Virinchi Ltd Management Discussions

Market context, operating performance, risk and financial analysis.

Global economic growth is estimated at approximately 3.2% for calendar year 2025, moderating from 3.3% in 2024, as trade-policy uncertainty, tariff actions and geopolitical tensions weighed on manufacturing and investment while the services sector continued to perform more resiliently. The International Monetary Funds most recent update projects growth of 3.1-3.3% for 2026, supported by continued technology-led investment, easier financial conditions and fiscal support in several major economies, even as risks remain tilted to the downside from renewed trade tensions and geopolitical flashpoints. Advanced economies are estimated to have grown by around 1.5-1.7% in 2025, while emerging market and developing economies grew a little above 4%, continuing to outpace advanced economies. Among major economies, the United States is estimated to have grown around 2.0% in 2025, China around 4.8%, the Euro area around 1.2%, and Japan and the United Kingdom in the 1.1-1.3% range. Global inflation continued to ease through 2025, aided by softer commodity prices and tighter monetary policy in earlier years, though inflation in the United States remained comparatively sticky.

Major economies estimated GDP growth, CY2025. Source: CNBC, China Briefing, Trading Economics, Reuters (as cited in the Companys Annual Report).

Outlook

The global economy enters FY 2026-27 amid continuing trade-policy uncertainty, with tariff actions and reciprocal measures between major trading blocs remaining the single largest source of uncertainty. Artificial intelligence-linked capital expenditure continues to be a significant offsetting driver of global growth, alongside gradually easing monetary policy in several major economies. Geopolitical tensions, energy-price volatility and the durability of the technology investment cycle remain the principal risks to the outlook.

Indian Economic Review

The Indian economy strengthened materially in FY 2025-26, with real GDP growth estimated at 7.4% as per the First Advance Estimates of the Ministry of Statistics and Programme Implementation (MoSPI), up from 6.5% in FY 2024-25 - among the sharpest accelerations in recent years and reinforcing Indias position as the fastest-growing major economy. Growth was led by a broad-based pickup in the services and manufacturing sectors, robust domestic demand, GST and personal income-tax rationalisation, front-loaded government capital expenditure, and accommodative monetary and financial conditions. The Reserve Bank of India progressively revised its FY 2025-26 growth estimate upwards through the year - from an initial 6.5-6.8% to 7.3% and subsequently to 7.4% - citing durable consumption and investment momentum. Quarterly real GDP growth accelerated through the year, with growth of 7.8% in Q1 FY 2025-26 and 8.2% in Q2 FY 2025-26, compared to 6.5% and 5.6% in the corresponding quarters of FY 2024-25. Retail inflation eased sharply through the year, falling to near-record lows and supporting the RBIs rate-easing cycle, including a 25-basis-point repo rate cut in its February 2025 policy review. Nominal GDP for FY 2025-26 is estimated to grow by around 8%, with the governments Union Budget 2025-26 emphasising agriculture, MSMEs, investment and exports as the primary growth engines, alongside a fiscal deficit target of 4.4% of GDP and continued personal income-tax relief for individuals earning up to Rs. 12 Lakh annually.

India quarterly real GDP growth, FY 2024-25 vs FY 2025-26 (Q3/Q4 FY 2025-26 pending official release).

Outlook

India is expected to remain the fastest-growing major economy into FY 2026-27, aided by sustained consumption demand, continuing capital-expenditure momentum, an easing interest-rate environment and moderating inflation. Key watch-points include the durability of global trade-tariff arrangements affecting Indian exports, the monsoon outlook, and the pace of private capital-expenditure revival.

