocation? Yes, there are alternate ways, and we keep on continuing to look at those options. especially considering the fact that there has been some changes to the taxation rules. So we will continue to evaluate that option as well. And as and when the Board approves that, we will relook at the capital allocation further.

The next question comes from the line of [ Rajiv Mehta wit Yes Securities. ]

Congrats on stable performance. So I have a few questions. First, what will be the outlook on the ratings growth in the current year? I mean what has been the kind of borrowing activity in April, May, if you can throw some light? And if this uncertainty lingers around for some more time, what kind of an impact it can have in the rating revenue growth? Because I think the last 2 years, the rating revenue has grown by 14% at a very healthy clip. So do you see it moderating because the start for the year at peak? And if you can also highlight what is the base of surveillance fees, which will give us some growth, natural and maybe will help us in understanding how much moderation can come...

See as far as the ratings business is concerned, I mean, obviously, similar to any other business, it is a leverage play on the economic activity. Whilst we -- in the near term, we expect the bond market activity to be somewhat subdued given the spike in the yields and which is probably expected to persist a little longer. But at the same time, we expect actually bank credit to grow quite well, so which is what I think will probably drive bulk of our growth at this point in time. In the first couple of months of this financial year, we have not seen any significant slowdown in the market or generally speaking, in our Ratings business. And we're hoping that the same trends will actually continue. But are there some headwinds, thanks to the geopolitical crisis? The answer is yes. But it hasn't yet manifested itself in any significant challenges, which is beginning to cause us concern from a growth perspective.

Yes. And in the Research and Analytics segment, you've been trying to point out in your word also in the presentation and the press release that there could be margin shift because the revenue mix itself is shifting. So can you give us some indications of margins at the business level? Because I think Fintellix is a 20% EBITDA margin roughly. Then you also have you can highlight ballpark margins of -- then the knowledge services is not growing well and the other businesses like BankTech and Cap are growing better. So this revenue mix shift within the Research and Analytics, where do you see eventual margin stabilizing? How much of the margin give up can happen because of the shift?

Yes, this is again. I will not specifically guide you on any EBITDA margins, but I can broadly talk to directionally where we are headed. -- at an industry level, banktech type of businesses, which are product-led risk and regulatory solutions to the financial services industry. The kind of businesses deliver anywhere between 20% to 35% EBITDA margins. And we will also be pursuing on those lines. Now why that broad range? It's because different geographies have different margin profiles. So based on how we shift our revenue mix from India to outside of India and more specifically to the developed markets, that will determine how much of that we can achieve. But broadly, this will be the margin profile of a product-led business.

And the other one, and B2, some indication there?

Again, I'll not comment specifically on B2. The way we have now organized ourselves, I don't know if you've seen the investor presentation, we have organized ourselves into BTech,aptech and NT. So BankTech consists of the erstwhile RMS business, which was the risk management solution.

Risk Management solutions.

Plus Fintellix and B2. Now as a combined division within R, BankTech, we are trying to move to a more consolidated integrated organization, and we'll strive to achieve this at a combined level.

And with regards to the synergies that we were supposed to extract from D2Kisition, where are we in terms of those synergies already being extracted out in the last 1.5, 2 years since we have taken over? And also possibly please talk us through about the synergies through which Fintellix will also -- acquisition will also become beneficial for us. This is my last question.

Yes. So although D2K acquisition happened a couple of years ago, the deeper integration has only recently along with Fintellix coming on board, we are driving that is -- integration is going as per plan. We have now been able to put all our products together into a more combined product suite, realizing the benefits of carrying all of these products together, which are broadly complementary in nature. And with overlapping customers, which is now not only just expanding our footprint in India and the region, but we are also beginning to see this manifest in customers having multiple of our products. And we believe this will start playing out over the next 2 years and where we strengthen our customer relationships and expand the solution offerings within each of those customers, especially the large ones.

The next question comes from the line of [ Niral with [indiscernible] .]

Ratings growing in double digits in FY '27 and operating leverage at play, is it realistic to assume for the margins to go above 40% in the coming years? And second is on the non-ratings Moody's part of the business. Are we seeing further in-sourcing of projects by the parent or that has stabilized? And what sort of growth or project visibility you have for the next couple of years...

