Intellect Design shares drop 7% after remarks on continued investments weigh

Shares of Intellect Design declined as much as 7% after the company reported its December quarter results, which came in below market expectations.

While revenue growth remained healthy, profitability took a hit, largely due to higher investments and timing-related issues in the recognition of licensing revenue.

The company posted a 20% year-on-year increase in revenue to ₹732 crore. However, EBITDA declined 14% YoY to ₹101.6 crore, with margins contracting sharply to 13.9% from 19.5% a year ago. Profit after tax saw a steep fall of over 61% YoY to ₹27.4 crore.

Management attributed the margin decline to increased investments, particularly in capacity expansion and overseas hiring, which led to a sharp rise in SG&A expenses to nearly 20% of revenue.

During the post-earnings call, the company indicated that a similar level of investment would continue into Q4FY26, suggesting near-term margin pressure may persist.

Despite the weaker earnings performance, management remained confident about the company’s growth outlook. It reiterated its target of around 20% growth in licensing revenue on a trailing twelve-month basis and reaffirmed guidance of ₹200 crore revenue in FY26 from its Purple Fabric platform.

Operationally, Intellect Design continued to see strong traction in deal activity. The average deal size increased to ₹66 crore from ₹54 crore last year, while the deal pipeline expanded to ₹12,038 crore at the end of Q3FY26, compared with ₹9,996 crore in the year-ago period.

The company also signed nine new deals during the quarter, including four large “Destiny” deals, underscoring sustained demand momentum despite near-term earnings headwinds.