The global information technology market continues to expand steadily, driven by digital transformation, cloud computing adoption, artificial intelligence integration into enterprise workflows, and rising cybersecurity investment. Enterprise spending on AI-linked infrastructure, data centre capacity and software has been a particularly strong growth driver through 2025 and into 2026, even as overall IT services growth remains more moderate than infrastructure and software spending. Worldwide IT spending is expected to reach $6.37 trillion in 2026, up 14.2% from 2025, according to the latest forecast by Gartner, Inc., a business and technology insights company. Worldwide IT Spending Forecast (Billions of U.S. Dollars)

Category	2025 Spending	2025 Growth (%)	2026 Spending	2026 Growth (%)
Data Center Systems	506	51.6	822	62.5
Devices	790	9.7	868	9.8
Software	1,271	13.9	1,468	15.5
Services	1,492	3.8	1,570	5.3
Infrastructure as a Service (IaaS)	222	25.3	287	29.3
Communications Services	1,296	3.3	1,354	4.4
Overall IT	5,577	10.7	6,369	14.2

Overall worldwide IT spending, 2025 vs 2026 (+14.2%). Source: Gartner (July 2026).

The United States IT services market - the primary market for the Companys SaaS and IT services businesses - continues to grow at a healthy pace, supported by continuing enterprise digital transformation initiatives, the accelerating adoption of agentic AI within business workflows, and sustained demand for cloud and data-analytics capabilities. Employment growth in the US IT sector is expected to remain robust over the medium term.

Indian Healthcare Industry Review

The Indian healthcare sector continued to expand through FY 2025-26, supported by rising government healthcare allocation, growing private investment, an ageing population, expanding medical tourism, and increasing adoption of AI-enabled diagnostics and hospital operations technology. The sector remains among Indias largest employers, with continuing growth expected in both clinical and health-tech roles as telemedicine, virtual care and data-analytics adoption accelerate. Government commitment to healthcare infrastructure continued to strengthen, with sustained increases in allocations to flagship programmes such as Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) and the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM), alongside continuing private-sector investment in tertiary and quaternary care capacity, particularly in oncology, transplant and critical care services - segments in which the Companys hospitals are actively expanding.

Outlook

With continuing government support, rising private investment, an ageing population and increasing willingness to pay for quality tertiary care, the Indian healthcare sector is expected to sustain strong growth momentum into FY 2026-27, with AI-enabled diagnostics, personalised medicine and expanding insurance/scheme-based coverage as key structural growth drivers.

Company Overview

Established in 1990 and headquartered in Hyderabad, Virinchi Limited has evolved into a diversified enterprise spanning fintech (SaaS-based lending technology for the US micro-credit industry and payment & credit services in India), IT services, and healthcare delivery. The Company operates through its wholly and majority-owned subsidiaries across these verticals, with an operating presence in Hyderabad and Marlboro, New Jersey (USA). During the year under review, the Companys shareholding in Virinchi Health Care Private Limited (its healthcare subsidiary) was diluted from 100% to 51%, following which Virinchi Health Care Private Limited continues as a majority-owned (rather than wholly-owned) subsidiary; a related-party investment and issue of Convertible Equity Warrants by Virinchi Health Care Private Limited was approved by shareholders through postal ballot during the year. Subsequent to the year-end, the Company also completed the purchase of two units of Virinchi Hospitals Private Limited under a slump sale, approved by shareholders through postal ballot concluding on 12th August, 2026, for a consideration of Rs. 100 Crore.

Segment-wise / Product-wise Performance

The Companys operations are organised into three principal business segments, namely SaaS Business, IDC & IT Services, and Healthcare Services. The segment-wise revenue and EBITDA performance for FY 2026, as compared with FY 2025, is set out below: Rs Crore

Revenue	FY2026	FY2025
SaaS Business	153.94	133.37
IDC & IT Services	40.37	57.30
Healthcare	79.99	104.15
IT Enabled Services	10.07	6.31
Total income from operations	284.36	301.13
EBIDTA	FY2026	FY2025
SaaS Business	33.01	30.98
SaaS Business EBITDA Margin	21.44%	23.23%
IDC & IT Services	13.73	33.74
IDC & IT Services EBITDA Margin	34.01%	58.88%
Healthcare	23.68	24.73
VHPL EBITDA Margin	29.60%	23.74%
IT Enabled Services	-0.69	-0.25
Total EBITDA from operations	69.73	89.20

