Euphoria Infotech (India) Ltd Management Discussions

FY 2025 represents the _scal year 2024-25, from 1 April 2024 to 31 March 2025, and analogously for FY 2024 and previously such labelled years.

GLOBAL ECONOMY

The global economy is holding steady, although the degree of grip varies widely across countries. Global GDP growth in the third quarter of 2024 was 0.1 percentage point below that predicted in the October 2024 WEO, after disappointing data releases in some Asian and European economies. Growth in China, at 4.7 percent in year-over-year terms, was below expectations. Faster-than-expected net export growth only partly offset a faster-than-expected slowdown in consumption amid delayed stabilization in the property market and persistently low consumer confidence. Growth in India also slowed more than expected, led by a sharper-than-expected deceleration in industrial activity. Growth continued to be subdued in the euro area (with Germanys performance lagging that of other euro area countries), largely reflecting continued weakness in manufacturing and goods exports even as consumption picked up in line with the recovery in real incomes. In Japan, output contracted mildly owing to temporary supply disruptions. By contrast, momentum in the United States remained robust, with the economy expanding at a rate of 2.7 percent in year-over-year terms in the third quarter, powered by strong consumption.

Where inflation is proving more sticky, central banks are moving more cautiously in the easing cycle while keeping a close eye on activity and labor market indicators as well as exchange rate movements. A few central banks are raising rates, marking a point of divergence in monetary policy.

Global financial conditions remain largely accommodative, again with some differentiation across jurisdictions (see box below) Equities in advanced economies have rallied on expectations of more business friendly policies in the United States. In emerging market and developing economies, equity valuations have been more subdued, and a broad-based strengthening of the US dollar, driven primarily by expectations of new tariffs and higher interest rates in the United States, has kept financial conditions tighter.

Economic policy uncertainty has increased sharply, especially on the trade and fiscal fronts, with some differentiation across countries (see box below). Expectations of policy shifts under newly elected governments in 2024 have shaped financial market pricing in recent months. Bouts of political instability in some Asian and European countries have rattled markets and injected additional uncertainty regarding stalled progress on fiscal and structural policies. Geopolitical tensions, including those in the Middle East, and global trade frictions remain elevated.

The Outlook

Energy commodity prices are expected to decline by 2.6 percent in 2025, more than assumed in October. This reflects a decline in oil prices driven by weak Chinese demand and strong supply from countries outside of OPEC+ (Organization of the Petroleum Exporting Countries plus selected non-member countries, including Russia), partly offset by increases in gas prices as a result of colder-than-expected weather and supply disruptions, including the ongoing conflict in the Middle East and outages in gas fields. Nonfuel commodity prices are expected to increase by 2.5 percent in 2025, on account of upward revisions to food and beverage prices relative to the October 2024 WEO, driven by bad weather affecting large producers. Monetary policy rates of major central banks are expected to continue to decline, though at different paces, reflecting variations in growth and inflation outlooks. The fiscal policy stance is expected to tighten during 2025–26 in advanced economies including the United States and, to a lesser extent, in emerging market and developing economies.

Global growth is expected to remain stable, albeit lackluster. At 3.3 percent in both 2025 and 2026, the forecasts for growth are below the historical (2000–19) average of 3.7 percent and broadly unchanged from October. The overall picture, however, hides divergent paths across economies and a precarious global growth profile (see the box below). Among advanced economies, growth forecast revisions go in different directions. In the United States, underlying demand remains robust, reflecting strong wealth effects, a less restrictive monetary policy stance, and supportive financial conditions. Growth is projected to be at 2.7 percent in 2025. This is 0.5 percentage point higher than the October forecast, in part reflecting carryover from 2024 as well as robust labor markets and accelerating investment, among other signs of strength. Growth is expected to taper to potential in 2026.

In the euro area, growth is expected to pick up but at a more gradual pace than anticipated in October, with geopolitical tensions continuing to weigh on sentiment. Weaker-than-expected momentum at the end of 2024, especially in manufacturing, and heightened political and policy uncertainty explain a downward revision of 0.2 percentage point to 1.0 percent in 2025. In 2026, growth is set to rise to 1.4 percent, helped by stronger domestic demand, as financial conditions loosen, confidence improves, and uncertainty recedes somewhat.

