Onward Technologies (NSE:ONWARDTEC) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Onward Technologies Limited q two and h one FY twenty seven earnings conference call as hosted by Go India Advisors. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation conclude. Please note that this conference is being recorded. I now hand the conference over to Mr. Lav Gupta from Goinde Advisor. Thank you, and over to you, Lav. Thank you, Danish. Good afternoon, everybody, and welcome to Onward Technologies Limited earnings conference call to discuss the q two and H1 FY twenty seven results. We have on the call Mr.

0:45 Jagamatha, Managing Director. We must remind you that the discussion on today's call may include certain forward looking statements and therefore must be viewed in conjunction with the risks that the company may face. May I now request mister to take us through the company's business outlook and performance, subsequent to which we will open the floor for question and answers. Thank you, and over to you, sir. Thank you, love. Good evening, everyone, and thank you for joining us today. I appreciate your continued interest in Onward Technologies, and I'm very pleased to share our q two and h one FY twenty seven performance. Q two FY twenty seven marks an important milestone in our transformation journey. We delivered our highest ever quarterly revenue at INR170 crores, representing a 22.4 Y o Y growth and 13.2% sequential growth.

1:34 Total income for the quarter was INR171.2 crores, while EBITDA grew 33.2% year on year to INR 26.5 crores, with margins expanding to all time high at 15.6%. That increased also to 41.2% Y o Y to INR 16.8 crores. These results reflect the operating leverage we continue to build into our businesses. What is particularly encouraging for me is the quality of the growth. It was driven by deeper engagement with strategic customers, improved utilization, higher productivity, and strong offshore execution. This was... Wanted a moment to congratulate my entire team for a very disciplined execution and operational management.

2:19 Focus as organization continues remains firmly on delivery led growth and converting execution excellence into sustaining sustainable profitability. The U. S. And Europe regions continue to be our primary growth engines. We also increased the number of customers billing for $1,000,000 annually from 16 to 18, demonstrating our ability to expand wallet share within our existing clients. A major highlight this quarter was a renewal of a three year digital engineering engagement valued at approximately INR44.5 crores with a global construction and mining equipment leader. The contract value increased by over 70% compared to the previous term, reflecting a customer's confidence in our ability to deliver quality and long term partnership approach.

3:06 This is very important because the earlier contract file was also sizable. We were getting the... While we had the statement of work and the contract, we were getting deals on a six monthly or annual basis. This time the customer has awarded us the entire contract. And we are... As we speak, we are participating and bidding for number of large RFPs in our existing customer. We are also seeing a lot of encouraging opportunities across US and Europe for digital engineering, AI led transformation programs, data center infrastructure engineering, and particularly in areas such as power management, cooling systems, and intelligent industrial platforms. We will be very happy to share more in the subsequent quarters. At the same time, we continue to invest big and hire a lot of people across all our four delivery centers in India, which is in Pune, Chennai, Bangalore, Hyderabad to get ready for 2027.

4:03 Based on the strong half year performance and the visibility we see across our customer portfolio, we have increased our FY 'twenty seven outlook. We now expect revenue growth of 15% to 18% for FY 'twenty seven and an EBITDA margin in the range of 13.8% to 14.3. While we are obviously very pleased with the momentum, our focus remains on long term value creation. We continue to strengthen our delivery engine, improve revenue productivity and expand offshore leverage. And most importantly, deepen our engagement with our existing customers across all the three verticals. We believe Q2 performance demonstrates the strategy that we've been sharing with you over the last couple of years, and now it's finally working. The foundation we have built is now translating into stronger growth, expanding profitability and greater business resilience.

4:55 We remain confident in our ability to scale sustainably and create long term value for all all our stakeholders. Thank you once again for joining us today. With that, let me hand over the call back to the operator, and we look forward to your questions. Thank you again. Thank you so much, sir. Ladies and gentlemen, we will now begin with a question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are request to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question comes from the line of with Maximal Capital. Please go ahead.

