At a Glance
3i Infotech, the IT service survivor that refuses to die, just posted a ₹7.55 crore profit in Q1 FY26, up from last year’s -₹8.8 crore loss. Sounds heroic, until you see that revenue fell 5% YoY and operating profit went negative again. The company is juggling cloud, AI, digital consulting, and BPS/KPO services like a street performer, but every now and then, it drops a flaming torch. Add in a 92% public holding, reclassification of ICICI’s promoter stake, and contingent liabilities of ₹202 crore – the circus is far from over.
Introduction
Remember the IT boom days when 3i Infotech wanted to be the next Infosys? Fast forward to today, and it’s more like Infosys’s distant cousin who works in IT support. Once a promising software solutions player, 3i has spent the past decade downsizing, restructuring, and begging investors for patience.
The company dabbles in cloud computing, infrastructure management, digital transformation, and next-gen business services (buzzword overdose, anyone?). Yet growth is stuck in a time warp, with sales CAGR at a sleepy 1% over five years. Despite this, the stock trades at a P/E of 8.6—cheap, but sometimes cheap for a reason.
Q1 FY26’s tiny profit is good news, but one profitable quarter doesn’t erase years of patchy performance. The market clearly agrees: the share price has fallen 33% in the past year. Investors, buckle up—this ride is still bumpy.
Business Model (WTF Do They Even Do?)
3i Infotech is basically an IT supermarket:
- IT Services: Cloud, AAA, Platform Solutions, Application Development, Infra Management—if it’s tech, they’ve probably pitched it.
- Digital Consulting: Helping companies go “digital-first” (because who isn’t?).
- NextGen Services: Fancy talk for experimenting with AI and analytics.
- Transaction Services: BPS & KPO handling back-office ops for clients who’d rather outsource the pain.
In short, they’re everywhere, but margins are thinner than a college student’s wallet. Competition from TCS, Infosys, Wipro, and every other IT shop keeps them under pressure.
Financials Overview
| Particulars (₹ Cr.) | Q1 FY26 | Q1 FY25 | YoY % |
|---|---|---|---|
| Revenue | 170.6 | 179.8 | -5% |
| EBITDA | -3.5 | -1.0 | — |
| EBITDA Margin | -2% | -0.6% | — |
| PAT | 7.6 | -8.8 | 185% |
| EPS (₹) | 0.45 | -0.52 | — |
Commentary: Profit this quarter is a win, but with revenue shrinking and operating losses still around, this is less “turnaround” and more “turn-and-hope.”
Valuation
- P/E Method:
- Annualized EPS = 0.45 × 4 = ₹1.8
- Peer P/E (small IT) ~ 15×
- Fair Value = ₹1.8 × 15 = ₹27
- EV/EBITDA Method:
- EBITDA is negative (N/A). Hence, this method screams: “Run!”
- DCF (quick & dirty):
- Assume FCF = ₹30 Cr, growth 5%, discount 12%
- Value ≈ ₹300 Cr
- Fair Value ≈ ₹18/share
Valuation Range: ₹18 – ₹27. Current ₹24 sits right in the middle, making it a coin toss.
What’s Cooking – News, Triggers, Drama
- ICICI Fund’s reclassification as public shareholder – promoter tag gone.
- Loan to subsidiary converted to preference shares – creative accounting or strategic move? You decide.
- Management reorganization – new faces, same old problems?
- Focus on AI & Cloud – buzzwords are free, execution is costly.
Balance Sheet
| ₹ Cr. (FY25) | Amount |
|---|---|
| Total Assets | 573 |
| Total Liabilities | 436 |
| Net Worth | 137 |
| Borrowings | 64 |
Remark: Debt is low, but net worth is barely above water. Contingent liabilities of ₹202 Cr hover like storm clouds.
Cash Flow – Sab Number Game Hai
| ₹ Cr. | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating | 145 | 73 | 44 |
| Investing | -171 | -59 | 1 |
| Financing | -41 | -25 | -26 |
Remark: Cash flows are positive but shrinking—like the last slice of pizza everyone’s eyeing.
Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | 8.4% |
| ROCE | 5.1% |
| P/E | 8.6× |
| PAT Margin | 4.3% |
| D/E | 0.37 |
Remark: ROCE and ROE barely justify the oxygen 3i consumes in the IT space.
P&L Breakdown – Show Me the Money
| ₹ Cr. | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 729 | 814 | 726 |
| EBITDA | -37 | -63 | 31 |
| PAT | 1 | -298 | 25 |
Remark: PAT turned positive, but revenue’s flatlining. Not a great mix.
Peer Comparison
| Company | Revenue (₹ Cr.) | PAT (₹ Cr.) | P/E |
|---|---|---|---|
| TCS | 2,56,148 | 49,273 | 22× |
| Infosys | 1,65,954 | 27,266 | 23× |
| Wipro | 89,259 | 13,462 | 19× |
| 3i Infotech | 717 | 47 | 8.6× |
Remark: Compared to giants, 3i is like an ant trying to play in an elephant polo match.
Miscellaneous – Shareholding, Promoters
- Promoters: None (ICICI Fund reclassified as public).
- FIIs: <1% – global investors have better things to do.
- DIIs: 6.6% – slowly exiting.
- Public: 92.7% – this is literally a retail playground.
When 93% is public holding, volatility is the only constant.
EduInvesting Verdict™
3i Infotech is a classic case of a company trying to reinvent itself after years in the wilderness. Debt reduction, occasional profits, and a low P/E suggest some value. But revenue decline, razor-thin margins, and no strong promoter backing make it a risky bet.
SWOT Analysis:
- Strengths: Low debt, strong service portfolio, occasional profit bursts.
- Weaknesses: Flat sales, inconsistent performance, high public shareholding.
- Opportunities: AI/cloud growth, turnaround potential.
- Threats: Fierce competition, contingent liabilities, shareholder fatigue.
Final Word: 3i Infotech isn’t dead, but it’s not exactly thriving either. For investors, it’s like dating someone with potential but a history of bad decisions—you either stay for the redemption arc or run before the next heartbreak.
Written by EduInvesting Team | 1 August 2025SEO Tags: 3i Infotech, IT Stocks, Q1 FY26 Results, Smallcap IT Analysis
