Intellect Design Arena Limited (INTELLECT.NS) Q2 FY2026 Earnings Call Transcript & Summary

[indiscernible] and press release have already been shared with you and are available on our website. During the call today, our leadership team will walk you through the highlights of the quarter, covering our financial performance, business momentum and strategic priorities, and we'll then take your questions. We have with us today Mr. Arun Jain, Chairman and Managing Director; Mr. Manish Maakan, Chief Executive Officer, Intellect Wholesale Banking; Mr. Rajesh Saxena, Chief Executive Officer, Intellect Consumer Banking; Mr. Banesh Prabhu, Chief Executive Officer, Intellect AI; Ms. Vasudha Subramaniam, Chief Financial Officer; and Mr. Vikas Mishra, Chief Strategy Officer. We are also joined by several senior members of the Intellect management team. Before we begin, I would like to draw your attention to the safe harbor statement. Certain statements made during this call may be forward-looking in nature. These involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied. These statements should be read in conjunction with the risks detailed in our filings and disclosure. With that, I would now like to invite Ms. Vasudha Subramaniam, our CFO, to take you through the financial performance of the quarter. Over to you, Vasudha.

Thank you, Nachu. Good evening, everyone. Thank you for joining us on our Q2 earnings call. It's a pleasure to connect with all of you again and walk you through what has been another solid quarter for Intellect, a quarter that reflects not only our momentum in top line and profitability, but also the underlining strength of our platform-led strategy, business model maturity and consistent execution. Let me begin by sharing the highlights of our second quarter and then move on to a composite view of our half year performance. In Q2, Intellect delivered revenue of INR 789 crores, registering a year-on-year growth of 34%. On a sequential basis, we grew 7% over Q1. Our EBITDA for the quarter stood at INR 184 crores, growing 68 percentage year-on-year. Net profit almost doubled, reaching INR 102 crores, a 94 percentage year-on-year increase. Our License-Linked revenue, which includes license fees, platform, subscription and annual maintenance stood at INR 423 crores in Q2, up by 69 percentage year-on-year. Our ARR, annual recurring revenue crossed INR 1,080 crore mark, establishing a strong and predictable foundation for future growth. What is also noteworthy this quarter is our continued strength in collections and cash flow. Collections stood at INR 753 crores in Q2, up from INR 550 crores a year ago, reflecting a 37 percentage increase year-on-year. Our cash and cash equivalents have risen to INR 927 crores compared to INR 755 crores in Q2 of last year, highlighting our robust working capital management and improved operational efficiencies. Now let's look at the half year performance to understand the broader trajectory. For the first half of current year, we recorded a revenue of INR 1,523 crores, representing a 26% growth over the same period last year. EBITDA for half year stood at INR 360 crores, reflecting a 46% growth year-on-year, while PAT for H1 reached INR 197 crores, up 55% from INR 126 crores in H1 full year '25. This transformation and revenue quality is not just a numerical shift. It reflects a strategic evolution, creating value through sustained investments in product innovation, strong customer relationships and prudent operational discipline. Let me now speak about the accelerating growth we are witnessing with our two synergistic platforms, eMACH.ai and Purple Fabric. Together, they are powering enterprise-wide transformation at scale, enabling financial institutions to embrace intelligent, composable and open architectures that deliver measurable business outcomes. In Q2 of the current financial year, Intellect recorded 18 new deal wins, including 11 multimillion-dollar destiny deals. These are large strategic engagements that span multiple modules and represent deep long-term partnerships with some of the world's leading banks and financial institutions. In parallel, we enabled 22 successful digital transformations this quarter, validating not only the breadth of our offerings, but also our delivery excellence. Looking at the demand side, our global deal funnel has now crossed INR 12,000 crores. This represents both the depth of opportunity and the strategic nature of our engagements. Leadership strength is a critical part of our ability to scale and deepen client engagements. This quarter, we announced two significant leadership appointments that strengthen our global presence and growth momentum. Vivek Gupta joined us as President and Global Head of Consulting, with over 3 decades of experience in global banking and large-scale transformation programs, Vivek will lead Intellect Consulting to help clients accelerate business value using our eMACH.ai and Purple Fabric platforms. We also welcomed Rakesh Srivastava as President and Chief Revenue Officer for the Americas. With deep expertise across financial services and fintech, Rakesh will spearhead our growth and client relationships across U.S., Mexico and South America. I'm also excited to share that we are investing in the creation of a state-of-the-art 7.25 lakh square feet facility at our Siruseri campus, which will house the Purple Fabric AI labs, design thinking centers, eMACH.ai academy and residential infrastructure to support our leadership development and training initiatives. This facility is not just a space. It is a strategic investment in IP creation, customer co-innovation and the future-ready talent. In conclusion, this has been a strong quarter on all fronts, revenue, profitability, cash flow and platform growth. We remain confident of sustained growth in the second half of the year. The opportunity landscape is expanding. The deal funnel is strong. Our execution machinery is battle tested. Our platforms are proving themselves across regions. Thank you once again for your time today and for your continued belief in Intellect. So you want to add anything? Or can you open for questions?