Yes. On the first question, when we talk about ratings, whether there will be a swing in the margin. Generally speaking, Ratings business, if they grow double digit, there generally -- we don't give a guidance of margin, but what we have seen in the past, even with ICRA or other industry is, if typically people growing double digit, there is some addition which happens to the margin. So if you go back and look back, you will figure out that whatever those companies which have done a double digit, there's some amount of leverage that kicks in. There's no doubt about it because generally, the employee costs are sub-10%, the merit increase. So typically speaking, if a well-invested technology company, it should give you some kind of a pass-through in terms of margins. On the second question, can you just repeat on the second question?

Sure. So my second question was with respect to non-ratings Moody's part of business -- are we seeing further in-sourcing of projects by the parent or that has stabilized? And what sort of visibility in terms of new project wins for that knowledge service part of the business we have for the next couple of years?

On the Modi side, I think you would have seen the last couple of years, the growth has been muted. And we think going forward also, we will see some kind of a moderation in growth. It will be muted. We don't expect a higher double-digit growth there. And as regards the in-sourcing from parent is concerned, they keep on automating the processes on an ongoing basis and certain amount of in-sourcing happens periodically. So there's no specific information that we have. But based on our past experience, some amount of in-sourcing happens, some amount of they keep on giving us the project work. So this keeps on happening on an ongoing basis.

The next question comes from the line of [ Pritesh Cha with Lucky Investments. ]

The organic growth in the Research and Analytics business for FY '26?

See, I think Sharendra did cover that earlier. The organic -- we don't give a separate growth between organic and inorganic. That's how we -- in terms of -- that's how the disclosures are made. Having said that, the overall growth, as mentioned in our PR, is driven by the acquisition of Fintellix. We had also clarified in the same year that the biggest business in the research and analytics, which is the knowledge services, we to see a moderate growth there. So bulk of the growth that we are seeing has come from Fintellix acquisition...

Okay. And what would be your outlook for growth for the coming years and in conjunction with the aspiration of making 50% of the company level revenue?

Again, we don't give an outlook for the revenue growth. But having said that, I think the acquisition of Fintellix gives us a very good platform. As Shar did explain, there's a lot of consolidation which happens. We are also trying to work on different geographies. So we expect that the acquisition of Fintellix will drive growth in the next 2 to 3 years. We can't quantify the growth, but the growth will be reasonable, and it will also try to offset some of the moderation that is happening in the knowledge services.

Okay. And since which quarter Fintellix was consolidated?

I think from October 1, we have started consolidating Finte...

Half year basically...

Just to clarify, just elaborate further on what Venkat just said. I mean FY '26 and even if you were to exclude Fintellix, if you look at the other businesses that were existing prior to October of 2025, the knowledge services business saw modest growth. But the other 2 businesses, basically risk management and market data, the 2 large verticals that are part of ICL Analytics, both of them saw pretty healthy growth. So at an aggregate level, even if one were to exclude Fintelix, the rest of the operations did actually deliver growth over the previous year.

The next question comes from the line of Abhijit Sakhare with Kotak Bank.

My first question was on the Ratings business. While you did mention that double-digit revenue growth would imply margin improvement. But what is your assessment of the current margin gap between ICRA and the other players?

See, from a current margin perspective, I'm sure there are 3 players that you are talking about CRISIL as well as. I think each one works with a different set of clients. We do recognize the fact that there is an amount of margin difference between us and the other C -- and our intent is obviously to cover some of those as we ramp up our sales. So it is largely dependent upon how -- so the way we are positioned here is we have worked a lot on the sales side of it. And if we continue the way we have done in the last 3 years, especially if you have seen our margin trajectory, the growth has been quite reasonable in the last 3 to 4 years. I think it has been quite good. We are able to catch up a lot of things. And if we continue with the same good work, I'm sure we will continue to do well.

Does that answer your question, Abhijeet?

Sorry. My second question was on the knowledge services business, sir. Historically, this business did enjoy pretty healthy margins. Now that the growth has started to slow down, does it also spiral into like margin decline as well into the next 2 to 3 years?