In other advanced economies, two offsetting forces keep growth forecasts relatively stable. On the one hand, recovering real incomes are expected to support the cyclical recovery in consumption. On the other hand, trade headwinds—including the sharp uptick in trade policy uncertainty— are expected to keep investment subdued.

Source: World Economic Outlook, Update Growth: Divergent and Uncertain, International Monetary Fund

OVERVIEW OF THE INDIAN ECONOMY

India is poised to lead the global economy once again, with the International Monetary Fund (IMF) projecting it to remain the fastest growing major economy over the next two years. According to the April 2025 edition of the IMFs World Economic Outlook, Indias economy is expected to grow by 6.2 per cent in 2025 and 6.3 per cent in 2026, maintaining a solid lead over global and regional peers.

The April 2025 edition of the WEO shows a downward revision in the 2025 forecast compared to the January 2025 update, reflecting the impact of heightened global trade tensions and growing uncertainty Despite this slight moderation, the overall outlook remains strong. This consistency signals not only the strength of Indias macroeconomic fundamentals but also its capacity to sustain momentum in a complex international environment. As the IMF reaffirms Indias economic resilience, the countrys role as a key driver of global growth continues to gain prominence.

(Source: India: Fastest-Growing Major Economy, Ministry of Finance, Posted On: 23 APR 2025 4:40PM by PIB Delhi)

The recent GDP growth figures of 5.4% year over year1 for the second quarter of fiscal year 2024 to 2025 probably caught markets off guard (it was significantly below the Reserve Bank of Indias projection of 6.8%). Slower growth in the first half of the fiscal (6%) led the RBI to bring down the annual projection to 6.6% (down from an earlier projection of 7%). However, its essential not to let the headline numbers overshadow the nuanced story beneath: GDP is just one lens to evaluate economic health, and this quarter reveals resilience in certain pockets that are worth noting.

Rural consumption has remained robust, supported by strong agricultural performance, while the services sector continues to be a key driver of growth. Manufacturing exports, particularly in high-value-added components (such as electronics, semiconductors, and pharmaceuticals), have displayed strength, underscoring Indias growing role in global value chains. We believe the slow growth in the secondary sector3 is temporary (due to disruptions caused by monsoons).

Deloitte has revised its annual GDP growth projection for India to between 6.5% and 6.8% in this fiscal year, and between 6.7% and 7.3% in the following one. A tempered global growth outlook and a delayed synchronized recovery in the industrial economies amid changing trade and policy regulations—compared to what was previously expected—will likely weigh on Indias exports and outlook for the next fiscal year. India will have to adapt to the evolving global landscape and harness its domestic strengths to drive sustainable growth.

Decoding the slowdown in the second quarter

On the expenditure side, the slowdown in investments and exports were key factors weighing on the economy. Gross fixed capital formation (GFCF), a key driver of economic growth, slowed down to 5.4%. This was partly due to slower government capex utilization, which was at 37.3% in the first half of this year, lower than last years 49%.

Geopolitical uncertainties and disruptions in global supply chains, particularly in the Red Sea region, continued to weigh on exports. Petroleum product exports experienced a consistent decline across all three months of the quarter, averaging an approximate 30% contraction. As a result, total export growth slowed to 2.8%. At the same time, imports were higher due to a rise in oil and gold imports.

On the production side, gross value added grew by 5.6% in the second quarter, down from 6.8% in the previous one, primarily due to poor performance in the secondary sector. The slowdown in the industrial sector was somewhat expected as the index of industrial production showed signs of slowing across multiple sectors, particularly in mining and electricity. Mining contracted by 0.1%, while electricity and other utilities grew by just 3.3% (a sharp decline from the previous quarters 10.4%). The construction sector grew 7.7% its lowest since the last quarter of fiscal 2021 to 2022. Growth in manufacturing was modest, at 2.2% (down from 7%).