It's a good storyboard right now. So what we are talking to the investor over the period of time that we designed 20% growth year-on-year, I think it's on that same traction. The important thing which happened was eMACH.ai was the agenda for advanced country. This half year, we are seeing America is growing significantly faster than other regions. So the decision of last April and May, which we have taken a decision to move to advanced market because eMACH is fitting into the legacy modernization space, where a lot of technologies are sitting with multiple mainframes, multiple old technologies are there, where the entire investment we have done in low-code, no-code term as a customer innovation platform. Purple Fabric as a next area, which is most usable in Americas and Canada. So this is a reflection which I mentioned during the July 2024, that we are investing in Americas, and there will be a dip in the last year. And then so to the investor, I just want to say that all the decisions which we are making is a calibrated decision. We are saying we have been investing INR 130 crores in Purple Fabric, the business impact AI platform. In last 3 months, I would have met more than 100 different people during the various master classes, the partners, the end customers. And what we are able to put our R&D teams are able to put together a business impact AI platform in terms of enterprise knowledge garden, digital expert, enterprise governance and LLM selection and optimization and using it as API, is so well received right now, which requires new investments to be made. So out of INR 130 crore investment, we are close to $15 million investment, which we are looking to invest this year. As of now, in this numbers which you are seeing, almost INR 25 crores is Purple Fabric investments, which has been taken into account. So our EBITDA margin would have been better by 3%, 3.25%, the EBITDA margin could have been better than that, so which makes it around close to above 25%, which are the guidance, which earlier we're seeing our margins close to 25%. So we are in range of 25% in spite of all the investments. So thank you very much for participating and trusting the company. We are here -- all the management team is here to respond to the questions, what you have.

[Operator Instructions] Our first question comes from Rahul Jain of Dolat Capital.

First of all, congrats on very strong execution. And I have a few questions on the inputs that you have just shared. So first of all, on the two hiring that we have done, and these are very interesting positions. So if you could help us specifically on consulting-led hiring, is it more to drive [indiscernible] set from the point of view of [indiscernible] is it on that side of it? Or is it more on the existing way of support that we provide to banks? It is on that side of it. This is for the consulting hiring. And similarly, on the other hiring, which was on the revenue officer, is it around the Purple Fabric investment and to rightfully monetize on that part of it? Or it's on a much more broader revenue stream from Americas?

Okay. You've broken in between. I'm just repeating the question for you. What is the role of a consulting in our journey? What is the role of it? So that's one question you asked. And second question is the growth in North America is Purple Fabric or otherwise. The first question...

Sorry to interrupt, but just to clarify, this was more specific to the two hiring that we announced. So I'm saying what is the role of these two gentlemen from a consulting reach point of view? And from revenue -- for the Chief Revenue Officer, will it be pertaining to Purple Fabric or overall Americas revenue?

That's right. These two hirings, consulting is a portion we are moving to business impact transformation space with eMACH, we are looking at it, we can measure the impact by reducing the cycle time, reducing of implementation, reducing the operation cost and creating the business impact in terms of revenue generation. So consulting will be helpful for improving our pricing, improving our business impact communication, expanding the eMACH across the organization when we are implementing one product, can we do three products in the same client. So it will use cross-sell. So that's the role Vivek Gupta will be playing. The role Rakesh Srivastava will be playing as a country head of our U.S. So he will be looking after the full interest of the Intellect for U.S.

Understood. And the INR 25 crore investment that you talked about, was it pertaining to H1 data or only Q2 thing?

Only Q2 things. H1 was -- first quarter was INR 10 crores, which we mentioned in the last call, INR 15 crore incremental has gone in this quarter. So INR 15 crore incremental each quarter, we are targeting to make it INR 130 crores.

Right. And in terms of payback on this investment or early sign of monetization, have we identified any time line by when we could see those -- this proof of concept converting into meaningful revenue for us?

Not yet. I think the opportunity size is so big that we don't want to monitor ROI on this. It's a minimum we need to do.

Right. So I appreciate that this kind of a product and opportunity would require a meaningful investment and much back-ended kind of a thing in terms of the ROI. But the first meaningful revenue should be coming in FY '27 or it could start this year as well?

We mentioned INR 200 crores in Purple Fabric last quarter, will come this year. So we are in line with that.

Okay. And these are right now maybe in the pipeline stage, but can get into revenue?

No, the Purple Fabric in U.S. is working from last few years, which you know insurance business is working on Purple Fabric underwriting space. So those revenues are already pipeline space in Purple Fabric.