I would rather look at differently. I think the focus for us as a management has been to largely grow the non-KS part of the analytics, which has got a different margin profile from the KS business. Just to clarify that there is going to be some moderation, which we have hinted, but we don't have very specific information in terms of what kind of moderation now. We are assuming there would be some moderation. But having said that, our focus, I think, in the last 1 or 2 years has been always to focus on the non-case business. I think we had multiple conversations, Abhijeet, if you recollect. So there, the margin profile will be different. So the intent for us is to grow on an absolute EBITDA terms. But as we have clarified in our press release also, there's going to be a shift in the margin profile because...

And sorry, in the non-case business, sir, given that the current reported numbers are kind of impacted a little bit, how should we think about the steady-state margins?

Sorry, which business?

Non-case.

Sorry, again, come back on the question again, non-case business?

So non-case business, how should we think about the steady-state margins like over the next couple of years once we kind of have a stabilization of the numbers?

We don't give a very specific margin guidance. And I think if you recollect, Shailendra earlier had said that kind of business that we are in on the product side, 20% to 25% EBITDA is, I think, what he spoke. That is something which generally what the industry does. We don't give a guidance, but we have touched base on what the industry generally looks at these numbers. And I'm sure we will also try to see how we can actually work around that.

The next question comes from the line of [ Gokul Maheshwari with Aurika Capital Advisors LLP.]

My question is just on the non-rating business. You've done a few acquisitions in the last few years. And as you are trying to move sort of build a business beyond the non-knowledge services business, is your product portfolio largely complete? Or is there more to be added with respect to build a bigger business over here?

Shailendra here. Let me take this. So like you've seen in the investor presentation, we have kind of now organized ourselves as banking division and a Capital Markets division. Within the banking division, we are primarily serving the credit value stream and data value stream. in those value streams, any analytical or data requirements is what we are trying to build out. From a product portfolio completeness standpoint, we are pretty much there. There are a few gaps that we are trying to bridge by building internally. And that kind of completes what we want to be doing. We will continue to explore adjacencies beyond these 2 value streams, which will be obviously new areas for us to grow. Within capital markets, we have a pretty good offering covering all the asset managers and newer segments within the capital markets that we are pursuing. Again, there are opportunities for us driven both by some of the regulatory tightening and requirements that are coming through as well as some new greenfield opportunities that we are spotting. So we'll continue to make investments there.

Which I assume, so this is basically largely investments which you have to do from internal expansions rather than making acquisitions to fuel your growth. Is that a fair statement?

In our existing product sets, yes, where we are comfortable where we are. We have the right set of products. We do have to evolve those products with the advent of AI and the new evolution that we have to go through for the products, the next titration of those products that we'll continue to do. But by and large, in the spaces that we operate or the product portfolio that we have, we are complete with the exception of those new regulatory changes that are driving additional requirements. But like I said, we will be looking at adjacent spaces, which are new areas and will explore all opportunities.

Okay. Great. Just as a feedback, I mean it was alluded in the previous questions also. We would be having more than INR 700 crores of net cash. And given a product portfolio is fairly comprehensive now on the nonratings business, you may consider -- and our business is not capital intensive. -- we will be generating INR 180 crores to INR 200 crores of cash flow again this year. So our cash balance will further go up. So -- just as a feedback would be to rethink on ways to actually give money back to the shareholders if there are no opportunities to invest back in the business.

Point taken Gokul.

The next question comes from the line of Ravi Purohit with Securities Investment Management Private Limited.

A couple of questions. One is for -- we -- I think we've been shareholders for ICRA for a very long period of time. And just know what if you -- from finalities like a completely new thing for a rating company in the -- right? So how does -- like what -- if you could share some real-life use cases as to what the actually do for the end customer, right? So right now, like most things that are spoken on the call or put out in the annual report, like Greek and Latin for a layman, right? When we analyze the rating business, we know what the rating business does, right? What does final like if you had to explain it to like really a person, how would you explain what does it do -- and what is the addressable market for a company like ours where -- which gives us confidence that we will grow over a period of time, right? Are we a tech company with some research or are we a research company with some type right? We have absolutely no idea. If you could just share some insights, it will be very, very useful for us to kind of understand and appreciate.

