Esconet Technologies Ltd Management Discussions

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Economy Global Economy

The global economy displayed resilience in Calender Year (CY) 2025* despite rising geopolitical tensions, trade barriers and persistent policy volatility. Global growth remained at the estimated 3.5% during CY 2025, supported by technology-led investments, accommodative financial conditions, alongside global fiscal and monetary easing. Investments in Artificial Intelligence (AI), infrastructure modernisation and productivity enhancement sustained global economic activity and business sentiment. Concurrently, improving financial conditions and the weakening US dollar offered further backing for economic stability across multiple regions.

However, the global environment remained exposed to geopolitical developments and commodity market volatility. Geopolitical conflicts in West Asia emerged as a notable headwind for predictability, impacting energy markets, inflation expectations and financial conditions globally. Commodity-importing emerging economies remained particularly susceptible to fluctuating oil prices and supply- side disruptions. Advanced Economies recorded relatively moderate growth amidst cautious consumer spending and tighter monetary conditions. Simultaneously, Emerging Market and Developing Economies (EMDEs) remained comparatively robust, supported by domestic demand, infrastructure investments and manufacturing activity.¹

Overview of World Economic Outlook Projections (GDP Growth %)

	CY 2025	CY 2026	CY 2027
World Output	3.5	3.0	3.4
Advanced Economies	1.9	1.7	1.8
Emerging Economies	4.5	3.8	4.5

Outlook

The global growth is projected at 3.0% in CY 2026 and 3.4% in CY 2027, registering below the historical average of 3.7% recorded during 2000-2019. The outlook reflects the impact of geopolitical disruptions, inflationary pressures and evolving trade dynamics worldwide. Global headline inflation is expected to rise to 4.7% in CY 2026 before moderating to 3.9% in CY 2027. Ongoing discord in West Asia and related energy market disruptions are anticipated to pose near-term challenges. Sustained policy interventions and improving productivity trends are expected to reinforce gradual economic stabilisation.

Moreover, emerging markets are forecasted as the primary contributors to global growth, bolstered by domestic consumption, infrastructure spending and ongoing investments in manufacturing and technology. However, downside risks pose threats through prolonged geopolitical tensions, trade-related disputes, commodity price volatility and tightening financial conditions. At the same time, increasing investments in Artificial Intelligence(AI), digital infrastructure and structural reforms across economies are expected to further boost productivity and medium- term economic resilience. Governments and central banks globally are poised to prioritise price stability, ensuring fiscal sustainability and bolstering economic resilience amidst an evolving geopolitical landscape.2

Indian Economy

India continuously demonstrated strong economic resilience amid a turbulent macroeconomic environment, strengthening its position among the worlds fastest-growing major economies. Real Gross Domestic Product (GDP) increased by an estimated 7.7% in FY 2025-26, compared to 6.5% in FY 2024-25. The growth momentum was propelled by growing rural consumption, steady agricultural output and industrial expansion via Production Linked Incentive (PLI) programmes. The Union Budget 2026-27 continued to drive Indias technology-led growth through sustained investments in digital infrastructure, data ecosystems and enterprise technology, whereas the Financial, Real Estate, Information Technology (IT) and Professional Services sector registered 9.9% growth in FY 2025-26, reflecting continued momentum in digital transformation and technology adoption across the economy.

Inflation moderated considerably during the year, with Consumer Price Index (CPI) easing to 2.75%, thereby, strengthening real purchasing power and the recovery of both urban and rural demand. Concurrently, the recent India-EU Free Trade Agreement and ongoing trade dialogue with the US marked an important inflection in Indias external economic strategy. These developments are anticipated to diversify export markets, promote technology transfer and bolster Indias integration with global value chains.³

Annual GDP Estimates (in K Lakh Crore) and Growth Rates (%) at Constant Prices

Outlook

Indias economic outlook remains positive, with real GDP growth estimated at 6.6% for FY 2026-27. Strong public investment and an uptick in private consumption are predicted to drive growth.The RealPrivate FinalConsumption Expenditure will display expansion at approximately 7.0% and the growth in GDP will be anticipated to be sustained by strong domestic fundamentals, rising investments and ongoing policy emphasis on infrastructure and digital growth. Government-led initiatives including technology adoption, digital infrastructure expansion and business efficiency are expected to drive investment activity and long-term economic competitiveness.

The economy is anticipated to steadily procure benefits from resilient consumption trends, improving capital formation and growing digital adoption across businesses and institutions. Indias robust growth momentum, reflected in 7.7% real GDP growth alongside sustained expansion in consumption and investments during FY 2025-26, thereby positioning the country favourably despite global geopolitical and economic headwinds.

