Black Box Limited discussed encouraging business momentum during its Q3 FY’26 earnings call. Revenues for Q3 FY’26 grew 11% YoY to INR1,660 crore. While strong order booking—projected to exceed $1 billion for FY’26, leading to an opening backlog near $800 million—provides visibility, temporary supply chain constraints have caused a downward revision of FY’26 revenue guidance to INR6,325 crore – INR6,375 crore. The company also announced the strategic acquisition of Brazilian integrator, 2S Inovações Tecnológicas (2S).
Q3 and 9-Month FY’26 Financial Overview
Black Box reported positive top-line performance for the third quarter of FY’26. Revenues for Q3 FY’26 stood at INR1,660 crore, marking an 11% year-on-year growth and 5% quarter-on-quarter growth. For the first nine months of FY’26, total revenues reached INR4,631 crore, reflecting a 5% Y-o-Y growth, primarily driven by higher order execution compared to the previous year.
Profitability remained stable despite increased operational costs. EBITDA for Q3 FY’26 was INR147 crore, a 10% year-on-year growth, with margins stable at 8.9%. Profit After Tax (PAT) for Q3 stood at INR50 crore. The PAT for the nine-month period was impacted by a one-time charge of approximately INR6 crore related to the new Labor Code provisions.
Record Order Book and Revised Guidance
The company demonstrated strong order momentum, booking orders worth $626 million during the 9-month period. Management expressed confidence in achieving the full-year booking guidance of approximately $1 billion. Supported by sustained wins, the expected order backlog by the end of March 2026 is now projected to exceed $800 million, which is $100 million higher than the initial estimate of $700 million.
However, execution timelines have been extended due to industry-wide shortages of inputs like optical fibers and cables, particularly in the booming data center ecosystem. Consequently, the full-year revenue guidance for FY’26 has been revised downwards from the expected INR6,750 crore – INR7,000 crore to a range of INR6,325 crore to INR6,375 crore. This revision corresponds to an expected EBITDA of INR555 crore to INR575 crore and PAT of INR220 crore to INR230 crore.
Strategic Acquisition of 2S in Brazil
Black Box announced it has signed a definitive agreement to acquire 2S Inovações Tecnológicas (2S), a leading Brazilian IT infrastructure and cybersecurity integrator and a Cisco partner. The acquisition is designed to scale Black Box’s presence in the rapidly growing Latin American market.
Key details of the acquisition include:
- Payout: Approximately INR275 crore at closing, with additional performance-linked deferred payments of up to INR100 crore over two years.
- Funding: The payment will be funded through a prudent mix of internal accruals and debt, maintaining the goal for ROE/ROCE in the 25% to 30% range.
- Financial Impact: 2S is expected to contribute around INR500 crore of revenue in FY’27 and achieve an EBITDA run rate of approximately INR50 crore post-integration. Management noted the company is being acquired based on EBITDA multiples of about 5x to 5.5x at closing.
Outlook and Growth Trajectory
Management reiterated its focus on navigating near-term execution constraints while maintaining a robust long-term outlook. The goal remains growing the business to $2 billion by FY’29 (moved from FY’28). Organic growth projections are targeted at a mid-double-digit CAGR of 12% to 15%, supplemented by inorganic growth. The company projects that the combination of organic pipeline growth and the 2S acquisition provides a clear path toward a CAGR of 30% to 35% (including inorganic) to achieve the $2 billion aspiration.
Addressing Operational Concerns
Regarding the supply chain delays, management characterized the hyperactivity in the AI-led data center sector as unpredictable and impacting the availability of crucial inputs like fiber and cables. The company expects these constraints to gradually ease, though the impact is seen persisting into the early quarters of FY’27.
On the margin front, the goal remains to move EBITDA margins toward 10%, with the acquisition expected to be margin accretive at scale, leading to improved EBITDA to PAT conversion beyond FY’27.
Regarding exceptional items, the company expects rent restructuring charges to continue for at least two more quarters in FY’27, although severance-related costs are anticipated to decrease significantly in the next three quarters.
Source: BSE