Sure. So I'll go to -- in summary -- is a rise tech company, right? But I'll try to elaborate on that. Financial institutions, whether they are banks, insurers, asset managers, et cetera, they have a need to meet a variety of regulatory requirements. One is on the reporting side which means they have to get all of their transaction data and difficult data into what is called as a regulatory data repository or a depository. Do the necessary calculations that the regulators expect structure formatted data and feed it into the regulator system, either it is in files or data extraction, APIs and valid for the formats. And this is by the regulators for a variety of reasons, including supervision, macros and so on and so forth. So that is 1 part of the business, right? Organizing the data, the risk and regulatory data are helping financial institutions meet with the external reporting requirements as well as certain internal regulatory, the second set of comes from credit-related requirements, there are analytical needs for a financial institution or a lender to be able to analyze, do decisions around credit, around monitoring of credit at a portfolio level at the visual level, whether it is sporting whether it is monitoring for nonperformance loans, whether it is coding, appifying dose and accounting for those, either as incurred loss method or the now expected credit loss net debt. So all of these solutions are the other type of solutions that we have. So broadly in summary, this is -- this falls into the category of risk tech and reg tech.

Okay. So -- and so how does -- so when we look at, let's say, someone like Oracle financial services, or Finacle from Infosys or Intellect Design who provide core banking solutions to the banks, right, and who provide also -- this is something that they can also do what they may already be doing, right? So in that sense, how do kinetic stand out vis-a-vis other software companies core banking software companies or banking-related domain, specific software companies. How -- is there a difference between 2 and can you just share? Or kind of help us understand where the synetic stand out?

Yes. See, the system that you're talking about, cynical from Infosys or any other core banking system for that matter. They also sit within the transaction plan. transaction plan is systems that are capturing transactions, their systems with record, they are keeping a record of the transactions as well as balances and so on. Our type of solution is more on the analytical claim. It is consuming data from all of these upstream systems -- not taking from -- it could be a treasury system, it could be a core banking system. It could be a card processing system. It could be a repackinand several others specifically exist in a bank or a lender. We consume all of the data structure and store it in a way that risk and regulatory cases can consume it. And then we build those risk and regulatory use cases on top of it. -- so we don't directly compete with the core banking vendors. In fact, in some cases, we take on top of them. In some cases, we collaborate with them. And our type of solution the need for it stems from regulators coming with new requirements or changing the existing requirements and financial institutions maturing enough that they want to invest and automate some of the risk and regulatory use cases. These are typically reasons why somebody would come and talk to us and consume products.

And how should we kind of look at the addressable market or the growth opportunities for us in the sense, where our revenue is today versus what it can be partially if all the things work well for us and we execute really, really well. What kind of business scale can we achieve? What kind of a business scale does the end market actually offer us for us to kind of scale up, right?

I'll respond to that slightly differently. Every single regulated entity within the BFS space will need solutions like ours. How much they will spend on solutions like that is based on their scale and complexity. And second is on the regulatory push in terms of how much automation the regulators want to see from these regulated entities. So obviously, we see much more higher levels of spending from the larger banks and financial institutions and the adoption that we are much, much lower within the smaller banks or the NBFCs and smaller entities. But as the supervisors to start looking at the next year and go down the chain, all of them will come under the pressure to start automating and being able to meet with the regulatory expectations. So our total adhesive market is every single lender or regulated entity that is delivered in the banking space.

And we typically send them like onetime licenses or this is like an annual product annuity product that we kind of sell to them.

Our preferred model is to have an annuity sort of a structure, but not every international institution is ready to consume like that. Many of them also procure based on their more conventional buying way, which is to say, give me an upfront license and a smaller recurring fees. Yes. We are making concerted deferred to shift towards more of a recurring subscription model. And obviously, we will get there as the market matures to that standard.

And 1 question for you, Venkat and Ram -- in a sense, this I think is a common question across like most of the comma that we've had in the past, right, on capital allocation, right? So if you could kind also help us understand or kind of renew our expectations in our minds when we look at acquisitions that we do, like what kind of IRR do we expect? Or what kind of payback period would we expect when we make acquisitions, right -- even if you, let's say, cash IRRs, right? So for example, if we spend $25 million on Fintellix acquisition of PrandD2K. And so typically, is there a benchmark IRR that we have or -- can you share that with us? So how is it better than kind of not holding excessive cash on the balance sheet or sharing -- sending it back to the shareholders -- so if you please share the difference between the 2, that will be helpful for us to kind of also understand and appreciate.

