Pace Digitek Q1 Results: Profit Up Year-on-Year but Margins Under Pressure
Pace Digitek reported its Q1 results showing a 20% year-on-year (YoY) rise in consolidated net profit to ₹54.1 crore, even as sequentially (quarter-on-quarter or QoQ) the profit fell by 5%. Revenue performance was mixed, while margins saw a notable compression compared to the previous year.
Pace Digitek operates in the technology and digital equipment solutions sector, supplying advanced imaging, computing, and digital integration products across enterprise and retail segments. The company’s results reflect industry-wide inventory normalization after a strong FY25 close, with some QoQ moderation due to seasonality and slower demand recovery in select verticals.
Understanding Key Metrics
Before delving into the results, let’s clarify a few financial terms often used in earnings discussions:
- YoY (Year-on-Year): Compares a company’s current quarter or year’s performance to the same period in the previous year.
- QoQ (Quarter-on-Quarter): Measures performance compared to the previous quarter.
- EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization — a measure of a company’s operating performance that excludes non-cash and non-operational costs.
- Margins: Indicates how much profit a company makes on each rupee of sales. A higher margin signals better cost efficiency.
Pace Digitek Q1 FY26 Performance Snapshot
| Metric | Q1 FY26 | Change (YoY / QoQ) |
|---|---|---|
| Revenue | ₹367 crore | Up 7% YoY, Down 46% QoQ |
| EBITDA | ₹80 crore | Down 18% YoY, Up 5% QoQ |
| Net Profit | ₹54.1 crore | Up 20% YoY, Down 5% QoQ |
| EBITDA Margin | 21.8% | Down from 28.36% YoY, Up from 11.15% QoQ |
The company has shown resilience in maintaining operational profitability despite slower topline growth. The marginal QoQ improvement in EBITDA and margins indicates stabilising costs, while the YoY decline highlights rising input costs and softer demand in enterprise orders.
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Peer Comparison
To understand Pace Digitek’s standing, here’s a look at some comparable technology and distribution firms:
| Company | Revenue (₹ Cr) | EBITDA Margin | Net Profit Growth (YoY) |
|---|---|---|---|
| Pace Digitek | 367 | 21.8% | 20% |
| Redington | 25,360 | 3.2% | 10% |
| Ingram Micro India | 22,100 | 2.9% | 6% |
Compared with peers, Pace Digitek’s margins remain robust, indicating superior operational efficiency despite smaller scale. However, the steep sequential decline in revenue warrants attention.
SWOT Analysis
| Strengths | Weaknesses |
|---|---|
| Strong distribution network and recurring enterprise orders. | Margin compression due to pricing pressure. |
| Efficient cost management reflected in stable QoQ EBITDA growth. | High dependence on a few key clients. |
| Healthy balance sheet with low leverage. | Seasonal volatility in enterprise demand. |
| Opportunities | Threats |
|---|---|
| Growing demand for AI-enabled and IoT devices in B2B space. | Global supply-chain risks and currency fluctuations. |
| Potential government push for domestic digital manufacturing. | Rising competition from low-cost regional players. |
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Final Verdict
Pace Digitek’s Q1 results depict a mixed performance — a solid YoY profit jump offset by soft revenue and margin contraction. The company’s efficient cost control and strong client base helped sustain profitability despite a subdued quarter. Investors can view the stock as a stable mid-cap play in the tech distribution space with improving QoQ momentum. However, monitoring demand recovery and margin normalization will be key before fresh accumulation.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, believes that Pace Digitek’s steady profitability amid sectoral moderation indicates operational strength. The firm’s consistent EBITDA improvement sequentially shows early signs of recovery. For investors seeking exposure to digital hardware and B2B IT distribution, it may be suitable for gradual accumulation with a medium-term view. Discover more insights and sectoral deep-dives at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries
- How is EBITDA margin different from operating margin?
- Why do sequential (QoQ) results matter to traders?
- Is Pace Digitek’s margin decline a short-term phenomenon?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment adviser before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