Right. So you are saying that those exponent and risk analyst opportunities very much in there, but the lending side of opportunities are yet to come into our revenues.

Yes. There are many things are there. I think Purple Fabric strategy we have shared with you in separate session. I think just go back to it as a platform, as a lending, as a GRC, as ESG. There's multiple ways of monetization of Purple Fabric with the partners is an other role. So we are not sharing all the strategy element in this call -- conference call because it's private to us. So -- but there are multiple angles to the Purple Fabric strategy.

Yes. And I must appreciate your team because recently, we saw your stall on GFF and the best collateral -- set of collateral that were available on any stall, I think it was Intellect Design and there was a significant collateral kept for all your eMACH and Purple Fabric kind of an offering, which is very relevant for that kind of a forum. So kudos for that. Just lastly from my side is on the CapEx side, which you just announced. So is there any investment and timeline that we have identified for this infrastructure spend that we just highlighted?

This is -- we always do investment once in 10 years. So this is the investment for next 10 years, when we are creating this capacity for next 10 years for business impact co-creation with the customer. We would like to invite customers coming over there, global customer coming over there, design the solution, compose the solution themselves, contextualize it. So it has a residential facility of 100 rooms to do the -- customer can come there, stay there as an executive facility. So this is the whole area where AI business will be done in a collaboration with the customer. So to us, AI is a very collaborative exercise with the customer. eMACH is very collaborative exercise with the customer on business impact. So that's why the -- all the three pieces of it, U.S. piece, consulting piece and this infrastructure piece, all three are coming together in a single initiative when we did the business plan, there are all three were approved at that time.

Our next question comes from Sushovon Nayak from Anand Rathi.

Congratulations on a good set of numbers. Just one thing, sir, I just wanted to understand how is the integration of C1 going on? And I believe initially, it was -- I mean, when it was novated the contracts, it was not very profitable, but you had to leverage on eMACH.ai platform to improve the profitability, and I think it was going on track. So if you could just give us a little more color on that, that would be helpful.

It's going on well. Rajesh can update you.

First of all, thank you for that question. I think to your question, the integration between C1 and the Intellect team is going as per plan. And during the last quarter, I think we mentioned it also, we've been able to sign up with 35 credit unions to move from the Erstwhile Forge platform into the new platforms -- to the new eMACH DP platform. So I think that's a significant movement that in one quarter, we will be -- we were able to move 35 -- we will be moving 35 customers. We just signed the contract over the next couple of quarters. So it is going on plan, and we have a plan to significantly grow these numbers over the next couple of quarters.

And anything on the color on the margins? When do you think that it will be in line with the company's present margins? And I believe the addressable market is 170 credit unions. So any timeline that you're looking at to onboard all of this?

Yes. So I think the way we are looking at the credit union space, you talked about the 170 credit unions. So there is an opportunity of 170 credit unions from a DEP platform. Then there are other cross-sell and upsell opportunities like selling them lending solutions, selling them commercial solutions, selling them core banking solutions. So the solution space is not only the DEP space, but also an opportunity to upsell and cross-sell. Regarding margins, I think I'll defer that to Vasudha. Vasudha, you want to take that question?

See we initially said it will be margin dilutive, but we have made some margins in Q1 and Q2. So we expect that to continue in the quarters to come. And it might increase also, like Rajesh said.

Is it fair to assume, ma'am, that this will be low single-digit margins as of now?

Yes, you can assume that, yes. As of now, yes. [Foreign Language]

We have Deekshant Boolchandani from DB Wealth. We'll go for the next person. We'll have Nemish from Shah Emkay Investment Managers Limited.

Congratulations on a good set of numbers. I just wanted some insight on how our partnerships with system integrators is kind of panning out? So if you could just throw some insight on that. And specifically, on the pipeline front, so we've seen a good strong growth on our pipeline, which is now at about INR 12,000-odd crores. So if you could just share how much is that now coming from the partnerships that we have, say, versus 1 year back?

Okay. So partnership strategy is working very well. So we are now in advanced conversation with most of the players, most of the SI player, IT services player, they need AI platform. So the big opportunity is that IT services player today are under pressure. They need an AI platform to work on. And that is what currently we are working on. They have done most -- almost 10 to 12 IT service companies have gone through the boot camp, working with the Purple Fabric. The pipeline-wise, I would say pipeline has substantially increased more than -- I think the exact number, we'll not like to share with you what the pipeline number is there, but it's substantially improved in the last 1 year because of Purple Fabric is a significant contributor of the pipeline besides eMACH contribution.

We have Mihir Manohar from Trust Mutual Fund for the next question.