So I think I will take that. I think on this. See, from an acquisition, there are many -- we have a standard framework that we have internally, which we have not actually externally published. So this is an internal, which goes through a fair amount of discussion in including the IRR -- so we have set a benchmark. And typically, there is a payback period also defined very much there, which forms a part of the framework and we generally stick to that. Obviously, and we also have to be mindful that being a listed entity, there are reporting norms. And we also have a detailed framework and we actually take it to the Board. So that way, I think -- what we are trying to say is that this follows through a structured framework which is approved, and we actually align to that. Obviously, there would be plus or minus a few things that we'll have to take a call. But broadly, we are guided by that framework. -- in terms of both payback as well as the IRR.

Venkat, if you don't disclose it to your shareholders, how do we know whether you have failed or passed in that acquisition or whether -- how do we assess whether it has actually worked or it has not worked, right? I mean -- is this not like a disconnect between the 2, right?

No, no. See, there are 2 parts to this, right? One, we have a framework, an naturally we'll look at the payback period, we'll look at IRR. Most importantly, we first look at the synergies that the opportunity might bring the adjacencies that the opportunity might bring to our stable. So that's the first -- and apart from that, when we look at IRR payback, all the structure, management or the rest of it, et cetera. Once that is done, I mean, naturally, I mean, as we are a Board government entity, we take the proposal to the Board and the Board evaluates all of this and then it gives us the approval to go ahead of the transaction or otherwise. But once the contours of the transaction are approved by the Board, the Board periodically reviews them to see what we promised to deliver is consistent with actually what is being delivered. And that will go on until the time that the integration is actually completed. So it is not as though. It goes completely unsupervised. We don't put it out in the public domain. But internally, the Board actually look at it, do they review it periodically to see whether the milestones are actually being met and whether what was actually promised or what was what we expected to deliver is consistent with what is actually being delivered. The answer is yes.

But still, like there is any like I mean think if it's already like there is an intel benchmark from the Board. But I'm just thinking like when I look at Moody's presentations in the U.S. or S&P's presentations in the U.S., right, I think there is -- there is always a communication that this is what our benchmarks are, right? Whether we meet or not with a different -- that's an outcome, right? But process is also kind of shared to a limited extent, right, to whatever cost -- if we don't share the process and the outcome, shareholders will always be in the dark, right? We don't even know how much scale up have happened since the acquisition whether the ROEs were met, whether the ROCs were met, the paybacks were met. For us, it will -- once it is all a merged entity, there is absolutely like a black hole right -- we have to basically just look at the numbers and assume that whether it has happened or not happened. So the disclosure from a shareholder any point of view, I think it might make sense and maybe for a feedback. So how should we kind of communicate with the shareholders because we have been justice to the money that we have spent on acquisitions over a long period of time? And is there a tracking method that we can share with the shareholders -- that's all I had.

The next question comes from the line of Nishant, a retail Investor.

Just a couple of things. One is I was looking at Page 9 of your presentation. So the organic growth was muted for the research and analytics business. So what is the rough segment profit contribution of Fintetics?

We don't give any specific...

But you will have to disclose it in any case as part of the annual reported because this is like a...

Till the time we disclosed for everyone, we have to maintain that clarity.

Come again?

The time we disclose for all the shareholders will have to maintain that pyrites. Right now, it is not in the public.

Okay. But this should be a public call, right? What is the -- anyway, it's okay. The second thing is when you look at growth, we should be...

We have given a note on the Fintellix especially in the north to fans where we have said, I think, around 26% or 26% is the EBITDA for Intelex. So that note we have...

Understand. I understand. Okay. Got it. Got it. The second 1 is in terms of just understanding the growth on a steady-state basis, right, after we exclude the impact of labor code, basically, there is a 20% growth. That's the order of magnitude we should be looking at, right, in terms of the delivered growth for FY '26.

Sorry, how much you mentioned?

20% is the older final too that I got.

Yes, yes. It will be -- I mean, if you exclude -- you are right, roughly, it will be in that range. You're talking about the segmental or you're talking about overall PBT.

Essentially segmental -- so the way I was thinking about it is that the segmental profit that you disclosed on Page 9, is the core operating EBIT, excluding the impact of interest income -- so that seems to be in the sport of 20%. That's the right offers mate.

Closer to that, actually, it will be slightly lower than that, especially you're talking about research and elicit.

Overall, both...

