Onward Technologies Limited (517536) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Onward Technologies Q2 FY '26 Earnings Conference Call hosted by [Technical Difficulty]. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Jyoti Gupta from EY LLP. Thank you, and over to you, madam.

[Technical Difficulty] which reflect any outlook for future or which can be construed as forward-looking statements must be viewed in conjunction with risks and uncertainties that we face. These risks and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual reports that you can find in our website. Having said that, I will now hand over the call to Mr. Jigar Mehta. Over to you, Jigar.

Thank you. Good evening, everybody, and a warm welcome to everyone who has joined us today for our Q2 earnings call. It's always a pleasure to connect with you quarterly and share updates on the progress we are making here at Onward Technologies.

Sorry to interrupt, this is the operator. Mr. Jigar sir, you're not -- your voice is cracking. Please can you check your mic.

Can you hear me now?

Yes sir, loud and clear.

Okay. I'll start again. Good evening, everyone, and a warm welcome to everyone again who's joined the call today for our Q2 earnings call. It's always a pleasure to connect with you quarterly and share updates on the progress we are making here at Onward Technologies. I hope you had a chance to go through the earnings deck and the press release that we shared post the Board meeting earlier today. Let me start with a quick overview of our Q2 performance. This was a record quarter for us, both in terms of revenue and EBITDA growth. We have been focused on executing on the 3 business lines and verticals that are predominantly focused on the North American and European market. One of our largest verticals is industrial equipment and heavy machinery, which continues to make very good progress. Our other 2 verticals are transportation and mobility and the healthcare verticals, where we have built a new leadership team. We are very focused on the clientele, the OEM clientele that we have in North America and Europe and making amazing progress there as well. So all in all, all the 3 verticals are making steady progress. And I think we have still a lot of runway in terms of what our customers expect us to do over the next couple of years. In terms of highlights, operational standpoint, just 3 top parameters. Our attrition continues to come down quarterly. Our LTM attrition for Q2 is at 15.49%, our DSO continues to be under control at 73 days with my target I shared before, I would like to be at 65 days, which is where I think is a good balance for us. This includes billed plus unbilled. And our headcount continues to remain steady, which is at 2,525 employees. Please keep in mind this is the same headcount we've been working with for the last 5 years, where we have grown from literally INR 100 crores to INR 500-odd crores of revenue. How is this possible? Just to reemphasize again, our business 5 years ago was predominantly from the India market. Now our business is predominantly growing on the global market, which is the North American and European customers. And that's what I've been maintaining that we believe even in the next 1, 2 years, our headcount will remain pretty steady, plus about 10%, 20%, as we shared in the last earnings call as well. And most of our growth will come from the North American and the European market. In terms of the infrastructure, last quarter and last 6 months have been the most exciting for us where we took a call in upgrading our infrastructure across all our delivery centers in India. Bangalore and Hyderabad were new and -- are relatively new and operating very well. Our Pune and Chennai facility, we have upgraded substantially. So very excited about that, both the offices are live now and would love to welcome all of you guys to come visit, especially people who've have been here before and for all the new potential people interested in Onward Technologies. Our CapEx investment so far has been approximately INR 18 crores, and we are well balanced for the next couple of quarters in growth from offshore that we expect from our clients. Looking ahead, we remain confident about the coming quarters. We have shared our projections in terms of where we believe we will be this year at the start of the year, that we will deliver double-digit revenue and EBITDA margins. We remain committed to that. We have a great execution engine, which is in place. And every quarter, we can only get better, and we believe this -- we should have a good run rate going into 2026, where all the 3 verticals will start performing or delivering better than where we are today as we speak right before Diwali. So good till that, over to you guys, back to the operator for Q&A and wish you all again a very happy Diwali.

[Operator Instructions] The first question is from the line of Nitish Rege from ChrysCapital.

Sir, just wanted to understand the EBITDA margin benefiting the INR depreciation? And what would be the steady state EBITDA margin for us...