Industry

Global IT Services Industry

The global IT industry continued to register resilient growth momentum in 2026, driven by increasing investments in AI, cloud computing, enterprise software and digital infrastructure. Worldwide IT expenditure is estimated at USD 6.31 trillion in 2026, growing by 13.5% over 2025. The increasing adoption of AI-driven technologies, hyper scale cloud infrastructure and advanced data ecosystems has significantly strengthened demand across the global technology landscape. Enterprises across industries are prioritising digital advancements, infrastructure modernisation and AI-enabled business operations to enhance productivity, operational efficiency and customer experience.

Among the major segments, IT services remained the largest spending category globally, projected to surpass USD 1.87 trillion in 2026, leveraged by rising demand for application implementation, managed services, infrastructure management and Infrastructure-as-a-Service (IaaS). Data centre systems spending is projected at the highest growth of 55.8%, driven by rapid expansion in AI infrastructure and high-performance computing requirements. Software spending is also estimated to grow by 15.1%, led by increasing investments in GenAI platforms and enterprise applications. The industry continues to evolve towards AI-centric and cloud- led ecosystems, with organisations increasingly prioritising cybersecurity, data management and scalable digital solutions to address evolving business and regulatory requirement,

	2025 Spending	2025 Growth (%)	2026 Spending	2026 Growth (%)
Data Centre Systems	505,634	51.6	787,990	55.8
Devices	791,663	9.7	856,189	8.2
Software	1,254,449	12.8	1,443,621	15.1
IT Services	1,715,650	6.2	1,870,197	9.0
Communications Services	1,296,409	3.3	1,358,553	4.8
Overall IT	5,563,805	10.5	6,316,550	13.5

Indian IT Services Industry

Indias IT services industry maintained its upward trajectory as a key enabler of the countrys digital economy, backed by accelerating enterprise technology adoption and sustained investments in digital infrastructure. Businesses across sectors focused on cloud migration, cybersecurity, AI/ML integration, data analytics and application modernisation are set to improve operational agility and customer engagement. Government-led digital initiatives, expanding internet penetration and enterprise digital maturity further bolstered technology adoption countrywide.

Indias IT spending is estimated at USD 176.3 billion in 2026, growing by 10.6% over 2025. Moreover, IT services spending is projected to increase by 11.1%, propelled by heightened demand for consulting, managed services, infrastructure modernisation and Infrastructure-as-a-Service (IaaS). Software spending is therefore expected to grow by 17.6%, reflecting sustained implementation of AI-enabled enterprise solutions, while data centre systems spending is forecasted to surge by 20.5%. It is backed by investments in AI infrastructure, sovereign cloud capabilities and emerging digital ecosystems. Additionally, the continued growth of Global Capability Centres (GCCs), coupled with Indias large skilled technology workforce, is expected to further reinforce India as a global technology and innovation hub.⁵

	2025 Spending	2025 Growth (%)	2026 Spending	2026 Growth (%)
Data Centre Systems	7,788	29.2	9,385	20.5
Devices	60,443	9.4	66,442	9.9
Software	21,032	12.1	24,741	17.6
IT Services	31,854	7.0	35,383	11.1
Communications Services	38,348	3.8	40,414	5.4
Overall IT	1,59,465	8.7	1,76,365	10.6

Company Overview

Esconet Technologies Limited, a leading Indian enterprise IT solutions provider specialises in High-Performance Computing (HPC), cybersecurity, cloud infrastructure and data protection solutions. Through its proprietary HexaData product portfolio, AI supercomputing systems and enterprise infrastructure capabilities, the Company delivers integrated technology solutions tailored for complex enterprise and public sector workloads. As an Original Equipment Manufacturer (OEM) listed on the Government e-Marketplace (GeM), Esconet strengthens its position across enterprise, government and mission-critical infrastructure deployments.

During FY 2025-26, the Company enhanced its enterprise infrastructure credentials with the HexaData HD-RS2200 server model, receiving Red Hat Hardware Certification, thereby emerging as a trusted, compliant and enterprise- ready server OEM for regulated industries, data centres and PSU deployments. The Company further diversified its services, adopting data centre solutions and advanced storage opportunities.

Driven by a strategic focus on innovation and digital infrastructure, Esconet is rapidly expanding its capabilities across AI infrastructure, sovereign cloud, cybersecurity and next-generation enterprise solutions. Through forwardlooking initiatives with global technology leaders such as NVIDIA, Scality and CATO Networks, the Company delivers advanced solutions across data storage, networking and cybersecurity domains.

Upon acquiring Fluidech IT Services Private Limited, bolstering its presence in Governance, Risk and Compliance (GRC) services and critical infrastructure cybersecurity consulting, the Company has improved its cybersecurity and corporate governance frameworks. Backed by Fluidechs National Critical Information Infrastructure Protection Centre (NCIIPC) accreditation and enhanced by curated compliance offerings, Esconet continues to augment its service in end-to-end infrastructure, cybersecurity and compliance solutions for enterprise and government customers across across evolving digital ecosystems.