The SaaS Business continued to demonstrate healthy growth, with revenue increasing from Rs. 133.37 crore in FY 2024-25 to Rs. 153.94 crore in FY 2025-26, representing a growth of approximately 15%. The growth was supported by the addition of two new clients, Check-n-Go and MoneyTree Inc., during FY 2024-25. During FY 2025-26, the revenues from these clients reached a more stable operating level, thereby strengthening the overall revenue base of the business. EBITDA increased from Rs. 30.98 crore to Rs. 33.01 crore, while the EBITDA margin remained healthy at 21.44%.

The IDC & IT Services segment recorded revenue of Rs. 40.37 crore in FY 2025-26, compared with Rs. 57.30 crore in FY 2024-25. The decline was primarily attributable to the tightening of the US immigration environment and restrictions affecting the issuance of H-1B visas, which impacted the deployment and movement of skilled resources. The Company was able to mitigate the impact to a significant extent through a diversified workforce comprising US citizens, Green Card holders and H-1B visa holders. The segment continued to remain profitable, with EBITDA of Rs. 13.73 crore and an EBITDA margin of 34.01%.

Healthcare Services revenue stood at Rs. 79.99 crore in FY 2025-26, compared with Rs. 104.15 crore in FY 2024-25. The decline was primarily attributable to a slowdown in revenues from certain therapeutic segments and lower contribution from the government segment. The Company consciously moderated its focus on the government segment in view of the relatively extended working capital cycles associated with such business. Despite the decline in revenue, the segment maintained healthy profitability, with EBITDA of Rs. 23.68 crore. The EBITDA margin improved significantly to 29.60% in FY 2025-26 from 23.74% in FY 2024-25, reflecting improved operating efficiency and a favourable revenue mix.

Risk Management

The Companys risk framework identifies and monitors the principal risks below, together with the Companys key mitigation measures.

Customer risk: risk of customer attrition due to service quality gaps. Mitigation: continued focus on a customer-centric operating model across the Companys fintech and IT services businesses, with an established base of enterprise and institutional clients in the US alternative-finance and technology sectors.

Competition risk: the Companys market share in fintech, IT services and healthcare could be affected by new entrants and incumbents. Mitigation: continued investment in technology differentiation (including AI-enabled platform capabilities) and quality-of-care upgrades at its hospitals.

Compliance risk: risk of regulatory non-compliance across the Companys multiple regulated businesses (listed-company, healthcare, and US/India fintech regulation). Mitigation: continued investment in compliance and employee-engagement programmes, and alignment with evolving regulatory requirements, including RBI digital-lending guidelines applicable to the vCard business.

Employee risk: risk to talent retention across the Companys IT, fintech and healthcare workforce. Mitigation: In FY 2027 the total strength of employees in IT stood at 460 with a retention ratio of around 85% while the total employee strength in Healthcare vertical stood at 700.

Financing risk: adequacy of the Companys capital structure to fund growth. Mitigation: The Companys capital structure remains adequately capitalised, supported by a meaningful equity base and a relatively moderate level of financial leverage. The Companys net worth has remained broadly stable, providing a reasonable cushion against business and operating risks. The balance sheet also has a diversified asset base comprising fixed assets, investments, loans and advances and current assets. While the overall capitalisation remains comfortable, the Company continues to focus on improving the quality and liquidity of working-capital assets and optimising the deployment of capital across its business segments. In FY 2025-26 the networth stood at Rs. 482.16 Crore and total debt at Rs. 141.32 Crore and gearing of 0.29x and the comparatives for FY 2024-25 were net worth of Rs. 474.27 Crore, total debt of Rs. 159.99 Crore and gearing of 0.34x.

Geographic risk: concentration of fintech/IT revenues in North America. Mitigation: In FY 2025-26, 68.33% of the total revenue came from export of IT Services/Product to the US while export revenue as a % of total revenue, was around 63.3% for FY 2024-25.