Hello, this is the operator. Nitish, please, can you speak a little louder?

Yes, is it better?

Yes, loud and clear now.

Yes. So firstly, just on the EBITDA margin, the EBITDA margins improved to 14.3% this quarter. I just wanted to understand how much of this is due to improvement in the business and how much is from the rupee depreciation there in the quarter?

For us, it's the entire margin improvement as we've been sharing, is consistent from what we have seen for the last several quarters, and it's predominantly driven by the utilization and productivity. And I think we still have a lot more room to improve over the next several quarters. In terms of dollar, I don't think there's been a benefit because the dollar -- the impact has been more than 5% negative this quarter, but we are -- coming back, it's predominantly driven by better utilization, better diligence from our existing clientele.

So do you think from here on, our EBITDA margins, there's further scope for expansion?

Absolutely. I continue to believe that we still have a huge runway and that's predominantly driven by 2 points. One, first one is we're still at a very, very early stage at Onward in terms of automation, while we have done an amazing -- team has done a phenomenal job in the last 1 year. For example, our books had closed literally on the 5th of the month. Finance team, our HR team, the CIO team does absolutely a phenomenal job and we're making good progress there. But on the client side, we have a huge runway because we are investing so heavily to get -- enter the U.S.

Sorry to interrupt. This is the operator. Jigar sir, your voice is not audible, it's cracking a lot.

That's never happened before. Okay. Can you hear me now?

Yes, it's loud and clear.

Okay. So the second point, if I see right there. The second point is predominantly because of the investments that we're making in the delivery organization for Europe and U.S., there's still a huge runway, and I do believe we can keep improving as we make progress with the clients in U.S. and Europe.

And anything on the geos? Are you seeing the pickup in demand in Europe in the Auto division or anything to highlight on that side in U.S. and Europe?

I missed the first part.

No, just on the demand across different geographies, any improvement in demand in Europe and U.S.A.

Yes. Absolutely. I've spent a lot of time in the last 1 quarter in U.S. personally. So in U.S., the demand is -- it's growing at a speed I've never seen before. A lot of positive things are happening across the manufacturing industry. There is tremendous push for companies to move towards AI and Onward is benefiting some. We still have to build a lot more capability towards that, and we are doing that, and we see continuous improvement and opportunity as we enter 2026. That's what we're going to be investing in. In terms of Europe is something last 1 quarter has been slow for us, but I do believe Europe is also on the verge of potential because they also have to invest very heavily on the data center, on the cloud, on the AI. And I do believe that's going to be a beautiful runway for all Onward and other tech companies as well who have built that competencies and capabilities.

The next question is from the line of [ Tanmay Agarwal from Atul and Sons].

Am I audible?

Yes, [ Tanmay ].

So I have just a couple of questions. First one being what's the growth outlook like margin sustainability, how does it look like? Can we target 15% EBITDA margins and 15% revenue growth possibilities around FY '27?

I think that's a realistic expectation. But as we have committed at the start of the year, [ Tanmay ], is that we want to deliver double-digit revenue and EBITDA, right? And I'm continuously just saying that because it's not IPL match. We're investing for the long term. And from last year's numbers where we had single-digit EBITDA and revenue, this year, we want to get into double digits and then obviously keep making a substantial progress towards that.

Next one has been that how are the client conversions shaping up? What does the pipeline look like? Do we have any uptick in revenues from U.S. and Europe? Because I believe that Europe has declined quite a bit recently.

So our client -- so we don't have a client pipeline. As you know, Onward Technologies, for the last 18 months, does not have a sales organization, right? We are focusing on actually trimming our entire or cutting our tail or focusing only on a few clients. So we are down to about 70-plus clients today. And as I've said before, I believe a sweet spot for a company of our size between INR 500 crores and INR 1,000 crores is about 50-odd clients, maybe 60. And so from our perspective, we are looking at just mining and going deeper into our existing clients.