Congratulations on a good set of numbers. Sir, I wanted to understand on the Purple Fabric side. I mean, specifically, how is the pipeline building up on a Q-o-Q on a Y-o-Y basis? Is it more than double digit? How to understand that? And which geographies, which kind of customers are building up this pipeline? And on a broadcast basis, let's say, for the full year, we are targeting INR 200 crores of revenue. But 1H, what would be the revenue that we would have received from Purple Fabric?

INR 200 crores is for Purple Fabric only. INR 200 crores is for Purple Fabric for this year.

1H, how much would be the number for first half?

We don't declare it right now. We don't define the numbers product-wise. As a strategy, we never do product-wise numbers.

Okay. Understood. I just wanted to understand on this thing. I mean, is it like a top-up offering? Or is it a cannibalization of the existing offering, which is there? How does the overall business work for Purple Fabric along with the customers?

I think you should attend a master class first, Purple Fabric Master Class to understand what AI is. It's a completely different line of business. What does the cannibalization means to me. So sorry to be slightly harsh on this call. I think we are communicating Master Class on Purple Fabric. It's such a differentiated product against Palantir. It's the biggest opportunity investor can have. And if you don't understand that it's cannibalizing something else, I think we have a very serious issue as an investor to understand what company -- your company has -- did a product, which is compared to Palantir. So you should study Palantir and you should study Master Class of -- it's available on YouTube to understand what Purple Fabric is.

Sure. I will do that.

Yes, because it is so different your company has done a job. You should be proud of some Indian company to do something for business impact AI, which is as good as Palantir, which is a $400 billion market cap company.

Our next question comes from Vivek Kumar of Bestpals Advisory LLP.

Sir, can you give outlook product-wise? I'm not asking the revenue breakdown, but normally, we give outlook about our core banking and about our GTB and how -- what are the trends playing out in each of the -- I'm not asking for numbers, but for the next 2, 3 years, you can -- because which is what is driving growth. And where do you see? Because you remember telling these three were the -- and now you have Purple Fabric, so you can -- Purple Fabric, you have given more than enough for us. So I'm just asking about outlook.

I think what is outlook-wise, you look at it, the core banking migration is the biggest space we shared with you. We won the deal in core banking migration using eMACH.ai. So that's one space where the growth opportunities are there, which Rajesh has mentioned, the credit union of 170 credit union, we can go into core banking and lending as a cross-sell opportunities. So they are not only digital engagement opportunity, but core banking and lending can go on the same credit union on the market space after DEP. So there's a next 2, 3 years, we have a clear visibility of core banking migration to get into that. Manish can give wholesale banking and payments and liquidity. There are three lines of business which wholesale banking is coming out. With foreign banks, they are expanding into the global landscape. Wholesale banking is becoming equally important, along with liquidity and the payment systems, which is there. So we won the large payment deals in this quarter against global competition on the payment side. Our Pay9 architecture is very unique over there. So three platforms: liquidity, payments and wholesale banking. Then fifth platform is wealth. Wealth with SBI and Kotak running on the wealth, it has become solid product which is there, which we are looking to take it to out of Asia to Europe. That's the same strategy which we followed for other products. We took core in India first, then we take core into Asia, then we took core to the Europe. Now we are taking core to the Americas. So this route is same highway is there. Highway goes from India -- comes from India, goes to Asia, then goes to Europe and Europe to America is our highway of taking products. So these are 5 product lines, which are core product lines. The supplementary product lines are trade supply chain finance is another important line. Credit card is another line which we are looking at to transform this business. And all these products are coming with AI embedded inside it, creates us a differentiation because Purple Fabric is embedded in all the products and creating each product line as an AI embedded product line. So that's what our bullishness or our pipeline is increasing because we are able to differentiate where the product comes with the AI built in, eMACH built-in, Turmeric built-in, which my competitors have not invested enough. So we have a sweet spot here.

And last question. So can we say we are moving outside our 20% growth rate for the next 2, 3 years, given that we have -- because it looks like that maybe I don't [indiscernible] one quarter.

We are designed for 20%, we will design for 20% if we achieve higher or we achieve lower, so you don't beat us when we are growing 10%. So it always happened in this industry. When we grow a few quarters less, few quarters higher, this is -- we stay at 20% design growth.

So can we take EBITDA margin around 23 same percentage -- around 23% -- 22%, 23% for this year, even with this INR 130 crores coming off?

There's no need of -- I'm depicting any numbers over there. Just if 20% growth is happening, it's EBITDA margin should grow better. But first half, 26% revenue growth, 46% EBITDA growth. That should be the indicator for you.

Moving on, our next question is from Sajal Kapoor representing Antifragile Thinking.

Arun, sir, what important insight about modern banking insurance of payments do we understand bigger and better compared to our older competitors? Because clearly, we have beaten a lot of the incumbents in this game again and again.