Opportunities and Threats

Opportunities:

Continuing government support for the healthcare sector and expanding insurance/scheme-based coverage.

Growing global adoption of AI-enabled platforms across fintech and healthcare delivery, an area of active investment for the Company (QFunds agentic-AI roadmap, AI-enabled hospital operations).

Expansion of Indias digital-credit ecosystem, with continuing headroom given Indias low household debt-to-GDP ratio relative to peers.

Continued growth in Indias credit-card and digital-payments penetration, benefiting the Companys vCard business.

Adoption of cloud, data-analytics and cybersecurity solutions across the Companys IT services client base.

Threats:

Escalating global trade-tariff and geopolitical uncertainty affecting the Companys US-facing SaaS and IT services revenues.

Rising cybersecurity threats across the Companys fintech and healthcare technology platforms.

Elevated employee attrition/turnover risk in the IT services industry.

Regulatory change risk in digital lending (RBI guidelines) and healthcare delivery.

Financial Overview

The financial results below are drawn from the audited Standalone and Consolidated financial statements for FY 2025-26, as summarised in the Boards Report.

Particulars (Rs. in Lakhs)	Consolidated 2025-26	Consolidated 2024-25	Standalone 2025-26	Standalone 2024-25
Total Income	28,613.26	30,830.41	18,338.14	15,341.34
Profit before Finance Cost,	7,149.88	9,638.57	4,940.42	4,546.65
Depreciation & Amortisation, Taxation and Exceptional Item
Less: Finance Cost	3,291.77	3,902.90	1,286.15	1,427.92
Less: Depreciation and Amortisation Expenses	5,621.97	5,498.60	1,054.24	1,113.83
Profit before Tax & Exceptional items	(1,763.87)	237.08	2,600.03	2,004.90
Less: Exceptional items	529.56	0.00	529.56	0.00
Profit Before Tax	(2,293.44)	237.08	2,070.46	2,004.90
Less: Tax Expenses	445.26	188.66	672.61	401.00
Profit before Minority Interest	(2,738.70)	48.41	1,397.84	1,603.90
Less: Minority Interest	127.02	23.99	-	-
Profit After Tax	(2,611.68)	72.40	1,397.84	1,603.90

Analysis of the Profit & Loss Statement

Consolidated total income decreased by 7.2% from Rs. 308.30 Crore in FY 2024-25 to Rs. 286.13 Crore in FY 2025-26. Consolidated EBITDA (profit before finance cost, depreciation, amortisation, tax and exceptional items) decreased by 25.8% to Rs. 71.50 Crore, with the consolidated EBITDA margin contracting by approximately 627 basis points, from 31.26% to 24.99%. After absorbing an exceptional item of Rs. 5.30 Crore and minority interest of Rs. 1.27 Crore, the Company reported a Consolidated Loss After Tax of Rs. 26.12 Crore for FY 2025-26, as against a Consolidated Profit After Tax of Rs. 0.72 Crore in FY 2024-25. At the Standalone level, total income increased by a strong 19.5% from Rs. 153.41 Crore in FY 2024-25 to Rs. 183.38 Crore in FY 2025-26, and Standalone EBITDA grew 8.7% to Rs. 49.40 Crore, though the Standalone EBITDA margin contracted by approximately 270 basis points to 26.94% (29.64% in FY 2024-25), reflecting a faster increase in the expense base than in EBITDA. Standalone Profit After Tax decreased by 12.9% to Rs. 13.98 Crore (Rs. 16.04 Crore in FY 2024-25), after absorbing the Rs. 5.30 Crore exceptional item and a 67.7% increase in tax expense. At the standalone level, employee expenses increased by 22.9% from Rs. 54.27 Cr in FY 2024-25 to Rs. 66.72 Cr in FY 2025-26 and the administrative expenses increased by 25.3% from Rs. 53.67 Cr in FY 2024-25 to Rs. 67.25 Cr in FY 2025-26. The increase in administrative expenses of Rs. 13.58 Cr included a one-time fully provided write-off of Rs. 8.43 Cr on the QC Holdings receivable

Consolidated financial highlights, FY 2024-25 vs FY 2025-26 ( Crore). *EBITDA = Profit before Finance Cost, Depreciation & Amortisation, Taxation and Exceptional Item.