Right. So my question was actually on those lines itself. So I was primarily willing to understand the pipeline with the existing clients. Like is it deepening? Is it going any further? Because I recall that probably in the January earnings call this year, you had shared that there's a crack through Tesla. Has that finally started happening moving forward? Have we had any new deal wins with existing clients like BMW or [indiscernible]?

So absolutely. So what we have done over the last -- I don't believe it was January, it was probably early last year. But coming back to your question, absolutely. So our clients, as you know, Onward, we started very well on the mechanical side, and we continue to deepen our relationships on the robotics and manufacturing engineering. But that area is becoming more and more commoditized. Second area is where we are spending our time and energy and investments, which is on the digital side and now more and more on the AI side and the opportunity is huge. We are continuously investing behind that. We have a lot of new SMEs and delivery leaders that we are hiring to build more capabilities. New infrastructure in Pune and Chennai is also helping because we have now a lot more space to set up the labs, and that's what is happening in Onward today as we speak. So absolutely, in terms of the pipeline with our existing clients, we are learning so much more about our clients where they are going. And the beautiful part about our clients, especially in U.S., where I personally spend time right now, as I said earlier, is everybody is moving towards the whole AI, data center, energy space, right? So whichever industry they could be, including automotive, there is a massive opportunity for people who have the right capabilities. And I believe we are in the right space right now because we have a client engagement in place. What we have is to convert that into scale in the next 3 years. And I think we are ready for that. We have a beautiful team in place today.

So any big project win worth talking about?

We don't -- we -- one is we're not -- because of engineering services, we're not authorized to talk about individual clients and individual projects. But each of our projects is bigger than yesterday, right? Just to clarify again, we are an extension of our client R&D department. So we are not bidding for projects every day, right? So objective is we have an ODC of 50 engineers working, which should then ramp up to 100, which then ramps up to 200, then ramps up to 500. That's the real goal. The difference between us and everybody else is large -- the larger companies prefer fixed price. I'm very focused on time and materials.

Right. So just last question, a 2-part question on that. One, first part being, how does the quarter 3 outlook look like on wage hikes furloughs? Or have you already done some wage hikes? And the second one being any update on leadership hiring?

So on the first question, Q3 is predominantly a slow quarter. There is furloughs, which is sort of continues from the pandemic era. It sounds ages ago, but it still continues in some clients. Most clients have stopped, and I think it's positive. The strange part about furloughs is nobody knows till December 15, whether there's going to be furloughs, right? So it's not something we're able to predict. As of today, we only have literally 2 clients which have sent an e-mail saying we are going to actually continue our furlough from last year because we have to save money, right? And these are massive, massive, massive companies. That's part of the culture, and they're not just doing furlough with Onward Technologies, they're doing furlough across -- we have thousands and thousands of employees all over the world and of course, suppliers. So we don't have -- I think I personally do not have more than 2 clients. On the second question was -- sorry?

The second one was any leadership hiring -- update on any leadership hiring?

It's a continuous process for us, right? We're always hiring people better than what we have, people who complement us, people who are -- come with more domain experience. It's a daily thing for us right now. So there's nothing in particular.

Specifically asking anything around CEO or something.

Not yet. Not yet, but that's definitely in the works. We are hiring P&L leaders for our units. We have very strong support organization with our HR head, our CFO. We have a CIO. Again, it's a lot of high-quality people in Onward. The best part as I've always said about Onward is that we have been here for more than 30 years. So we have a lot of amazing people and a lot of people who have contributed tremendously over the years. So I don't think any one individual is what, but we will hire a CXO going into next year or the following year.

Fantastic. And any plans for the healthcare vertical or any merger and acquisition plans because you're, I think, sitting at INR 150-odd crores cash as of now?