If you look at our site or my lecture, if you look at it eMACH.ai, we've gone from design thinking where we understand the customer desirability better, not customer desirability, customers' customer desirability, which if Manish speak for a few minutes is about each industry segment to understand that customer desirability. Then we move to first principle thinking. First principle thinking is why bank exists because event exists in the company. So we do fundamental shift in way we design our product then my competitors does it. I don't want to compare with Tesla, but the point -- the way Tesla has challenged the starting first principle thinking they applied in Tesla, we applied in banking technology saying event, microservices, API, cloud, headless and AI. There are 6 first principles, which any bank will require. And we invested all the money around making that perfect, composable and contextual. From last 5 years, you are hearing the same story. Initially, we we're not understanding what is the composable and contextual. It was label when we put composable and contextual in 2020. It took 5 years for them to come to the reality, and that investment is there. So the differentiation is design thinking, first principle thinking are the way we design the product, and that's why we are able to take one by one, competition. And we are not dumping all of it together. We are saying first take one space, then take next space, then you take next space and then take a leadership there. Manish, you want to add to this?

No, no, no. I think you called it out. This is the differentiation we are driving from that perspective. I think we should stay there.

And my second and last question is, how is our R&D, the processes, especially around AI and ML and eMACH Labs, how are the processes explicitly designed to sort of encourage frequent small scale or "safe failures" sort of trial and error that generate immense amount of economies of learning without jeopardizing the company's stability or spreading any systemic risk? Because we have to make small mistakes, gain significant learning as a result and then become even better and extrapolate our successes into other domains, hopefully.

First time you are asking a very good question in the investor call about R&D because I think our strength is R&D. 1,200 research engineers are working. How many companies have a 1,200 research engineers, given a freedom of working together. And if you look at the average stint in the company, it's is so phenomenal that everybody just worked like a team, research engineers. We made a lot of mistakes. It's not that we don't make a mistake. I acknowledge in AI space from 2016, first three cycles, we didn't succeed. 2016 to 2018, we didn't succeed, '18 to '20, we didn't succeed. It takes that amount of resilience for research team to work. The research is a completely new paradigm for Indian IT industry that how the research is to be conducted. And I like your question that you are emphasizing that component of research, which I was trying to highlight for quite some time, but investors are more focused on returns and immediate outcome, because this research requires 5 years to 7 years kind of a cycle time to translate the research into the business outcome. So fortunately, we could stay with our course. We didn't cut down our AI investments when we failed in '22. We continue those investments. And today, we can get the benefit of it ahead of the industry, where every IT service company require a platform and they are saying, they are building a platform. I have a doubt that they can build a platform because research is not their cup of tea.

Absolutely. It's a different DNA, Arun saab, that doing as a service. So Indian IT traditional model has been project maintenance, just service model. I mean people -- it takes a lot of courage and conviction to invest behind generating your own IP rather than working for someone else's IP. And that's where I think we have been trying and making a small mistake is absolutely fine. Look at our balance sheet, I mean, that's -- numbers speak louder than whatever narrative we could spin around it. So net cash balance sheet gives us a lot of optionality to continue to innovate. Yes, we'll make mistakes in future as well. But think about 2, 3 big successes that could take us into a completely different orbit. And eventually, we'll get there. But thank you for all those responses.

[Operator Instructions] Let's move to the next question in the queue. Pawan Kataria from Bullseye, you are up next.

Congratulations on another strong quarter. I have follow-up questions on margins. You had earlier guided for 27%, 28% margins. And I understand the INR 25 crore investment in Purple Fabric this quarter. That was a deliberate strategic spend. But should we assume that the investment phase continues in H2? Or do we expect operating leverage to bring margins near 27%, 28%?

It's a time to invest more and more here. I'm just looking when I spent -- I just came back from U.S. I spent 2 weeks' time there. I made two trips to U.S. first in August and then in October. Opportunity is humongous. How much we need to invest is a question right now? So that we should not make significant error, but we need to invest more and more. So margin is not my concern right now. Margin will happen anywhere.

Okay, sir. And since finally, sir, Purple Fabric is now scaling commercially. So could you quantify how much interest or how much qualified leads it has generated? And what portion of the current INR 12,000 crores funnel is linked to it? Because I've attended your Purple Fabric Master Class, and it was pretty impressive. So just would like to know out of the INR 12,000 crores funnel, how much is linked to Purple Fabric?

I think let me not quantify that right now. It's -- my current product portfolio itself is Purple Fabric embedded. So if I say every pipeline has a Purple Fabric embedding, I would say almost 70% of my pipeline has a Purple Fabric embedding into it. If I look at it separately, partnership pipeline is also separate. So I think it's -- AI is everywhere. And we have today, just to share you, we have 3,500 people in Intellect using Purple Fabric. We have 9,000 agents, which we are using internally for our own efficiency gains. 9,000 agents in last 6 months, they have created.

