Neutral Updater Services; target of Rs 230: Motilal Oswal

Neutral

Motilal Oswal's research report on Updater Services

Updater Services (UDS) reported a 2QFY26 revenue growth of 7% YoY to INR7.3b, below our estimate of ~INR7.7b. Core EBITDA margin came in at 4.3% (est. 5.9%), down 130bp QoQ. Consolidated adj. PAT stood at INR198m (down 30% YoY), below our estimate of INR321m. UDS’s 1HFY26 revenue grew 7.3% YoY, whereas EBITDA declined 16.3% YoY. For 2HFY26, we expect its revenue/EBITDA to grow by 13%/1.0% YoY. We downgrade the stock to Neutral with a revised TP of INR 230, as weaker BSS trends (FY26 growth cut to 3–3.5%), lower overall guidance (9–10% vs. 13 15% earlier), margin pressures from client issues, and ramp-up costs limit near-term visibility.

Outlook

We downgrade the stock to Neutral with a revised TP of INR230, based on 11x Jun’27E EPS, implying an upside potential of 13%.

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