5:41 It's Henry, may please proceed with your question. Yes. Yes. Yes. Hi, guys. Congrats on the good quarter. So my question is related to the first one is related to the revenue guidance that you provided. I mean, can you just double click on what is happening in the segment wise and where do you see more RFQs or, you know, that order buildup, and what gives you that confidence that, you know, we can sustain this revised, you know, growth guidance. So we upgrade our guidance based on our H1 on a strong H1 execution and and and the improved visibility that we have from our existing customers across... Especially across North America.

6:41 It's the momentum that we have with the customers, the hiring that we have done in the last six months, we've onboarded net about 430 plus employees, and the RFQs that we are participating, especially with the large demand in the AI data center space. So most of our manufacturing customers in the industrial segment have been growing very rapidly. There is a huge talent need which across US and offshore, And we have been building up this over the last many years, and now we are finally seeing the clear visibility towards that. And hence, we feel comfortable giving 15 to 18% revenue guidance.

7:29 Understood. Understood. And on this BI, the DC opportunity, can you just give us some color on, you know, what exactly that we are doing? Because if my understanding is correct, I mean, usually, the system integrators kind of, you know, do the kind of services that probably we are doing. So what is our, like, you know, value addition or what kind of projects that we do there? I mean, if you can give us some color and what is the scope of that opportunity? Sure. So we view... I've shared this earlier, but we view AI both as a productivity enabler and a growth opportunity. Right? So one is we are embedding AI into our engineering workflows, know, in our software development and delivery processes. And while they're also helping our customers accelerate their own digital engineering initiatives.

8:19 And we have the skill sets, as I said, we have now almost 3,000 plus people in our team, employees, and all of them are focused only on few customers, understand the customers' products, which eventually are going into building those large data centers. Right? So when there's power generation, cooling systems, and that's where we have the skills already in house. Our employees, our engineers are well trained from a domain perspective. And that's where we see the advantage in terms of when we participate in the RFQs. And these are US customers or or India, like, India plus US customers? So Onward Technologies only has US and Europe customers. Right? So we have no India customers.

9:08 Got it. Got it. Got it. And the final one is, like, any impact from this new regulation, the form regulations on our, like, you know, on-site delivery model? I mean, if you can just give us some color to that. So it's... We are definitely a bit cautious about that. We do need to ramp up substantially in The US, and we are hiring local people, which we've been doing for many years. There is a... There is definitely an impact on that, and the guidance that we have given is post the new regulatory, the external environment which is out there. Understood. Thank you, Jigal. I'll join back up to you. Thank you so much. Our next question comes from the line of Abhijit with Qualysit.

9:56 Please go ahead. Thanks for the opportunity. Am I audible? Yes, sir, you are. Thank you. So first of all, congratulations on a great set of numbers. My question is regarding the unbilled receivables that increased in the first half. So can you give some light on the reason behind this and when can we see this converting into the investment cash? Sure. So unbilled receivables went up marginally to eighty days. Our DSO has gone up to about eighty days. And I think it will come down very quickly. Right? We had a very quick ramp up, and there were some instances where the POs were delayed or at the same time, there was some customer payment delayed. For all that has been rectified. September itself was one of our highest month.

10:54 And we will see in Q3 and Q4 things getting normalized again. We continue to have zero. Understood. Got it. And the other question is regarding the margins. So even if we exclude the R and D credit of, I think 2.9 crores, the margin is still expanded sequentially. So the first question is, this INR 2.9 crore of R and D credit, can you explain of which period it was? And can we expect some further credit in the upcoming quarters? Sure. So the credit was through the normal course for the last twelve months, for the current period, it is for f five twenty six.

11:47 It's not just a credit for us. It's for every other company which operates in The UK. So but since the number is material for us, hence, we reported a special line item, but all all engineering companies get that. The second, the margin expansion for us was driven predominantly by four factors. Right? So one was high utilization for our offshore engineers, Improved leverage of offshore, right, especially with the earlier question. When the new policy came out, it was anticipated for many months. Customers are ramping up offshore more without the dependence on-site, and that changed as well for us because then we could start projects much faster. And third, it was, again, just very strong, really disciplined focusing on few customers, investing behind a few customers, keeping ready capacity, training the whole L and O that we have been investing in for many years. I think it's just slowly now settling in beautifully in terms of what our customers expect from us and we're able to ramp up at the speed that they expect from us.