We believe these sectoral declines are temporary due to monsoon-driven disruptions (8% above-normal rainfall)4 and restrictive spending during elections. What is concerning is we also suspect the possibility of higher dumping from neighboring countries. Imports of goods such as plastics, organic chemicals, iron and steel products, machinery, and electronic components have seen a sharp jump in recent months and pose a significant threat in the months ahead amid restrictive trade regulations in industrialized nations.

Amid this growth slowdown, there were a few emerging trends that pointed to inert resilience.

• Robust rural consumption: Agricultural growth hit a five-quarter high of 3.5%, aided by a strong monsoon season. Indicators like rising sales of fast-moving consumer goods and declining numbers of jobs demanded through the Mahatma Gandhi National Rural Employment Guarantee Act (more commonly, MGNREGA) confirm strength in rural demand. With healthy kharif5 harvests and improved rabi sowing, rural consumption is expected to remain strong, further boosted by festive season spending.6

• Strong services sector growth: Services grew by 7.2%, driven by public administration and defense (9.1%) and finance, insurance, and real estate (7.2%). Services exports surged 21.3%. Between April and October 2024, total services exports stood at US$216 billion, compared to US$192 billion in 2023. This growth is crucial given the sectors significant contribution to Indias GDP and employment, specifically for the urban middle-income population.

• High-value manufacturing exports: Exports of electronics, engineering goods, and chemicals have grown significantly, now comprising 31% of total merchandise exports. Given that micro, small, and medium enterprises are significant contributors to manufacturing supply chains and exports, rising performance of these enterprises points to healthy growth in this export segment.

• Controlled fiscal deficit: The fiscal deficit stood at 4.4% of GDP in the second quarter of this fiscal year, accounting for 29.4% of the budget estimate, and standing 10% lower than last year. This gives government some room to ramp up spending to boost demand. With lower capital expenditure in the first half of this fiscal year, the government is poised to ramp up spending in the coming half, supporting demand and crowding in private investments. A significant uptick in government spending is expected in the second half of this fiscal year to meet budgetary targets, which may provide additional support to the economy and boost investment by crowding in private investments.

Indias near-term outlook

We now expect India to grow between 6.5% and 6.8% in fiscal year 2024 to 2025, in our baseline scenario. Although admittedly lower than previously estimated, because of a slower first half of the year, we expect strong domestic demand in the second half, driven by a significant uptick in government spending).

This will be followed by growth between 6.7% and 7.3% in fiscal year 2025 to 2026, with significant downside risks (hence a wider range; figure 1). Indias growth projections in the subsequent year will likely be tied to broader global trends, including rising geopolitical uncertainties and a delayed synchronous recovery in the West than anticipated. Disruptions to global trade and supply chain due to intensifying geopolitical uncertainties will also affect demand for exports.

Source: https://www2.deloitte.com/us/en/insights/economy/asia-pacific/india-economic-outlook.html ( )

INDIAS GROWTH IN GLOBAL CONTEXT

India is projected to remain the fastest-growing large economy for 2025 and 2026, reaffirming its dominance in the global economic landscape. The countrys economy is expected to expand by 6.2 per cent in 2025 and 6.3 per cent in 2026, outpacing many of its global counterparts. In contrast, the IMF projects global economic growth to be much lower, at 2.8 per cent in 2025 and 3.0 per cent in 2026, highlighting Indias exceptional outperformance.

The IMF has also revised its growth estimates for other major global economies. Chinas GDP growth forecast for 2025 has been downgraded to 4.0 per cent, down from 4.6 per cent in the January 2025 edition of the World Economic Outlook. Similarly, the United States is expected to see a slowdown, with its growth revised downward by 90 basis points to 1.8 per cent. Despite these revisions, Indias robust growth trajectory continues to set it apart on the global stage.