We'll now move on to the next question. Vipul Kumar Shah from Sumangal Investments.

So what will be the CapEx for this...

$20 million is the CapEx, which is...

It will be spread over what time frame?

$20 million per year we are spending on the CapEx investment. So last few years is $20 million.

Okay. And for 1,200 research engineers, what is our annual outgo?

In this quarter, R&D expense, which we are doing, R&D plus $20 million. So if you look at it, we are spending...

First half is less than $10 million. First half is less than $10 million, I'm saying.

$10 million capitalized, not...

$10 million capitalized.

But total investment on research is...

It's about INR 55 crores in the first quarter and INR 60 crores in the second quarter. So it's about INR 105 crores.

That's the R&D investment?

That's R&D investment.

Plus CapEx? Add them all -- it's close to INR 200 crores in the first half. INR 200 crores is R&D investment in first half.

We have a follow-up question from Sushovon Nayak from Anand Rathi.

Sir, I have obviously the privilege of attending most of your Master Classes on Purple Fabric. Just wanted to understand if you could at least provide a directional view about when I'm looking at foundry for Palantir or a C3.ai, what would be -- if you could quantify what would be the addressable market? And obviously, internally, you would have had some plans, how much of that market you may want to capture the way you had articulated about the INR 200 crores this year? If you could just give some sort of a directional view on that. Would just love to understand your perspective here, sir.

So Purple Fabric, we are looking for IT services player to look at it first, they should implement. We are looking for at least 100 partners to be there across the globe by the IT services partners. So every country, we are looking for some 10 to 15 partners we want to select who will be using Purple Fabric for their internal use like Intellect is using, which we call it Purple Fabric Tech. Then they will take to their clients. So our client -- our partnership with some of the larger IT services company who has a 500 to 1,000 clients are there. That will be the second space. So to reach our access to Purple Fabric by direct sales force, we can reach to, let's say, 500 clients. But with the partners, I can reach to 2,000 clients. So our ecosystem will be close to -- will be -- in the next 2, 3 years, we'll be looking at it, 5,000 customers should be approaching Purple Fabric directly or through partners.

Any quantification in terms of revenue or the overall addressable market? Sir, if that could -- if you could provide some directional view on that, if that is possible.

I mentioned in one of the master classes that opportunity is between INR 1,000 crores to INR 5,000 crores. Just a minute I'm saying AI business is INR 1,000 crores to INR 5,000 crores number when you have given, the risk is also there. It's changing every day. The point is it's a highly volatile market, the speed at which we are able to get it adopted, that will be the important point for all of us. So don't take it -- take it with pinch of salt of INR 5,000 crores number, but the opportunity size of TAM is INR 5,000 crores, which we believe it's possible if things are going in the right direction, but anything can happen in AI space.

Our next question comes from Srinivasu K from TIA.

Congratulations for the great set of Q2 numbers. My first question is about the India's DPDP Act and data localization. You already have PF Cloud GIFT City that mandates local hosting. So I just wanted to see the opportunity for Intellect?

GIFT City is only one means of doing it. So GIFT City is not expanding the -- I'm saying the biggest opportunity is North America and Europe. Okay. Next, I think he has dropped off.

Okay. So you don't see much...

It's there. India is there, but I think GIFT City is only a means to reach out to other people, but not necessarily the GIFT City -- it is one component of it. I'm not saying it's there or not there. I don't want to undermine it. But it's just one component of it. If there are 10 component of Purple Fabric, GIFT City is one of them.

Yes. That's fine. But I'm just asking the opportunity -- being an Indian software company, do you see a big opportunity based on this DPDP Act?

I didn't get it, DPT Act? Data Privacy Act, okay. Yes. It should have -- it has evolved. This is too early to say anything. We need to test it out Data Privacy Act, how much the act is applicable, what situation bank will use DP. So we are just evaluating. It's too early to say anything on it.

Okay. My next question is about the deals that you won in Q2, be it payments, treasury or trade. Is this eMACH wins sit above the incumbent course?

These are like full payment transformation. Manish, do you want to highlight that?

Sir, your voice is not clear.

The question is, out of the Q2 deal wins that you won, how many wins this eMACH sit above your competent -- competitor course like be it Temenos, be it Oracle, be it Finacle?

These have been all fought in the global landscape for against each of these players. Like Arun spoke about the large payments transformation deal. These are the common players we are winning against, and these are very significant deals from that perspective.

Okay. How many eMACH customers adopted Purple Fabric as an AI layer in these deals?

I think that next level of data right now, we're not sharing.

Okay. So let me put it in a different way. When banks pick up a core plus componentized modules, what unique differentiation that your PF or eMACH, the default AI workflow layer rather than hyperscaler tool chain?