Opportunities	Challenges
Enterprise AI Adoption: Increased adoption of AI and Generative AI are driving demand for large-scale digital transformation, automation and managed IT services.	Macroeconomic Uncertainty: Ongoing global economic volatility and geopolitical tensions persistently delay client decision-making and technology spending.
Large Deal Pipelines: Major IT companies continue to report strong contract wins and supplier optimisation opportunities, supporting long-term business foresight	Weak Discretionary Spending: Clients remain cautious on nonessential IT investments, impacting near-term revenue growth sectorwide.
Digital Transformation: Demand Enterprises across industries are increasing investments in cloud, cybersecurity, analytics and modernisation initiatives.	Supply Chain and Industry Pressures: Challenges in sectors such as BFSI and automotive are leading to project deferrals and slower execution cycles.
Recovery in Global Markets: Anticipated stabilisation in the US and European economies in FY27 may enhance discretionary spending and accelerate IT demand.	Margin and Growth Pressure: Muted client-led revenue guidance, pricing pressure and cost optimisation continue to influence sector profitability and growth momentum.

Segment-wise Performance

The Company operates exclusively within the Information Technology Services domain, offering a comprehensive ecosystem of services such as system integration, cloud computing, data centre infrastructure, cybersecurity and enterprise IT capabilities. These interrelated offerings, together contribute to the Companys revenue and strategic growth, thereby constituting a single reportable business segment. Consequently, primary and secondary reporting disclosures for business or geographical segment as envisaged in AS -17 stand as inapplicable to the Company.

Financial Highlights (Consolidated)

Particulars	FY 2025-26	FY 2024-25
Total Revenue	357.84	233.25
Operating Revenue	354.40	230.30
EBITDA	12.25	13.05
EBITDA Margin (%)	3.42	5.59
PBT	8.62	10.62
PAT	6.16	7.99
PAT Margin (%)	1.72	3.43
EPS (T)	4.66	6.11

Risk Management

Esconets comprehensive risk management framework safeguards its operations and protects long-term stakeholder interests. Through its systematic approach to identifying, assessing and mitigating risks, the Company manages key areas including operations, finance, regulatory compliance and cybersecurity. Given the evolving nature of the IT industry, Esconet sustains high standards of corporate governance while adhering to applicable regulatory and compliance requirements.

Human Resource

The Company reaffirms its effective human resource policies in fostering the ideal workplace culture. The Company remains focused on addressing day-to-day organisational challenges, building strong and long-term relationships with its employees.

Employee retention and sustained development remain among the key priorities of the Company.

• With the rapid evolution of technologies such as AI, cloud and cybersecurity, how is the Company strengthening its talent acquisition, retention and workforce development strategies to support long-term growth?

• As Esconet continues to expand its customer engagements and technical capabilities, what initiatives are being undertaken to build a future-ready and high-performance workforce?

• In a competitive IT talent environment, how is the Company fostering employee engagement, learning and organisational culture to strengthen retention and productivity?

• As human capital remains central to the Companys growth journey, how are leadership development and skill enhancement programmes helping employees align with evolving business and industry requirements?

Internal Control and System

The Company has put in place adequate systems of internal control. These have been designed to provide reasonable assurance with regard to maintaining proper accounting controls, efficiency of operations, protecting assets from unauthorised use or losses and ensuring reliability of financial and operational information. The Company continues its efforts to align all its processes and controls with best practices, operating through well-defined international standard certifications and accreditations. Some significant features of the internal control systems include the preparation and monitoring of annual budgets, internal audits and their reviews, clear delegation of authority and responsibility, corporate policies on accounting and periodic management meetings to review operations and plans in various business sectors.

Cautionary Statement and Disclaimer

The opinions expressed by the management may contain certain forward-looking statements in the current scenario, which is extremely dynamic and increasingly fraught with risk and uncertainties. The Company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this report, consequent to new information, future events, or otherwise. Estimation and expectation made in the Report may differ from actual performance due to various economic conditions, Government Policies and other related factors.

The management has attempted wherever possible to identify such statements by using words such as‘anticipate, ‘estimate, ‘expects, projects, ‘intends, ‘plans, ‘believes, and words of similar substance in connection with any discussion of future performance. The management cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in assumptions. The operations of the Company may be affected due to various reasons including changes in political and economic front of India; fluctuations in exchange rate, tax laws, litigations, labour relations, interest costs and overall scenario of the infrastructure sector. Hence, the achievements of results are subject to risks, uncertainties, and even inaccurate assumptions. If known or unknown risks or uncertainties materialise or should assumptions prove inaccurate, realised outcomes could vary materially from those anticipated, estimated or projected. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.