(Source: India: Fastest-Growing Major Economy, Ministry of Finance, Posted On: 23 APR 2025 4:40PM by PIB Delhi)

Industry Overview

THE INFORMATION TECHNOLOGY SECTOR

The IT & BPM sector has become one of the most significant growth catalysts for the Indian economy, contributing significantly to the countrys GDP and public welfare. The IT industry accounted for 7.5% of Indias GDP, as of FY23 and is projected to hit 10% by FY25.

As innovative digital applications permeate sector after sector, India is now prepared for the next phase of growth in its IT revolution. India is viewed by the rest of the world as having one of the largest Internet user bases and the cheapest Internet rates, with 76 crore citizens now having access to the Internet.

The current emphasis is on the production of significant economic value and citizen empowerment, thanks to a solid foundation of digital infrastructure and enhanced digital access provided by the Digital India Programme. India is one of the countries with the quickest pace of digital adoption. This was accomplished through a mix of government action, commercial innovation and investment, and new digital applications that are already improving and permeating a variety of activities and different forms of work, thus having a positive impact on the daily lives of citizens.

Indias rankings improved six places to the 39th position in the 2024 edition of the Global Innovation Index (GII).

MARKET SIZE

According to the National Association of Software and Service Companies (NASSCOM), the Indian IT industrys revenue touched US$ 227 billion in FY22, a 15.5% YoY growth and was estimated to have touched US$ 245 billion in FY23.

The IT spending in India is estimated to record a double-digit growth of 11.1% in 2024, totalling US$ 138.6 billion up from US$ 124.7 billion last year. By 2025, the Indian software product industry is projected to hit Rs. 8,68,700 crore (US$ 100 billion) as companies seek to expand globally.

The Indian software product industry is expected to reach US$ 100 billion by 2025. Indian companies are focusing on investing internationally to expand their global footprint and enhance their global delivery centres.

The data annotation market in India stood at US$ 250 million in FY20, of which the US market contributed 60% to the overall value. The market is expected to reach US$ 7 billion by 2030 due to accelerated domestic demand for AI.

Indias IT industry is likely to hit the US$ 350 billion mark by 2026 and contribute 10% towards the countrys Gross Domestic Product (GDP), Infomerics Ratings said in a report. As an estimate, Indias IT export revenue rose by 9% in constant currency terms to US$ 194 billion in FY23. Exports from the Indian IT services industry stood at US$ 199 billion in FY24.

The export of IT services has been the major contributor, accounting for more than 53% of total IT exports (including hardware). Exports from the Indian IT industry stood at US$ 194 billion in FY23. The export of IT services was the major contributor, accounting for more than 51% of total IT exports (including hardware). BPM, and Software products and engineering services accounted for 19.3% and 22.1% each of total IT exports during FY23.

The IT industry added 2.9 lakh new jobs taking the industrys workforce tally to 5.4 million people in FY23.

By 2026, the increased use of cloud technology could create 14 million jobs and contribute Rs. 33,01,060 crore (US$ 380 billion) to Indias GDP.

INDIAN TECHNICAL IT INDUSTRY

Indias Information Technology (IT) sector has come a long way since the early days of the 1990s when liberalization policies opened the doors to global markets. Today, the sector is a multi-billion-dollar industry contributing significantly to Indias

GDP. It encompasses a broad range of services including software development, IT consulting, systems integration, business process outsourcing (BPO), and IT-enabled services (ITES).

The IT industry in India is known for its cost-effective solutions, vast pool of highly skilled talent, and its ability to deliver complex technology services to businesses around the world. Major global companies rely on India for software development, technical support, and business process outsourcing. The country has emerged as the preferred outsourcing destination due to its competitive pricing, English-speaking workforce, and strong IT infrastructure.

The Indian IT sector is one of the most important contributors to the countrys economy. As of 2023, the sector is expected to generate over $200 billion in revenue annually, accounting for nearly 8% of Indias GDP. Additionally, it is the largest employer in the private sector, with over 4.5 million people working in IT services, software development, and related fields.

The exports from the Indian IT industry have been a significant source of foreign exchange, with a large portion of the sectors revenue coming from overseas markets, especially North America, Europe, and other parts of Asia. The IT sector has enabled India to establish strong trade relationships with some of the worlds largest economies, driving economic growth and technological innovation.