Srinivasu, I'll help you answer your question differently. So our Purple Fabric is embedded into eMACH like in the core banking, in the lending side, in the payment side, it's an embedded capability as well as it can sit outside on top of a Temenos or an Oracle or Finastra or any one of them. So from our configuration specific to these product segments, it can sit -- it is embedded in our platform, and it can sit on top of anything. So our opportunity -- and then it's a licensing capability of what the customer has licensed for. That should help you understand where we are.

Okay. My last question is the global orchestration players like ServiceNow, Pega, they're all talking about agentic workflows. So how is your iTurmeric is placed to capture this trend?

We have not launched iTurmeric against BPN. That's an area which we can launch in '27 or '26 or '27. That's -- still we are using Turmeric only to solve our own customer problem, not as a product against Pega. But Turmeric plus Purple Fabric is a very lethal combination. When we are ready to launch, we'll launch it over there. So from an investor perspective, you need to look at it, my INR 1,000 crores is the cash in the books, but I have a INR 10,000 crores of IP asset, which I can leverage at any point of time to go to market in different construct. So that's the role of an IP company, which we have built over a period of time, that Turmeric will build up. We are patiently looking at it. We have more than 300 customers are working on Turmeric as of now, but we have not launched it. When we have capacity to launch, maybe in June '26 or January '27, that is the time when we'll take a Purple Fabric against Pega and against ServiceNow.

Moving on, we have another reraise question from Deekshant Boolchandani question from DB Wealth.

Firstly, congratulations on the solid numbers. And moreover, congratulations to Intellect that we are now competing someone like Palantir and even saying that as an Indian, so proud. So it's a little bit long-winded question. Please help me hear. So I see that underwriting really appears to be a major challenge across finance overall, whichever geography that we are looking at. And from my understanding, the Purple Fabric layer that we have created now can really revolutionize it with a better cost optimization. Again, that's my limited understanding, sir, I would love to hear from you. So you have mentioned platforms like Palantir, and they do some enterprise intelligence in depth. So I'm curious how Purple Fabric would compare to some U.S. companies like Affirm, which really excels in real-time risk assessment and management for their credit lending and how can we create a better credit layer of assessment of underwriting so that, that layer can be an agentic workflow for all these people so that a lot of their OpEx gets saved up and which becomes our margin and our...

Manish, do you want to take it up?

Yes, it's an interesting question. So let me try and explain this to you. See, underwriting -- the underwriting capability was one of the early investments we did in AI. The ability to orchestrate underwriting all the way from the submission from a customer, whether this -- we've done it a lot in insurance, but we're also doing it in lending and other areas, where you could basically take a submission of documents and have the digital experts, which are the agentic capability to be able to work on that underwriting, validate some of that information, firstly, extract it, validate it with data that is there within our knowledge gardens or -- and our knowledge gardens brings in data from market sources. And then the ability for us to take this decision through digital experts on underwriting and provide the human an ability to do it faster and more efficiently and accurately is really the end-to-end embedding of Purple Fabric into the underwriting process. Manish mentioned, and some of you asked the question about the investment in Purple Fabric. The investment in Purple Fabric is actually the investment in AI. And no company today cannot invest in AI because it helps you internally in your own businesses, it improves the product, and it brings you the ability to bring the agentic solutions together to get better business impact outcome, which is why our platform is called the Open Business Impact platform because you have to use the agents to orchestrate end-to-end solutions for our customer using AI. It is not a layer that it works along. It connects and works along with eMACH. It's not like a layer of eMACH or something. It's partly these agents are embedded into eMACH solutions we have. And at the same time, they connect to many other solutions clients have for the digital expert to work efficiently. And that's really the orchestration.

Okay. Sir, just two follow-ups here. One, at some point of time, the workflows will get standardized for a lot of insurance players or finance players, BNPL players. And at that point of time, then cost really becomes the only constraint, right, for them, like if we are able to do it at a better optimized cost, then the other party, they would want to stick with us and also the whole problem of like going from one player to other. So what kind of stickiness do we expect our sort of total solution to have? Because once someone has integrated with us, I'm thinking that stickiness should be higher, right?

No -- is your question to do with stickiness? Is your question to do with cost?

Aren't those two related?

No. So a customer can stay with you and actually it continues to -- because this is not a onetime activity. Underwriting and improving the digital agents is a regular maintenance because you have new data, you have new systems. So the ability for the agent to continuously improve underwriting for you is part of the process. Like in any system we use, the end-to-end underwriting has to get more efficient. And then finally, you have to take the credit risk decision. You can get inputs to do it faster and quicker. But the final decision for each bank or institution is how much they want to lend and what is the risk reward they want to do? The AI only helps you with much superior knowledge to be able to take those decisions more efficiently. And the agent actually helps you do that.