12:53 Right. Right. But the revenue grow revenues will grow, we will see the benefits. Got it. Yeah. That's all from my side. Thanks, and all the best. Thank you. Our next question comes from the line of Richard Jawedi with CB Asset Managers, LLP. Please go ahead. Yeah. Hi. Am I audible? Yes. You are. Yep. Yeah. So, sir, first question would be, sir, what would be our growth in terms of constant currency terms across segments? So the Y o Y constant currency growth will be 17.7%.

13:41 Okay. And segment wise, if you can provide. Sorry. What is segment wise? It's... Do we have the bifurcation by the industry, so account by constant currency terms? No. I don't have it right now, but I'm sure my team can share that. Okay. And second, sir, I'll Thank up the Q o q is 13.5%. You can reach out to them, love of GI, and they can share that with you. But q on q is 13.5, and BIOY 17.7. Okay. Sure. And one more question. Will scale up on the previous part is on the AI. So what is the update on the Chen nine AI lab? And how do we plan to slowly and gradually take it as an opportunity across industries?

14:35 So we started building on it. We started hiring a lot of people in Chennai. Would love to welcome all of you guys. I think it'll be up and running by q four or early two thousand twenty seven. It's gonna be a lab. Right? It's a lab which we can showcase. One is we can train all our engineers, all our managers. Second is gonna be where we can showcase all the the innovative work that we are doing for our customers. Third, we can actually dedicate for customers who are looking for an AI lab for... To test their own products. So there are a lot of amazing opportunities towards that when we make this kind of an investment. So I think in 2027 is when we will see the first benefit of it. Okay, sir. Thank you, and all the best, sir. Thanks.

15:22 Thank you. Our next question comes from the line of Amit Tawani with Clear Blue Capital Advisors. Please go ahead. Hi. Thank you for taking my question. And, Jigarh, congratulations on fantastic set of numbers. My first question is, is there an upside to the guidance? Because these number the numbers that you've delivered this quarter kind of, I think, justify a higher guidance. So we've already include... Increased the guidance. Right? Based on the visibility we have today, we obviously prefer to remain prudent and execute rather than get ahead of ourselves. So so far, we are very comfortable and happy that where we are at. And I think there's definitely a huge potential out there in terms of what we can do.

16:12 So revenue is not a challenge. Right? For a company of our size, execution is a challenge. Right? Ramping up that quickly is the main thing, and that's what we are doing as we speak. What is actually stopping us from getting... I mean, these are huge customer base. They are huge, and, you know, they have... So what is actually stopping us from getting a higher... Much higher wallet share from them? So it's it's both. Right? So it's capacity... Ready capacity, and second, capacity is the people and the infrastructure. And number two is the capability, right, where we are executing large progress. And that's what we've been investing in. So I think it's a gradual process, and I think you will see that over the next couple of quarters.

17:02 We, as an organization, get ready towards that. And my last question You're asking is our opportunities opportunities there and customer expects the same from us and all the suppliers. So we will keep ramping up towards that. And we have a substantial cash reserves where we can proactively invest behind each customer engagement and opportunity out there. Thank you. And my last question is what is our hiring schedule for the next two quarters? So q three hiring will be a bit slow. It's a holiday period. We continue to onboard people, and we have released a lot of offers out there. So in q three, we are prioritizing bringing in lot more subject matter experts getting ready for 2027 and '28.

17:51 In q four, we will add, I think, another few 100 people is what we are anticipating. The market is getting competitive. And we are... Also, our design centers are getting full. So we are... We had opened our fourth design center in Pune earlier this month, which is already expected to get full by end of November, December. We have signed the lease to add more seats in Pune. So we're building up capacity as well. We're hiring people as well. So more and more in terms of Q4 is going to be a critical quarter for us and Q1 in terms of adding few 100 people. And when you say 100, Jigarh, you meant net 100 or hiring of 100? Net.

18:38 Net. Thank you. Thank you. Next question comes from the line of Madhu Rathi with Counter Cyclical Investments. Please go ahead. Sir, thank you for the opportunity. Sir, I wanted to understand regarding this INR 3 crore r and d expense that we have incurred during this quarter. Earlier, this was actually... If you can help us understand more on that. So this is not for this quarter. This is a normal benefit. Any company that operates in UK that gets that gets it. This is for FY '26. It's for the entire last financial year.