Standalone financial highlights, FY 2024-25 vs FY 2025-26 ( Crore).

Key Ratios

Particulars	2025-26	2024-25
EBITDA margin - Consolidated (%)	24.99	31.26
EBITDA margin - Standalone (%)	26.94	29.64
Net (PAT) margin - Consolidated (%)	(10.27)	0.23
Net (PAT) margin - Standalone (%)	7.62	10.45
Debt-Equity ratio (x)	0.29	0.34
Particulars	2025-26	2024-25
Return on Equity (%)	(5.73)	0.16
Book value per share (Rs.)	44.32	46.20
Earnings per share (Rs.)	(2.52)	0.07
Debtors turnover (days)	111.48	98.42
Current ratio (x)	1.69	1.49
Interest coverage ratio (x)	2.17	2.47

At the standalone level, employee expenses increased by 22.9% from Rs. 54.27 Cr in FY 2024-25 to Rs. 66.72 Cr in FY 2025-26 and the administrative expenses increased by 25.3% from Rs. 53.67 Cr in FY 2024-25 to Rs. 67.25 Cr in FY 2025-26. The increase in administrative expenses of Rs. 13.58 Cr included a one-time fully provided write-off of Rs. 8.43 Cr on the QC Holdings receivable. The Companys capital structure remains comfortable in consolidated level, with the Debt-Equity ratio improving from 0.34x in FY 2024-25 to 0.29x in FY 2025-26, indicating a reduction in financial leverage. Liquidity also strengthened during the year, with the Current Ratio improving from 1.49x to 1.69x. The Companys interest servicing capacity remains adequate, with an Interest Coverage Ratio of 2.17x despite the moderation in consolidated operating profitability. The return on networth (RoE) declined on account of the fall in profit after tax due to the reasons as listed above even though there is a marginal increase in networth.

While consolidated profitability was impacted during FY 2025-26, resulting in a negative PAT margin of 10.27%, the standalone operations continued to remain profitable, reporting a PAT margin of 7.62%. The deterioration at the consolidated level is therefore primarily attributable to the performance of the Companys subsidiaries and the overall business mix, rather than an increase in financial leverage. The Book Value per Share remained relatively stable at Rs.44.32 as against Rs.46.20 in the previous year, further indicating that the Companys underlying capital base remains substantially intact. The increase in debtor days from 98.42 days to 111.48 days remains an area of focus, and the Company is taking measures to improve collections and optimise working-capital deployment. Overall, the Company continues to maintain a reasonably strong capital structure, adequate liquidity and manageable financial leverage, providing a sound balance-sheet foundation for the Companys medium- to long-term growth plans.

Internal Control Systems and Their Adequacy

The Companys internal control and risk management framework is aligned with its corporate governance policies and is integrated across the Company and its subsidiaries. The Board of Directors provides strategic oversight over Executive Directors, management and the Companys monitoring and support committees. The Audit Committee, together with the Internal Auditor appointed under Section 138 of the Companies Act, 2013, operates under the Boards supervision, with internal audit reports placed directly before the Audit Committee.

Human Resources

The Company continues to view its employees as central to its performance and growth, and remains focused on competitive compensation, a supportive work environment, and structured performance-recognition systems across its IT, fintech and healthcare businesses. As at 31 March 2026, the Company and its subsidiaries employed a total of 460 resources with a retention ration of 85%., and the number of resources in Healthcare stood at 700.

Cautionary Statement

Statements made in this Management Discussion and Analysis describing the Companys objectives, projections, expectations and estimations may be forward-looking statements within the meaning of applicable securities laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual results could differ materially from those expressed in this statement or implied, due to the influence of external factors beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements based on any subsequent developments, information or events.