1. At a Glance
Q1 FY26 shows Magellanic Cloud flexing its muscles again: ₹164 Cr in revenue (+24% YoY) and ₹28 Cr PAT. Margins hover at 35%, ROE at 22%, and their recent ₹43.8 Cr acquisition could signal big ambitions. But debtors at 170 days? Someone forgot to chase invoices.
2. Introduction with Hook
Imagine Infosys and a drone delivery startup had a baby… and then that baby became obsessed with HR outsourcing and AI-based toll audits.
Magellanic Cloud isn’t just another IT stock — it’s a cocktail of HR tech, AI surveillance, DevOps, and drone drama.
- Q1 FY26 PAT: ₹28 Cr
- ROCE: 22.9%
- New ₹75 Cr order in AI-based toll audit space
The company wants to cloud-hop into govtech, infra-tech, and future-tech all at once. Question is: can it weather turbulence on this multi-sector rocket ride?
3. Business Model (WTF Do They Even Do?)
Revenue Segments:
- Human Capital Outsourcing: Bulk of historical revenues
- IT & DevOps Services: Application development, QA, cloud infra
- Drone & Surveillance Tech: Now entering Gov contracts
- Consulting & Digital Modernization
They also acquired Finoux Solutions (₹43.8 Cr) to bolster fintech-adjacent capabilities.
Their game? A diversified IT + HR + AI Tech mashup across Asia, Europe, and the US.
4. Financials Overview
Q1 FY26
- Revenue: ₹164 Cr
- PAT: ₹28 Cr
- EBITDA: ₹57 Cr
- OPM: 35%
- EPS: ₹0.47
- Net Profit Margin: 17%
FY25 (Full Year)
- Revenue: ₹597 Cr
- PAT: ₹103 Cr
- OPM: 34%
- EPS: ₹1.76
- ROE: 22.2%
- ROCE: 22.9%
5. Valuation
Market Cap: ₹4,905 Cr
Book Value: ₹8.85
P/E: 47.4
P/B: 9.5
Fair Value Range (based on peer EV/EBITDA + growth premium):
- Conservative Range: ₹60–₹80
- Aggressive Growth Range: ₹80–₹115
At current ₹84, it’s trading at forward P/E >40 — rich unless earnings growth really accelerates.
6. What’s Cooking – News, Triggers, Drama
- Q1 FY26 Result: 24% revenue growth, 5.5% PAT jump
- Finoux Acquisition: ₹43.8 Cr for product/platform IP
- NHAI subsidiary order: ₹32 Cr executed, ₹75 Cr pipeline
- AI-Based VMS software: ₹45 Lakhs pilot project
- Promoter pledged 1.923% of shares in June 2025
The company’s ambition? Turn into a Smart Governance Tech Enabler.
But margins can’t scale if receivables remain out in the wild.
7. Balance Sheet
| Metric | FY25 |
|---|---|
| Equity Capital | ₹117 Cr |
| Reserves | ₹401 Cr |
| Borrowings | ₹257 Cr |
| Other Liabilities | ₹115 Cr |
| Fixed Assets | ₹482 Cr |
| Total Assets | ₹889 Cr |
Key Points:
- Asset-light in software biz, asset-heavy in drones
- Debt-funded expansion visible
- Leverage isn’t excessive — but receivables a big red flag
8. Cash Flow – Sab Number Game Hai
| FY | CFO | CFI | CFF | Net Flow |
|---|---|---|---|---|
| FY25 | ₹143 Cr | ₹-64 Cr | ₹-48 Cr | ₹31 Cr |
| FY24 | ₹32 Cr | ₹-76 Cr | ₹6 Cr | ₹-37 Cr |
| FY23 | ₹160 Cr | ₹-367 Cr | ₹203 Cr | ₹-5 Cr |
Observations:
- Investing cash flow includes drone infra buildout
- Operating cash flow rebounding
- Healthy discipline visible in FY25 after FY23’s debt-fueled spree
9. Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROCE | 22.9% |
| ROE | 22.2% |
| OPM | 34% |
| D/E | 0.64 |
| Debtor Days | 170 (👀) |
| CCC | 170 days |
Verdict: Sexy on returns. Stressy on receivables.
10. P&L Breakdown – Show Me the Money
| Year | Revenue | EBITDA | PAT |
|---|---|---|---|
| FY23 | ₹427 Cr | ₹108 Cr | ₹74 Cr |
| FY24 | ₹560 Cr | ₹184 Cr | ₹103 Cr |
| FY25 | ₹597 Cr | ₹205 Cr | ₹103 Cr |
Margin uptrend? Yes.
PAT plateau in FY25 despite higher sales = early signs of operating leverage limits.
11. Peer Comparison
| Company | Rev (TTM) | PAT | ROE | P/E | Mcap |
|---|---|---|---|---|---|
| TCS | ₹2.5 L Cr | ₹49,273 Cr | 32% | 23 | ₹11.4 L Cr |
| Infosys | ₹1.6 L Cr | ₹26,516 Cr | 18.6% | 24.8 | ₹6.5 L Cr |
| Persistent | ₹11,939 Cr | ₹1,358 Cr | 24% | 66 | ₹90,364 Cr |
| Magellanic | ₹629 Cr | ₹104 Cr | 22.2% | 47.4 | ₹4,905 Cr |
Conclusion: Valuation premium close to mid-tier IT peers, but scale miles behind.
12. Miscellaneous – Shareholding, Promoters
| Shareholder | % (Jun 2025) |
|---|---|
| Promoters | 58.3% |
| FIIs | 0.44% |
| DIIs | 0.00% |
| Public | 41.25% |
| Pledged Shares | 1.923% (by Jagan Mohan Reddy Thumma) |
Also notable:
- Retail base surged from 3k (2022) to 38k+ in 2025
- Company has not diluted equity since FY23
13. EduInvesting Verdict™
Magellanic Cloud is the IT penny stock that grew up and got a drone license.
With strong ROE, diversified verticals, and ambitious government contracts, it’s positioning itself as a microcap disruptor.
But:
- Valuation isn’t cheap
- Receivables are on vacation
- PAT growth has slowed
Think of it as a spicy momentum play with strong fundamentals… but the kitchen’s getting hotter. Don’t burn your fingers chasing clouds.
Metadata
– Written by EduInvesting Team | 21 July 2025
– Tags: Magellanic Cloud, Q1 FY26, DroneTech, DevOps, Finoux Acquisition, Microcap IT