19:28 So this is a you see the pandemic, it's about investing in The UK, whether investing in r and d, in engineering programs, research programs, AI programs, anything which is technology disruption which UK does not have. So they encourage encourage foreign companies to actually do that. So all engineering companies, all IT companies are benefited from that for investing in The UK region or UK market per se. For ours, because it is the logic... I mean, larger companies don't have to do it because it's not material, but for us, it's important that we share with you guys and hence, we have put a note in the results as well. Got it. So do we have 100% subsidy or this reversal for the... Whatever r and d that we do on... So, you know, how is... How does the accounting treatment works for this going forward if you can help us understand this?

20:24 So it happens once a year. It's usually about 10 to 15% of your revenue. There's a long process. You claim for it with all the projects that you've done, and then there's a evaluation, and that's when it comes in. So once it... We we got the approval in September, and hence, it was booked in the quarter, and it's net of employee expenses because the expenses were already incurred last year. So when you collect the money or when you receive the refund or subsidy from the government, that's where you adjust it against the employee... Against the expenses. Got it. And another question was there has been a substantial jump in our revenue from North America. So what led what led to this? We've been sharing the similar guidance for the last many quarters, right, for the last eighteen months when we sort of fine tuned our strategy further for account management and existing customers.

21:20 And if you see our customers, majority of our customers come from North America. A majority of our revenue comes from North America. And this is the ramp up that we are seeing, and we were ready at the right time. This ramp up actually started in q four of last year when we started winning programs, larger programs, and a very quick ramp up. And we had already had the people trained with the right infrastructure in place where we could actually invoice in this quarter. So it's not a one off thing. It's a sustainable thing which we see over the next many quarters. Got it. And just a final question from my end. In the case study we have given, it seems that we have replaced the legacy SaaS our customer was using. So is this a new sort of work order that we are getting? Or we used to do this earlier, just that we highlighted this during this quarter?

22:19 We have highlighted it this quarter. We just wanna share more and more engineering programs, more and more projects that we are doing successfully for our customers. So, again, right, so just to summarize, ONWARD has 70 plus customers. We are an engineering partner to them. Historically, we would just be doing mechanical engineering. Now we're doing a lot of work in lot of other areas. The new technology instruction is key to our future growth and success while you continue to invest behind it. Right? So we are looking at this opportunity when we share the earnings deck to share new case studies, new areas where we've been building capacity and capabilities and the customers are valuing us. So it's gonna be just gonna be... We're gonna try and do this few times a year where we keep sharing more and more stuff with you guys.

23:08 Got it. Thank you for the opportunity and all the best. Thank you. Thank you. Our next question comes from the line of Ambrish Kakar, an individual investor. Please go ahead. Thank you for the opportunity and congratulations to you and your team for a stupendous performance. First question is on the revenue by industry. If you could just provide some color. I'm just looking at the you provided the percentage breakup, so I'm just using that percentage to look at the revenue by industry. And industrial has been, for the last eight quarters, been doing nearly 20% growth. It looks like transport mobility is turning around. So it had a... It seems to have had a good year on year growth this quarter.

23:58 Health care has been difficult to know, but it seems like it's in the right direction, but still very small. So if you could give some color on transportation and mobility as to whether we're now going to see this growth continue. Plus health care, is there anything you could you could talk about? We're around, I think, five per quarter. How and when does this get bigger? Sure. So the transportation and mobility vertical has two sub verticals, automotive and rail transportation. Our rail transportation has been growing meaningfully for the last many quarters. Automotive business last year, as you knew, there was lot of furloughs and shutdowns and across... Especially across Europe. Now I think that has bounced back, and I think lot of places are seeing positive momentum, but I think it must be industry broad broad based. So there is a lot of opportunities coming up both in the automotive side.

