IRIS RegTech Solutions Limited Stock Analysis

Robust revenue growth in continuing operations: Q3 FY26 revenue of ₹3,558.83 lakhs represents 24.6% QoQ growth and 23.3% YoY growth, indicating strong business momentum / SupTech segment showing exceptional traction: SupTech revenue grew 26.8% QoQ to ₹2,109.74 lakhs in Q3 and delivered segment profit of ₹832.82 lakhs, up 77% QoQ from ₹470.21 lakhs / Strategic divestment executed at attractive valuation: Sale of GST ASP business and IRIS Logix subsidiary generated exceptional gain of ₹13,598.67 lakhs, significantly strengthening capital base / Strong operating leverage demonstrated: Profit before tax from continuing operations reached ₹713.40 lakhs in Q3 vs ₹516.58 lakhs in Q3 FY25, showing 38% YoY improvement despite unallocated expenses / Healthy cash generation potential: Nine-month profit from continuing operations at ₹752.02 lakhs with improving margins across core SupTech and RegTech segments / RegTech segment recovery underway: RegTech revenue at ₹1,305.65 lakhs in Q3 (up 22.9% QoQ) with segment profit improving to ₹331.63 lakhs from ₹109.74 lakhs QoQ

DataTech segment remains loss-making: DataTech posted segment loss of ₹54.74 lakhs in Q3 FY26 and cumulative nine-month loss of ₹104.19 lakhs, requiring turnaround execution / High unallocated expenses pressure margins: Unallocated expenses reached ₹648.46 lakhs in Q3 FY26, representing 18.2% of revenue from operations and limiting overall profitability / Subsidiary IRIS Business Services LLC remains in negative equity: Total liabilities exceeded assets by ₹45.91 lakhs as of December 31, 2025, requiring continued financial support from parent / Revenue concentration in SupTech creates segment dependency: SupTech contributed 59.3% of Q3 revenue (₹2,109.74 lakhs of ₹3,558.83 lakhs), creating reliance on single segment performance / Post-divestment business scale reduction: Discontinued operations contributed revenue historically; ongoing business must demonstrate sustainable growth trajectory without divested tax-tech assets / New Labour Codes implementation uncertainty: Company recognized ₹6.85 lakhs incremental gratuity expense for Q3 due to revised wage definitions, with full impact of new codes still pending detailed rules

Continuing-operations revenue growth is strong: Q3 FY26 consolidated revenue from operations was Rs 3,558.83 lakh, up ~23.3% YoY (Rs 2,885.28 lakh) and ~24.6% QoQ (Rs 2,856.35 lakh). / Core quarterly earnings improved: continuing PAT rose to Rs 531.36 lakh in Q3 FY26 versus Rs 371.45 lakh in Q3 FY25 (~43% YoY growth). / SupTech is a clear growth engine: Q3 segment revenue increased to Rs 2,109.74 lakh from Rs 1,579.82 lakh YoY (~33.5%), and segment result rose to Rs 832.82 lakh from Rs 443.97 lakh (~87.6%). / Balance-sheet stress in the US subsidiary is reducing: IRIS Business Services LLC net liability position improved to Rs 45.91 lakh (from Rs 64.29 lakh in March 2025), indicating lower deficit versus earlier period.

Earnings quality is affected by one-offs: 9M FY26 includes Rs 13,598.67 lakh exceptional gain and large discontinued-operations profit, inflating reported net profit and EPS. / Underlying 9M profitability weakened despite headline growth: continuing PAT fell to Rs 752.02 lakh in 9M FY26 versus Rs 1,027.72 lakh in 9M FY25. / DataTech execution risk remains high: DataTech segment result was -Rs 54.74 lakh in Q3 and -Rs 104.19 lakh for 9M, despite being a strategic focus area. / RegTech profitability is volatile: Q3 segment result declined to Rs 331.63 lakh from Rs 494.49 lakh YoY (~33% drop), even though revenue was slightly higher YoY.