Moreover, the IT sector has played a crucial role in driving the digital economy in India, which includes e-commerce, fintech, digital media, and other technology-driven businesses. The proliferation of the Digital India initiative, launched by the Indian government in 2015, has further amplified the role of the IT sector in empowering citizens, promoting digital literacy, and driving financial inclusion.

THE RISE OF NEW TECHNOLOGIES

Indias IT sector has also made strides in the field of emerging technologies. While the traditional IT services industry remains a core pillar, the demand for digital transformation and next-generation technologies has surged. Indias IT companies are investing heavily in artificial intelligence (AI), machine learning (ML), blockchain, big data analytics, the Internet of Things (IoT), and cloud computing.

• AI and Automation: AI and automation are transforming the way IT services are delivered, driving efficiencies, reducing costs, and enabling businesses to focus on innovation. Companies are leveraging AI for predictive analytics, cybersecurity, and process automation.

• Blockchain: With its decentralized, secure nature, blockchain is being explored for use in industries like banking, supply chain management, and healthcare. Indian IT companies are developing blockchain-based solutions to help businesses address security, transparency, and compliance challenges.

• Cloud Computing: Indias cloud computing market is expanding rapidly, with more businesses migrating to cloud platforms for flexibility, scalability, and cost-efficiency. Indian IT companies like TCS and Wipro are helping businesses transition to the cloud and build custom cloud applications.

• Cybersecurity: As cyber threats evolve, Indias IT sector is playing a key role in strengthening cybersecurity measures. Indian IT companies are providing cybersecurity solutions to protect organizations from evolving threats and data breaches.

GOVERNMENT INITIATIVES

Some of the major initiatives taken by the government to promote the IT and ITeS sector in India are as follows:

• The Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman on July 23, 2024, proposes an allocation of Rs. 1,16,342 crore (US$ 13.98 billion) for IT and Telecom sectors.

• In March 2024, The Cabinet approved an allocation of over Rs. 10,300 crore (US$ 1.2 billion) for the IndiaAI Mission, marking a significant step towards bolstering Indias AI ecosystem.

• The government prioritizes cybersecurity, hyper-scale computing, AI, and blockchain. With data costs at Rs. 10/GB ($0.12/GB), India ranks among the worlds cheapest.

• Cabinet approved PLI Scheme – 2.0 for IT Hardware with a budgetary outlay of Rs. 17,000 crore (US$ 2.06 billion).

• In September 2022, the new Telecommunications Bill 2022 was published for public consultation by the Ministry of Communications as a move toward creating a new telecom framework in India.

• In June 2022, STPI Director General Mr. Arvind Kumar stated that exports through STPI units have increased from Rs. 17 crore (US$ 2.14 million) in 1992 to Rs. 5.69 lakh crore (US$ 71.65 billion) in 2022.

• In May 2022, it was announced that Indians can now avail of their DigiLocker services through WhatsApp to get easy access to their official documents.

• The government introduced the STP Scheme, which is a 100% export-oriented scheme for the development and export of computer software, including the export of professional services using communication links or physical media.

• The Department of Telecom, Government of India and Ministry of Communications, Government of Japan, signed an MoU to enhance cooperation in areas of 5G technologies, telecom security and submarine optical fibre cable systems.

THE FUTURE OF THE IT SERVICES SECTOR IN INDIA: KEY TRENDS AND INSIGHTS

The Information Technology (IT) services sector in India has been a major driver of economic growth and a key player in the global technology ecosystem. Looking ahead, the future of this sector holds immense potential, influenced by several trends and evolving needs within the global market. Below are key points that define the future of the IT services sector in India:

1. Growth in Digital Transformation As organizations across the world continue their digital transformation journeys, Indias IT services sector is poised to benefit greatly. The demand for cloud computing, artificial intelligence (AI), machine learning (ML), automation, and data analytics is growing, creating new opportunities for Indian companies to deliver these services at scale.