24:59 We've invested a lot more in our real vertical starting earlier this year, and we continue to invest behind that. Just last month, our entire team was at Renault France in Berlin. So now they're attending the right conferences and taking Onward Technologies brand out there with our technical capability that we have built across 3,000 people. So we are seeing value of that as well. So we do believe this business, the e and m vertical will continue to grow and grow much faster over the next couple of quarters. On the health care side, we have done... The team's done a fabulous job in terms of winning large customers, and we continue to do that. So we're a very similar spot as what we were in the industrial segment two years ago, where we had the customers. We had to just wait for the right opportunity in terms of where we start bidding for larger programs, and that's the spot that we are in.

25:52 So I think the ramp up in health care or in HCLS will be very similar to our other verticals and maybe faster because we're starting at a very small base. But we're just waiting for the right opportunity in terms of winning some large programs where we ramp up much faster. But in terms of customer base, HCLS has done a remarkable job in terms of opening up some remarkable brands, some of the biggest brands in North America. Fantastic. Very encouraging. Thank you for that. Second question is just a broader question on T and M and AI. So we have a 88% of our... Or eighty eighty odd percent of our revenue T and M. And and I understand you've explained this in the past that T and M is a outcome based T and M. It's not just body shopping.

26:41 But as incorporate more a n I... AI into your own internal processes, presumably, you know, you will get some productivity which customers will will demand. Is this something we should we should be cognizant of that we may have some revenue deflation from this? Or is there something different in what... Onward does that that protects us a bit? So so far, there definitely will be impact of AI, which we have shared before. I think it's gonna be, again, industry broad based. Currently, customers are you... Utilizing or asking us to see AI how to improve efficiency in the system, how to improve the workflows, but it's not reducing the workload.

27:30 Right? Because our business continues to be very heavy on engineering, not IT. So from that perspective, I think so far that we have not seen any negative pushback from our customers. But definitely, everybody is expecting productivity improvement. We are a 100% Microsoft shop. Our entire team uses Copilot. And definitely, we are seeing a lot of value. We're able to showcase a lot of case studies and lot of benefits to their customers. But eventually, customer will make the final call when they're ready to put their IP out there because when a for a product company, they will put the entire IP on the AI system, which I don't think they're doing yet. So what we are doing is still on the periphery, on the plant side, on the manufacturing manufacturing side, side, on on the the robotics side. And all the revenue guidance that we have given, the revised one, also includes...

28:16 Is taken into consideration some impact from that, but we see, again, huge opportunity in terms of the ramp up that our customers are expecting from us over the next two years. So we are pretty excited about that. Thank you. Thank you. That's helpful. Just one last comment. You don't need to react to this, but just to see if my understanding is is correct. I'm tracking... I've been tracking revenue per employee, which, you know, you have your own stated objective of of 30 to 40 lakhs. And if my calculations are reasonable, we're already nearly at somewhere between 22 to 24 lakhs per employee. So we're going... And it's been growing quite steadily. But if I just use this metric and I use your rough estimate of how many people we expect to add, is it... Is is that a wrong way to think about this? Because, know, it comes back to the guidance looks a little conservative. But, again, I understand there are a lot of other variables. But broadly, is that the right way to think about it?

29:22 It is the right way to think about it. The revenue guidance that we shared, again, eighteen months back, it was an aspiration, which is a platinum standard in our industry. Right? So 25 to 40 lakhs is what some of the best companies globally do, Indian and globally. And that's sort of where we would like to be. It's more about showcasing that we do the same quality work and that we are aspiring to do the same quality work, not just resource base or people based organization. So that's the aspiration of the organization of the board. In terms of we are hiring people because we need to build up capacity today because the demand is that high. And number three, important point, I think we had a question earlier as well. When The US visa and all the other restrictions started coming in '18 again couple of quarters ago, that revenue guidance, that revenue aspiration of '35 to 40 also comes down because on-site is a significant portion of that for... To get a blended rate per engineer.

30:21 So just keep the last point also in mind when you are thinking about that. Like, 35 to 40 lakhs per engineer is not... I I don't think it's possible only from doing offshore work. It's a blended outcome Yeah. Of 10% on-site, 90% offshore. Thank you for that, and all the best. Good luck for the rest of the year. Thank you. Thank you. Our next question comes from the line of Oumesh Chanduwani with Sandler O'Neill. Please go ahead. Yes. Thanks for allowing me to ask the question. Your current margin for Q2 EBITDA margin has increased to 15.6. So just to summarize, earlier, we had said double digit EBITDA, and then we were constantly people are asking us, analysts and investors are asking us questions on what double digit is at 10% or close to 14%, 15%.