So we don't look -- we have not looked at M&A very seriously, right? We've had a lot of inbound deals where there's a lot of opportune companies who are looking at -- interested in Onward. We have always said no politely. We've had companies reach out to us to merge with us. We have always politely said no to that as well. And there are a lot of boutique companies available, which doesn't really make sense for us. So my M&A strategy would continue to be acquiring companies which are already supporting existing Onward top 25 clients, right? So if there's a competing supplier, but they have a complementary skill set, a complementary capability and let's say, they have 200,000, 500,000 engineers, we are very interested in talking to them. But to go out with a new geography, especially outside of North America, at least today for the next 3 years, we see a beautiful runway where it's all about execution for us.

And just last one, any update on the healthcare vertical and the plans for the healthcare vertical?

So healthcare has been tricky for us a bit. As I said, it's been -- we won some great clients. We're building capabilities. And then we started winning a few more clients, we got distracted. Now we're going back to the main clients. And we just need to get more and more deepened in terms of mining or winning deals from our existing clients. So we brought that focus back last quarter, and I think we will see a lot more progress in 2026, both in terms of revenue growth and growth from existing clients, which will all shoot towards $1 million, right? So just to give a perspective, in our industrial or automotive clients, took us 5 years to get to $1 million with those clients. In healthcare, we're trying to reduce that to 3 years. So this is the second year in the healthcare vertical. By the next year, I would like to see at least 1, 2, 3 clients cross $1 million per year. So that's the ambition for the team. I think we have a good team in place, and we're only -- we'll continue to invest more towards that.

Just one last, any concrete quantitative guidance maybe on revenue growth or EBITDA margins that would be really, really helpful in case we didn't get something on those lines.

As I said, I'm very comfortable and optimistic where I am today, I'm very positive that we will be able to deliver double-digit revenue growth and EBITDA growth this year and next year again, right? So next year has to beat this year's numbers, and I think that will change Onward completely in terms of what we are trying to achieve.

The next question is from the line of [ Sushovan ] from Anand Rathi.

So just a couple of questions. First is what we're also seeing is that gradually the transition towards EV, which is happening earlier, now in the U.S. with the subsidies going away, we are going back to the internal combustion engine. And I think that is also something that is being seen in Europe. So with that coming in, is that impacting Onward's scope of work in any way? That's first. And if you could also give us the breakup of what is the OEM and Tier 1 exposure that you have, that would be helpful. I'll just ask some other questions, but I will just wait for the responses first.

Sure. So on the first side, absolutely, I don't think it's a new phenomena for last 1 quarter what's happening with the government in U.S. I think that's something we are all seeing for the last almost 18 months. That's the first part. Just to add a bit more to that, add some more depth into that conversation. What we are seeing for the first time in Onward is in the large OEMs that we signed, let's say, in the last few years and on the automotive side, in particular, is at least for now, we are involved in the budgeting exercise for next year. So we know what they expect from us. There's a much better clarity for us, and it looks exciting. So now it's the entire onus comes back to us in terms of -- it's not about winning deals for executing and building on those capabilities, especially on the digital side, on the embedded electronics side. We have always been confident in delivering 15%, 20% growth but other areas is where we have to grow. That's where the margins are. On the second side, between OEM and Tier 1, I do not have personally the exact statistic, but [ E&Y ] can definitely share that with you after the call, if you can just drop them a note, we'll try to reach out to you. But if I could just broadly guess, absolutely about 90%, 95% would be our direct clients and about OEM clients and about less than 5% or less than 10% would be Tier 1 clients.

Okay. And this whatever is happening from a bankruptcy perspective in Tricolor and First, is that in any way impacting your work in the U.S.?

Sorry, can you say it again?

So because I think there has been some bankruptcy related news that has come about for Tricolor and First brands, which basically are the Tier 1 companies which have basically filed for bankruptcy, right? Is that in any way impacting the work in the U.S.?

Sorry, unfortunately, I don't know these companies, but it's not affected Onward Technologies yet.

Okay. Just one last housekeeping question. From a tax rate perspective, there has been a significant volatility in that. Is that something that could stabilize if there is some further significant volatility that could be provided for that would be helpful.

Sorry, you said the tax rate, right?

Yes.