It will be closer to 20%, 21% if we exclude the amortization as well. investment amount.

Got that. Okay. Then what is the total dollar-denominated business that we have on the top line?

Dollar would be roughly around the range of around just give you one, I think.

Sure. Yes.

Are you asking specifically within the R&D business?

No. Overall, I'm just trying to understand how much of the revenue for the company total -- so let's say, if I look at the INR 600 crores of top line that you have for FY '26, how much of that would be denominated in dollars?

Roughly about USD 18 million.

Okay. That's about 1/3 roughly like maybe appreciate. Okay. I understand. And that effect is that the currency impact doesn't have a full flow-through in Q4?

It has -- So why are you -- see...

I'm just trying to understand how much of the growth was because of currency versus -- so.

So the maybe go through of the currency, actually. -- roughly 1/4 of that would take compare it with last. There is some -- there will be some growth on account of currency. But typically, what we do is we don't recommend or say that you look at only the quarter because what quarters, there's some true up which happens for incentives and so it keeps on happening. So if you look at the previous quarter, there was an impact of the labor condo. So rather than that, we would rather want it to be in a half year or full year to extent possible.

Understand. And of the costs are there, let's say, significant dollar-denominated costs like, let's say, product licenses or other...

Nothing.

Okay. Okay. So Understand. So basically, the way I should think about it is that about $18 million is effectively dollar-denominated revenue and rupee-denominated costs.

Yes, roughly bulk of it would be -- there will be some odd, but bulk of...

The like predominantly, I'm just trying to get a sense of order of primates. Understand. Understood. Okay. And just 1 last question with respect to Fintex. Will be the competitor for us in this business?

So let me take that, globally, a couple of names I'll give you technology and Asda technologies. These are in private equity public company backed entities that have grown through a lot of acquisitions over the last few years. They are the ones that we typically find in the large global banks or internationally in the facilities. We also see a different kind of competition. There are a lot of the system integrators that will be there will be pitching for more scope were of customized solutions around -- but from a product standpoint, these are the larger global players. There were many more which have now gotten consolidated into these to a series of acquisitions that have happened over the last 24 months. Within India, we come across the usual suspect some of the other ICRAs have equal in risk and resolutions. And there are smaller entities that have 1 or 2 of the solutions that we also have in our larger.

Understand. So effectively, the way to think about this business is that you have data provided by the lender or the regulated entity. And then you sort of organize the data and provide access mechanisms to the regulator or to the regulatory engagement team in the bank or with the regulator effectively like a streamlined pipe for them to access and sort of view the compliance track of the company? Is that the way to think about the machine here?

Add a couple of more layers. So that -- what is it, right? That is 1 part of what we do, but also think of the regulatory rules, regulatory calculations that are required to be done, including any underlying models that required to be able to achieve that. Those are all part of the solution. So we also constantly have to make sure that the product continues to meet the regulatory framework and regulatory requirements as prescribed by the respective jurisdictional regulators. So that's part of what customers pay for.

Understand. And today, it is only credit institutions or you also do insurance?

We do -- so it is -- it is all types of financial institutions, obviously, a high concentration within the lending unions, but we are trying to foray into some of the other adjacent areas I don't have any further questions.

The next question comes from the line of [ David Panjabi with Banyan Tree Advisors. ]

Yes. explaining the product of Intellex. Just wanted to understand like, do we foresee any risks from the AIG on the regulatory reporting side because what I understand is we take certain data structure it in a -- structured as per what regulation requires and then pass it on to the regulator. So like can AI take some AI model do this?

Well, AI will threaten every aspect of the technology world and every workflow within the enterprise. But honestly, this is the place which will be far touch because of the regulatory complexity that is involved. And the fact that the well of accurately required, the level of SME expertise that is required to interpret the regulations and construct those regulatory submissions and any calculations that is quite high. An external provider who brings his expertise doing it for financial institution, I think they also rely upon that aspect. Is there a possibility that some parts of this will get automated or written by AI, there is always a possibility if you can never rule that out. But Bindas, this space will continue to exist, and I believe, going forward, we very, very relevant for India entities to vendor sales.

Does that answer your question, David? Yes. Thank you. Ladies and gentlemen, that was the last question for today. On behalf of ICRA Management, that concludes this conference call. I thank all the participants for joining us. Thank you.