31:38 Hence, we have revised. We feel comfortable giving a revised guidance for the whole year. We believe we will be between 13.814.3%. How much is this revenue increase, 22.2 disturbance. Sorry. Somebody's on mute. It's from, Omish lines only.

32:32 You guys said you can... You may please proceed. Thank you. Okay. Yeah. Thanks. That's much better. So sorry. The question was on constant currency? Yes. Oh, I thought I shared that detail earlier. Just one second. The constant currency for the quarter, Q on Q was 13.5%, Y o Y was 17.7. Our Our next question comes from the line of Abhishek Chaudhry, an individual investor. Abhishek, there is some background noise from your end.

33:32 Can you use headset, please? Hello? Can you hear me? Alright. Go ahead. Yeah. Hi, sir. Thank you for the opportunity. So I was just checking your numbers. So I could understand that you are focusing more on $1,000,000 accounts where I can see, like, the number of accounts you have been dealing have increased in the last four to five years. And we have moved more towards offshore than domestic. So I just wanted to understand the guidance which you have given, EBITDA 14%. Could we think about achieving more as we move up the value chain? Or, like, you know, could you explain me, like, how could we maybe move from 14 to further?

34:27 Maybe, like, you know, more upwards? Like, is there any possibility in which you are thinking the... Into... By entering different industries or anything like that? Yes. We view there's definitely further opportunity over time. The key point is that margin improvement that we are seeing is being driven by structural levers, which is high utilization, increased offshore delivery as I said earlier, more productivity, and better account mining. And I think it's gonna play play out over time across all the three verticals and across both the regions. So definitely, there is, over time, lot of opportunity to do much better or scale much faster in terms of EBITDA as well.

35:20 And also on the account sizing also, like, 1,000,000 could go to probably, like, higher numbers as we... Like, I'm talk... I'm more... I'm talking more from the vision point of view. Absolutely. So we shared this earlier as well. Our vision is each customer that Onward works with gets to close to $10,000,000 per year in terms of revenue. We are already seeing a lot of amazing tractions. A lot of customers are moving towards that. So 1,000,000 is the is what is base number for us where we know the relationship and the investment that we have made over many, many years is working. And then 10,000,000 is the aspiration for your recurring revenue, sustainable revenue with each customer.

36:07 And also, could I... Can you also explain, like, what could be the investments you could be making for this to happen? Like, you know, are you, like, investing any... In any, like, any new initiatives in the company? So the investments behind each customer each customer is very unique for us. Each customer is a world leader in a particular product. Right? So we, being an engineering company, we are building product knowledge. We are building domain knowledge. We're building manufacturing process knowledge. So every customer is very, very unique. While at the bottom of the pyramid, we could use common skills, which is engineering.

36:57 At the top of the pyramid, we need very specialists, as we call them subject matter experts, SMEs, and we have to hire them in hundreds just for one customer. Right? And then we want to scale in a very big way. So that's where the majority of our investments go. Second, large investment goes in l and o d or in training to train people because you can't find these people ready made in the market. And on... As an engineering company, we don't hire directly from colleges. We need people from the manufacturing shop floor, and then we have to train them. So that's definitely a huge investment for us as well. And third is on the front end side, which we call it iCOR, I c o r, indirect cost of revenue, which is our sales team, account management team, the presentations and the workshops that we do, participating in seminars that our customers are going, and being aware of all the new... Where they want to go in terms of the technology disruption coming their way so they can get ready for that. So these are the few areas where Onward has to invest proactively every every day, every week, every year.

38:00 So we identify a few customers every year where we see a lot of visibility. We invest behind that. I hope that over the next couple of years, we will be ready to invest behind all 70 at the same time. Then we... Then that's that's gonna be very exciting as well. But we have to reach that stage in terms of relationship and maturity with the customer. Thank you very much, sir. All the best. Thank you. Our next question comes from the line of Aditi Gupta with AG Capital. Please go ahead. Hello, sir. Am I audible? Yes. You are. Okay. Congratulations, sir, on a good set of numbers.