Yes. I think it should be fairly stable going from now where it is. I think last quarter, we shared that as well in the details. We had a one-off tax credit. That's why the tax rate came down. Now I think it should be averaged out over the next whole financial year, right? Because in some countries where we do R&D or where we are investing proactively where we're investing in innovation, we get some tax credit. And that's what I think the benefit we got last quarter in Q1. Otherwise, it should be fairly stable. And just to add one more point on that. On the depreciation side also this quarter was a bit higher because that's where we use maximum CapEx investment in new offices, in new hardware purchases, in the new labs. So that's why you got the entire impact right now. And obviously, that will not be there next quarter.

The next question is from the line of Keyur Kumar Vadalia from Niveshaay.

Congratulations on the set of numbers. My question is in the geography of the Indian, so what kind of industry we have with respect to India? And on second question, like you were mentioning about the data centers. So are you targeting any specific need for the industry in the data center? Or are you seeing any traction in the geographies?

Sure. Thank you. For the first point, India, so Onward Technologies exited India business in 2019. So we don't do any business in India. And the last -- so that's the first question. And on the second question on the data center is, predominantly, that's where the whole world is moving today, right? That's where you're hearing about trillions, if not billions of dollars of continuous investment from some of the largest technology companies in California. Now what's that doing to the economy is the best talent is all moving towards that, supporting those data centers. Please keep in mind the data centers are not only popping up in California. They're popping up across North America. And when that's happening, all of these large centers need huge manufacturing engineering, huge embedded electronics and maximum digital capabilities. So we are -- we have the capability and skills towards that. It's not a new phenomena, but that's very much hot in the news in the last 1 year, and that's why we are sharing a bit more about that. It's something which is going on for the last 3, 4 years. And that's why the U.S. economy is, I believe, my team believes, is booming, and I think next year is going to be even bigger next year there.

So is there any specific opportunity size in your mind, which you can share with us?

It's the same, right? As for the business plan that we shared 6 months ago for FY '25, '26 and FY '26, '27, that we will be able to -- from coming from low-single-digit EBITDA and revenue numbers of last year, we will be able to deliver double-digit revenue growth and EBITDA growth. Sorry, I was just reemphasizing that because we don't share daily, weekly, quarterly numbers.

No, no, no. I was asking if you can share the opportunity size we are looking in the data center side with tractions?

Zero. We are not looking at anything on the data center side, I don't want to confuse you. What we are doing is on our industrial equipment customers, our heavy machinery customers, our customers are investing and winning huge deals towards data centers, and we are supporting them. So we are doing exactly what we were doing 2 years ago, nothing different. It is just our customers' end customer has changed now, which is what has changed over the last 2 years, which gave us the confidence to actually share with everybody about as a young company that we will be -- we have the visibility to deliver double-digit revenue and EBITDA, right, year-on-year.

The next question is from the line of from [ Diya ] from Sapphire Capital.

I just wanted to ask you your current order book and the margins for all the verticals.

Current order book is very good, very exciting. We do not share transactional data. It's very young. And on the margin, the largest vertical runs at a very operating normal industry margin. The other 2 verticals where we are investing, so they should be in single digits.

Okay, sir. And also, how does this entire Trump tariff situation affect your U.S. operations?

I think it's very exciting. Again, I'm not a political guy. I don't have political views. But I think whatever I have seen in the U.S. market, I think it's very progressive. Companies are excited. Companies are investing. Companies are spending huge amounts of capital on CapEx. Companies are back into investing in R&D and innovation. And that's where we have exactly where Onward was created to serve, and I think it's a beautiful opportunity for us. And I think following the lead in U.S., I think Europe has to move towards that next year or 2027. And I think Onward will be present at the right place, right time, which will benefit us as well towards that, where we can -- our capabilities that we have will be used to serve our customers.

Okay, sir. And what was the reason behind this quarter being so soft?

Being so soft?

Why did the PAT decrease on a Q-o-Q basis?