And I'd like to add another, Manish, point to let them explain. I think people are not understanding AI -- a lot of us are understanding in AI world, say AI is agentic. AI is not agentic. AI has changed the world. It's a new way of working in this world where every manager has to work AI augmentation. In your job as an analyst or as an investor, how many places you are using AI for a serious issue rather than a ChatGPT as a conversational agent. It's a way of -- new way of working in this era and people are not realizing it. When we have 9,000 agents in Intellect, it's not that they are creating operational excellence or -- they are doing a part and parcel of their day-to-day work. They are using -- they're thinking like that. So in the next 3 years, the AI will change the entire -- the way a lot of businesses which you are evaluating today will change dramatically, differently in the next 3 years. We are undermining the power of AI as an agentic power.

Sir, I understand where you're coming from, and I really appreciate you coming from moreover, but let's say that someone like Anthropic or Claude, if they are creating similar financial workflows. How can we then be more competent there? Like, let's say, 3 years last 5 years down the line.

Please attend the Master Classes.

Sure, I will, sir.

Next question from [indiscernible].

Sir, I've been invested with Intellect as well as Polaris and I've been closely tracking for almost 20, 25 years. I think the energy you show and the -- is amazing. Next -- my question is, last year, we signed a lot of SI contracts in Q2, Q3, for example, HCL Tech and other big companies. I know it takes a few quarters for them to materialize. Can you give us an update about how it is going? And how do you see that SI thing evolving in, say, maybe next 2, 3 years?

SI will be the way to grow the Purple Fabric, SIs will take us to their customers. They don't have an option. To me, many of the SIs doesn't have a platform to which they can deliver AI to their customers. Intellect brings a complete platform with enterprise governance, LLM optimization. Either they have to choose Palantir or they have to choose Intellect or they have to choose C3.ai. So we are one of the 3 options available to SI to take to market. So the investment we have made in a partnership over the last 2 years is playing well for the coming years. How much it worked out, the determination of the package between INR 1,000 crores to INR 5,000 crores, that is a kind of a bandwidth, which partner will define us.

And are you getting -- well, are you signing some contracts coming through that route nowadays or still too early?

That's right. They are coming closer.

Okay. And the next question is like our cash and cash balance is almost touching INR 1,000 crores. It's quite different from the COVID days when we were barely making profit. And most of the questions were conference call where when are you going to make profit? So from that stage to where INR 1,000 crores is -- it's commendable achievement. Now I think you probably have got a critical mass. How do you look to utilize this cash and cash balance, which is there and which is likely to grow even further now?

As of now, I think we need a lot of investments in AI, the market capital investment. So I think this much cash is anyway required for us to look at it. It's a one quarter cash. So the numbers are, I think, close to INR 800 crores, INR 789 crores is a quarterly number. So a company will require at least 6 months of the revenue as a cash in the company books to have a proper risk management practices. So I think we are still short of -- the simple principle is 6 months revenue should be cash in the company books as a risk management practice. Today, we are close to 5, 4.5 months cash in the books.

Okay. And I think last quarter or maybe a quarter before that, you hinted a transaction -- or you hinted investment like some portion of your profit, you would be investing in CVC kind of activity. Is it -- how -- what is your thought process on it? Would you like to increase that number given our financial position now taking in more debt or...

We are not getting distracted. We have a clear focus on eMACH.ai strategy to go forward in the market. Just last question, it's 6:00.

The last question comes from Pravesh Kochar of FourLion Capital.

Hypothetically, if you were to operate at 10% margin, right, instead of 25% and invest it in either R&D or doing free implementation for your pipeline customers, by how much could you accelerate your revenue or conversion of that pipeline?

Usually 2 years, but there are more investors who want more than 10%. So we need to play with the whole marketplace. So as a CEO, it's a ball to play on. I think we need to increase our sales team substantially. We have increased -- we are -- salary cost has gone up now and SG&A cost is going up. In next 2 quarters, we'll be investing more in sales cost. So that's the investment we'll be making. I cannot predict what will happen to the immediate outcome because AI still is an early stage of people to understand it's like Internet era of '97. A lot of hype is there. But there are many players are there, which are saying Anthropic can do this, this can do this. All of it is there in the -- if you can take a right space of Palantir and Purple Fabric, I think that can be of different fortune, which can happen. But it's not -- it is not going to happen by more investment. It will happen with the right adoption of our platform by the certain key customer and many variables are there, they are still keeping us awake at night on Purple Fabric, what opportunities it can throw at us, whether we are able to capture all the balls which are in the air.

And that concludes our Q&A session for today. Thank you, everyone, for joining today's call and for your insightful questions. If you have any additional queries, please feel free to reach out to us, and we'll be happy to respond. We appreciate your continued interest in Intellect and look forward to connecting again next quarter. Thank you, and have a great evening.

Thank you.