38:50 Just had two or three questions. Firstly, it was about the employees. So I think we had about two fifty people that we had added in this quarter. And just wanted to know, is, like, the capacity for the projects already signed for... Or are we, like, dependent on our future demand that we are seeing? What is it? And also wanted to know how is the utilization, you know, I mean, among the employees? How much is the pressure intake, and how much is the experienced people? We... Let me answer the question a bit differently. The... I... Just if I understood the question right, the Mhmm. We as a service company have to constantly hire people.

39:40 Right? So we hire a lot of people every day, and the number we are talking about for h one is about 450 odd people. We have hired 50 odd employees. This is a net hiring. Right? So when you add the attrition and everything else, people on leave, and all kinds of other stuff that happens, people on higher education. So that's our net intake so far. Number two, we don't hire freshers. ONWARD Technologies, so far, has never gone out in the market for colleges and hire directly from campuses because the learning curve there is very, very high, and that's why customers like us. So we have chosen the hard way where we do a lot of lateral hiring. We... And we we don't depend on external agencies for hiring. Right? So we have 90 plus recruiters on our payroll, which is an Italian acquisition group.

40:30 There's... So we do all the hiring ourselves because that's what customers value about us, our ability to find the right... The best teams, talents from the shop floor. Let's put it simply. So that's what we do. In terms of the guidance that we have given, in terms of the revised revenue growth guidance that we have given, yes, the hiring has been done for that, majority of that. Now we just have to make sure there are no external factors that can delay the projects. Right? There is so much happening in the world today that there could be some level... Element of surprise there. But we are budgeted for that as well. Okay. Got it, sir. Got it. And there was another question. Just wanted to ask that the receivable days, I think, have stretched to around eighty.

41:19 And just, you know, wanted a brief one. Is it a timing issue, or is it a structural issue, and what are we targeting in the future? And, also, a separate question was that, you know, there is 27% jump in the depreciation. Just wanted to know what is that number. So, sure, so the DSO has gone up to eighty days, and that's due to fast growth and some delays in customer approvals. I think the sweet spot for us, as we have shared earlier, I think, is about sixty five to seventy days, and I think that will normalize in the next two quarters. And your second question was in terms of depreciation going up. Depreciation went up predominantly because of two factors.

42:10 One is we acquired an asset. So that's... We have... We bought an office in Bombay at Berlin. So that was one area where the depreciation went up. And second is all the hardware that we have been purchasing across our new design centers when you added 400 plus people, which is the first time we have done that over the last many years. So that's the second part where the depreciation has gone up. Got it. Still got it. Got you, sir. Once again, congrats. Thank you. Thank you. There are no further questions from the participant. I now hand the conference over to the management for the closing remarks. Thank you, and over to you, sir.

43:01 Thank you, everyone, again for joining us today as a continued interest in ONWARD Technologies. Q2 was a very important quarter for us. We delivered strong revenue growth and improved profitability, expanded our margins and most importantly, great outlook for the year, again, of course, for Onward Technologies. The results reflect the progress that we have been making over the last many, many years in strengthening our delivery engine, offshore leverage, improved productivity. And we are seeing that with some of our customers where our engagements are getting deeper and larger on a global level. We are again encouraged by this momentum in the business and the increasing interest from everybody in the ONWARD ecosystem.

43:47 We believe the opportunity ahead of us remains significant across all the three verticals, industrial being the most dominant and the most matured, but the T and M and the HCLs vertical also are very critical to our success and future growth, and we remain very excited about it. Our focus continues to remain to create long term value for all our three stakeholders, which is our customers, employees, and shareholders. On behalf of our entire leadership team, I wanna thank thank all our customers for their trust, our employees for their dedication and commitment, and, of course, all of you and our shareholders for your continued support. We look forward to updating you on our progress next quarter. Thank you, and have a great day. Thank you so much, sir. Ladies and gentlemen, on behalf of Going Day Advisors, that concludes today's call. Thank you for joining us, and you may now disconnect your lines.