This was the best -- I think you might see the data. This is the best quarter we ever had, a record quarter for us. We delivered 14.3% EBITDA. On the PAT side, I think it's very similar to last quarter, predominantly as I shared with the gentleman earlier, it's because of the tax credit that we had one time in Q1, which is not there this time. But if you look at from a cash generation perspective, this was a quarter where Onward generated enough cash more than last year. But a significant portion of the cash in last 12 months, we generated in the last 90 days, free cash flow.

The next question is from the line of [ Amrish Kakkar ] from -- an individual investor.

Congratulations on a steady revenue and fantastic margins in this quarter. The first question is a broader one on the H1B issue. 2 parts to that. First, does it have any implications for us in terms of cost for our American operations? And the second is, does it create more opportunities for GCCs for us in India?

So great questions. First question on the H1B side, I don't think there's any impact on us towards H1B because that's not the business Onward is in. But it definitely has an impact in terms of where we are -- I shared that in the earnings -- in my call last year in particular, where we had to build capabilities to serve U.S. clients. So every time when we win an existing -- a new project in existing clients, it always starts with the 10% headcount being on site at the client side and 90% being remote or offshore. That 10% ability, I think we are good for the next few years because we invested proactively in several areas. I think there's a huge runway between -- there's a huge time line between now and April of how the whole $100,000 fee will come about. And I think there will potentially can be changes. So let's wait and see about that. But I think we are good for -- at least Onward is good for the next 2 years. On the second side, on the GCC side, I -- again, I am a very pro GCC or the India business model of these global cost centers that have popped up in India. I think there's only going to grow. right? And that's linked to my point of earlier, if you see just the U.S. economy or what's happening in the U.S. in the last 6 months or last 9 months, every company is innovating. Every company is investing huge billions and billions of dollars in CapEx. To do that, they need manpower. The manpower doesn't exist there. It's not about hiring manpower, which is support at home or looking for a job. The millions of people that we need don't exist. India is definitely one of the places where they would come. And if they already have their own cost center in India, chances of the cost center growing 3x, 5x from where it is today is very high. So you will see at least majority of those good run GCCs grow 10%, 20% every year for the next 3 to 5 years. Can Onward benefit from that? I don't know, but that's something we had a view before even any of these other external parameters came in place.

That's helpful. Second question is just on -- I'm trying to understand some of the revenue dynamics, revenue metric dynamics. So you mentioned yourself that you're keen on more time and material projects, and we've gone from 85% to about 89% now time and material. At the same time, our revenue per employee has increased very significantly in the last 12 months. My understanding is typically, we had more flexibility in doing this when we have a fixed contract, but we've managed to do this with an increase in time and material projects. Is that just a utilization issue? Or what is the underlying growth in revenue?

So fundamentally, when we say time and material, we are still -- Onward is still responsible for the SLAs. We are still responsible for the quality delivery, timely delivery, first-time delivery, right? So there's no escaping that side, right? So it's not a staffing model or what the staff and payroll companies do. That's the first part. Second part is, please keep in mind, Onward since 2016 since I've taken over, have a large portion amazing running business in India already. It was just not fit for a listed company. So a private profitable business was a very good business. What we have done, this current management team and the current Board driven by my father is we've taken the same team, which was invoicing at $3, $4, $5, $7 an hour for the India clients, moved them to the global clients for $18 and spend that in between huge capital for training, in HR, in infrastructure, in licenses and anything else. So predominantly taking the same talent, which was supporting our historical Indian clients at very, very low-single digit. If you see the average bill for India client is about INR 5 an hour. Very shocking, that numbers are. That's what happens here. But if you multiply that, the same thing is at $18 an hour in when we support the export market. So that's what we are doing. And we still have 1,000 more people move from here to there. And that's why I believe we were from 2,500-odd people plus/minus 10%, we don't need to add substantial number of people from the -- current same people have moved earlier and if my current existing the GCCs grow, which growing beautifully as well, we will augment them with other talent so we keep bringing the cost down from our clients, which is what the GCCs want from us.