2. Rise of Cloud Computing Cloud adoption is accelerating worldwide. Indian IT companies are well-positioned to capitalize on this trend by offering cloud migration, optimization, and management services. Indian firms like TCS, Infosys, and Wipro are already prominent in the cloud space and are expected to expand further.

3. Increased Demand for Cybersecurity Services As cyber threats continue to grow, there is an increasing need for robust cybersecurity services. Indian IT firms are likely to enhance their capabilities in this area, offering end-to-end cybersecurity solutions to global clients, tapping into a rapidly expanding market.

4. Artificial Intelligence and Automation AI and automation are revolutionizing industries, and Indias IT sector is increasingly becoming a hub for developing and deploying AI-driven solutions. From chatbots to predictive analytics and robotic process automation (RPA), India is likely to lead in both development and implementation.

5. 5G and IoT Expansion The rollout of 5G networks and the growth of the Internet of Things (IoT) will create new avenues for IT services in India. IT firms will need to develop innovative solutions for industries like healthcare, manufacturing, and transportation, leveraging the capabilities of 5G and IoT technologies.

6. Focus on Sustainability and Green IT Sustainability is becoming a key priority for businesses worldwide, and this trend is reflected in IT services. Indian companies will likely increase their focus on green IT practices delivering energy-efficient IT solutions and helping clients reduce their carbon footprint through technology.

7. Integration of Blockchain Technology Blockchain technology is gaining traction across industries, from finance to supply chain. Indian IT services providers are expected to develop blockchain solutions for sectors like banking, healthcare, and logistics, contributing to the rise of secure and transparent systems.

ROAD AHEAD

India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India.

The IT spending in India is estimated to record a double-digit growth of 11.1% in 2024, totalling US$ 138.6 billion up from US$ 124.7 billion last year.

Indias public cloud services market grew to US$3.8 billion in the first half of 2023, expected to reach US$ 17.8 billion by 2027 By 2026, widespread cloud utilisation can provide employment opportunities to 14 million people and add US$ 380 billion to Indias GDP.

As per a survey by Amazon Web Services (2021), India is expected to have nine times more digitally skilled workers by 2025. In November 2021, Mr. Piyush Goyal, Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, lauded the Indian IT sector for excelling in its competitive strength with zero government interference. He further added that service exports from India have the potential to reach US$ 1 trillion by 2030.

The highlights of the financial results for the year ended March 31, 2025 and the corresponding figure for the previous year are as under:

(Rs in Lakhs except EPS)

Particulars	Standalone		Consolidated
	FY 2025	2023-24	FY 2025	2023-24
Revenue from Operations	1,321.57	601.40	1.321.58	601.40
Other Income	11.18	1.23	11.18	1.23
Total Income	1,332.75	602.64	1,332.75	602.64
Total Expenditure	1,084.91	478.93	1,084.91	478.93
Pro_t before tax	247.84	123.71	247.84	123.71
Current Tax	88.59	30.94	88.60	30.94
Income tax Adjustment	(12.22)	-	(12.22)	-
Deferred Tax Adjustment	(7.62)	0.19	(7.62)	0.19
Pro_t after Tax	179.08	92.58	179.08	92.58
Basic Earnings per share (in )	6.17	4.40	6.12	4.40

Key Ratios

Particulars	FY 2025	FY2024
Revenue (Rs. in Lacs)	1321.58	601.40
Net Profit After Tax (Rs. in Lacs)	179.08	92.58
Earnings per share (in Rs.)	6.12	4.40
EBITDA (Rs. in Lacs)	275.58	153.46
Net Profit Margin (%)	20.85	25.52
Return on Net worth	10.92	6.33
Current Ratio (times)	8.18	8.45
Debtors Turnover(times)	2.09	1.14
Debt-equity (times)	0.07	0.06
Debt Service Coverage Ratio(times)	11.93	5.20

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis report detailing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand supply conditions, raw material prices, finished goods prices, cyclical demand and pricing in the Companys products and their principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries with which the Company conducts business and other factors such as litigation and / or labor negotiations.