Synopsis:- Declaring its first quarterly results under a merged entity, R Systems International has reported a 30 percent revenue jump and a near-70 percent surge in net profit for the quarter ended March 31, 2026, driven by IT services momentum and the effective integration of Velotio Technologies with 51.6 lakh OCRPS worth Rs. 240.7 crore now allotted, introducing a dilution overhang over the next 18 months.
Shares of a leading technology and AI services company came under investor scrutiny after its Board approved both Q1 CY2026 financial results and the formal OCRPS allotment arising from the Velotio Technologies amalgamation, at a meeting held on May 6, 2026. The consolidated results.
With a market capitalization of Rs.3,529.12 crore, the shares of R System International were trading at Rs.297.85, up 3.26 percent from its previous close of Rs.288.45. The stock trades at a P/E of 16.04.
Consolidated revenue from operations rose 29.9 percent year-on-year to Rs. 574.77 crore in the quarter ended March 31, 2026, compared to Rs. 442.47 crore in the same period last year. Net profit after tax grew 69.5 percent to Rs. 65.41 crore from Rs. 38.59 crore, with the operating margin expanding 112 basis points to 13.76 percent. The sequential picture was cleaner than reported headline numbers suggest the previous quarter (December 2025) carried a Rs. 24.58 crore exceptional charge from New Labour Code provisions, which artificially depressed PAT to Rs. 36.41 crore that quarter.
IT services remained the dominant growth engine, with segment revenue rising 31.9 percent YoY to Rs. 520.81 crore. Knowledge services, the smaller segment grew at a more moderate 13 percent to Rs. 55.62 crore, though its absolute segment profit of Rs. 26.56 crore continued to be disproportionately high relative to its revenue base, reflecting the structural margin difference between the two businesses.
One item warrants attention: R Systems recognised a Rs. 18.04 crore fair value loss on foreign currency forward contracts in Other Comprehensive Income this quarter, arising from its new cash flow hedge designation effective January 2026. The loss will recycle into the P&L when hedged forecast transactions materialise, an accounting reclassification rather than an economic loss, but it pulled total comprehensive income down to Rs. 69.27 crore from the Rs. 65.41 crore PAT figure.
The composite scheme merging Velotio Technologies Private Limited and Scaleworx Technologies Private Limited into R Systems became effective May 1, 2026, following NCLT (New Delhi Bench) approval on April 16, 2026, with an appointed date of April 1, 2024. The Board allotted 51,60,833 Optionally Convertible Redeemable Preference Shares (OCRPS) of Re. 1 face value to six named Velotio shareholders valued at Rs. 240.7 crore in aggregate.
The OCRPS carry an 18-month term from the effective date and convert to equity shares at a 1:1 ratio at maturity, subject to a vesting factor tied to whether holders become “Bad Leavers” as defined in the scheme. In practice, this means the eventual equity dilution up to 51.6 lakh shares, or roughly 0.43 percent of the current paid-up capital of 11.85 crore shares is contingent on founders staying on. The dividend on OCRPS is set at 0.0001 percent per annum, which is effectively nominal. The preference shares will not be listed on any exchange. Since the standalone financials have been restated to give pooling-of-interest effect from the beginning of the preceding period, Velotio’s operations are already reflected in the restated comparatives.
Business Overview
R Systems International, incorporated in 1993, is a mid-cap IT services and knowledge process company providing product engineering, cloud, quality assurance, and digital transformation services, with operations spanning India, the US, Europe, and Southeast Asia. For the full year ended December 31, 2025, consolidated revenue stood at Rs. 1,958.21 crore, up approximately 12 percent from Rs. 1,742 crore in the prior year, while annual PAT came in at Rs. 186.20 crore, a 42 percent improvement over the Rs. 131 crore reported for CY2024.
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