That's very helpful. In fact, I think 2 years ago, you said the 3 metrics that you track, revenue per client, gross margin and DSO. And as long as revenue per client keeps growing and gross margin keeps increasing, then you're doing what you're saying you're doing. And all these 3 have done remarkably well in the last 2 years. So congratulations to everyone. One last question. One bookkeeping question. The share count has decreased by about 18 lakhs in this quarter. Is there something specific here? Or is it just extinguishing of some stock options?

I don't have the exact thing, but I can have E&Y get back to you on this. I would believe it's the latter of what you said. But if there's any change, they can get back to you.

The next question is from the line of [ Vikas Aatri ] as a private investor.

Sir, my question is, is there an update on getting into high-tech and semiconductor space?

Not yet. We are focusing on the current 3 verticals. As soon as the 2 of the verticals, which is TMH, transportation, mobility and healthcare starts ramping up as expected, then I think we will start looking at new verticals. I think right now, we are well covered to deliver the numbers that we are talking about.

The next question is from the line of [ Tanmay Agarwal from Atul and Sons ].

I'd like to add to your positive outlook on growth, which you said just a couple of questions earlier. And in a tough year like FY '26, how it has been for the industry, Onward has outperformed almost everyone I believe. Is it fair to say that once the industry picks up properly, we will continue to do better based on our current pipeline?

I don't know how the other companies are because again, I never hope anyone does. But what I can share with you, I can tell you about our existing clients. Our existing clients where we are at, we have -- because we're not a sales organization anymore, we get -- our entire team is obsessed or focused only on existing clients. So we know a lot more what's happening with our clients, where our clients want to go, what their challenges are. It's a very different company today than it was 6 months ago. The best time to be in Onward from my perspective. The next 3 years are going to be very exciting. So from a client perspective and from what they have told us and the budgets that they have shared, I think we have a beautiful runway for the next 3 to 5 years. Now it's all about execution and as I said, moving more and more towards being relevant to our customers instead of being in the old commoditized world. So same answer to what you are asking, but just a different way of how I look at where Onward is today.

So would it be safe to say that the H1 margin currently sitting at 13.5% roughly and assuming furloughs and wage hikes, the full year '26 margins would be somewhere around 13%. Can you see a path to 15% by FY '27 because our peers, I believe, are somewhere around in the range of 20%?

I would love to dream. Yes, absolutely. I think the first part is 13%, double digit means we have to get to 14%, 15%, 16%. So that's definitely what we are seeing in terms of growth. And we do believe we have because our fixed costs will remain the same, right, because we have already put the team in place. There is no sales cost, there is no new marketing cost. So a lot of your cost disappears which you need to acquire clients. So we don't have that anymore. Operational efficiencies will come with better delivery utilization and product delivery. On the second -- sorry, the second question was on...

Do you see a clear path to 15% for FY '27?

I answered that, you had one more point after that. Sorry, maybe I missed it.

Okay. So last question quickly. Since we are not looking at M&A deals, et cetera, and where the stock prices are at the moment, does Onward plan for a buyback or something like that because it will help reduce the equity and increase EPS?

It's something definitely the Board has discussed. It was discussed this morning as well. We will evaluate all the options. Our CFO has been mandated to do that. And I think in the next -- you will see continuous progress and updates on all of the options that are available to us as a young company, yes, absolutely.

[Operator Instructions] As there are no further questions, I now hand the conference over to management for the closing comments. Over to you, sir.

Thank you so much. Again, thank you, everybody, for joining us today. Wish you all a very happy Diwali. We look forward to updating you with further progress both in Q3 and Q4. There are several -- 2 questions where we didn't have the exact data. E&Y team will get back to you guys by end of today or at the earliest possibility. And if there's anything else which is missed out, please do reach out to us, and we'll be very happy to share. Thank you again, and have a great Diwali holiday.

On behalf of Onward Technologies, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.