Indian IT companies are struggling to revive growth amid weak discretionary spending and the AI transition. Investors have been closely tracking sector leaders like Infosys and TCS, watching how they are repositioning their businesses for the next phase of growth.
Away from the spotlight, however, one listed mid-cap IT company has quietly been defying the trend. The company, Indegene, has been delivering 30-40% revenue growth and generating nearly 50% higher revenue per employee than traditional IT companies.
The reason lies in where it operates. Unlike conventional IT service providers, which focus on application development, cloud migration, and infrastructure management, Indegene works exclusively with global pharmaceutical and medical devices companies.
Let’s delve deeper into the company’s business model; can its specialised operating model sustain superior growth and profitability, and does it deserve to trade at a premium to India’s IT services sector?
A Different Kind of IT Services Business
Bringing a new drug to market is one of the most expensive and tightly regulated processes in the world. Even after a medicine receives regulatory approval, pharmaceutical companies must prepare thousands of pages of scientific documents, comply with evolving regulations across multiple countries, educate doctors, and monitor the drug’s safety throughout its lifecycle. A delay or compliance error can postpone a product launch by months and cost millions of dollars.
This is where Indegene operates. It focuses exclusively on technology-enabled commercialisation and regulatory operations for global pharmaceutical and medical device companies.
Unlike conventional IT outsourcing, these functions require deep scientific knowledge alongside technology expertise. More than 27% of its workforce comprises doctors, PhDs, medical writers, and regulatory specialists working alongside software engineers. This combination makes the business difficult to replicate, as competitors must build both domain expertise and long-standing relationships with global pharmaceutical companies.
This specialised positioning allows Indegene to participate in critical projects where clients prioritise accuracy and regulatory compliance over cost. As a result, the company enjoys higher revenue per employee than traditional Indian IT companies and has built relationships with each of the world’s top 20 biopharma companies.
The Numbers That Set It Apart
Indegene’s financial performance reflects a business that is investing aggressively for its next phase of growth.
Revenue growth accelerated sharply in FY26 after relatively modest growth in FY25. Revenue from operations increased 23.6% YoY to Rs 3,511 crore. The momentum continues into FY27 with Q1 revenue up 39.7% YoY to ₹1,063 crore, making it one of the fastest-growing listed IT companies in India.
The growth was largely driven by a combination of deeper engagements with existing clients, contributions from recent acquisitions, and sustained demand for AI-enabled life sciences services.
Indegene: Financial Performance
| Metrics | FY24 | FY25 | FY26 |
| Revenue from Operations(₹ crores) | 2,590 | 2,839 | 3,511 |
| EBITDA Margin (%) | 20.7 | 19.8 | 17.8 |
| Net Profit (₹ crores) | 337 | 407 | 401 |
| ROCE (%) | 25.2 | 20.5 | 16.6 |
Indegene: Quarterly Performance Snapshot
| Metrics | Q1FY26 | Q1FY27 | Change |
| Revenue from Operations(₹ crores) | 761 | 1,063 | 39.7% |
| EBITDA Margin (%) | 20.2 | 16.9 | -330 bps |
| Net Profit (₹ crores) | 116 | 116 | 0% |
A key indicator of Indegene’s improving unit economics is its revenue per employee, which has climbed from around $56,000 three years ago to nearly $75,000 today.
It is well ahead of the $40,000-50,000 range, typically generated by large Indian IT services companies. This suggests that the company is not simply deploying more people on projects, but is executing higher-value work for clients.
Profitability Margins Falling Behind
Looking at the profitability metrics, it seems growth is coming at a cost of profit. EBITDA margins have declined from 20.7% at the end of FY24 to 16.9% in Q1FY27.
However, this is not the case. The margin compression is happening due to increased investments in AI platforms and integration of acquisitions into the business. The company recently integrated three acquisitions- BioPharm, WARN, and Cake Communications- which affected the overall profitability margins.
As a result, returns on capital have also moderated as recent acquisitions and investments have increased the capital base.
Improving Client Quality
The company already works with all of the world’s top 20 biopharmaceutical companies. And, at the same time, it is increasing the wallet share within existing customers while adding new large clients.
- Across the top 20 accounts, revenue increased from ₹2,208 crore to ₹2,502 crore in FY26, reflecting deeper engagements across multiple service lines.
- The number of clients contributing more than $1 million in annual revenue rose from 41 to 53.
- And, the number of active clients generating more than $250,000 in annual revenue increased from 73 in FY25 to 91 in FY26.
As pharmaceutical companies outsource more functions to a trusted partner, switching vendors becomes increasingly difficult because of accumulated domain knowledge, regulatory familiarity, and integration into client workflows.
Also, the increase in million-dollar relationships indicates that clients are not merely renewing contracts but expanding the scope of work. Over the long term, these relationships have proven to be sticky, but any reduction in spending by a handful of large customers could affect growth.
Can AI Expand Indegene’s Economic Moat?
For much of the Indian IT industry, AI has become a double-edged sword. As generative AI improves software development productivity, enterprise clients are demanding lower prices and smaller project teams. This has created pricing pressure across traditional IT services.
Indegene operates in a different part of the value chain. Developing AI solutions for medical writing, regulatory submissions, or commercial operations requires deep domain expertise, proprietary datasets, and a thorough understanding of regulatory requirements. In this setup, AI acts less as a replacement for skilled professionals and more as a productivity enhancer.
If the work is delivered in less time, Indegene can either deliver more projects with the same workforce or take on higher-value work without proportionately increasing headcount. Over time, this creates the possibility of operating leverage through higher revenue per employee and improved margins.
To support this strategy, the company has developed three complementary AI platforms. Cortex serves as its core AI engine trained on proprietary life sciences data, NEXT automates medical writing workflows, while Tectonic extends AI into commercial content creation and product launches.
Moving Up the Value Chain
Of the three AI initiatives, Tectonic helps Indegene move further up the value chain into higher-value commercial content and creative strategy work. Earlier, ad agencies designed a drug’s marketing campaign, and Indegene executed the more technical, back-end work. Now, through Tectonic, Indegene wants to become the single partner handling the whole commercial launch- the higher-value contract.
Tectonic is already witnessing good traction within a year of its launch. Tectonic had already onboarded five clients, and management expects it to become a meaningful revenue contributor during FY27.
3 Key Factors Keeping Indegene Stock Sideways Post-IPO
Indegene: 1yr Stock Price Chart
What may surprise investors is that, despite the strong operational performance, the Indegene share price has mostly stayed sideways. The market’s cautious stance reflects a combination of factors rather than concerns over the company’s long-term opportunity.
1. It Listed at a Premium Valuation
Indegene debuted on the stock market in May 2024 at a premium valuation. The IPO was priced at ₹452 per share, valuing the company at around 30–33x annualised FY24 earnings. Strong investor demand saw the stock list at ₹655, nearly a 45% premium to the issue price. In effect, the market had already priced in several years of high growth, leaving limited room for execution misses.
2. Private Equity Exits Created a Technical Overhang
Indegene was backed by private equity investor Carlyle Group alongside Brighton Park Capital. Both had bought minority stakes for a combined $200 million back in February 2021. Following the expiry of the post-listing lock-in, Carlyle steadily reduced its holding through a series of block deals. First, in December 2024, selling a further 4.7% stake for about ₹707 crore. And second, in June 2025, selling its remaining roughly 10% stake entirely in a ₹1,447-crore block deal.
While these transactions reflected Carlyle’s planned investment exit rather than any deterioration in the business, they significantly increased the supply of shares in the market. These added to technical overhang, as investors anticipate additional supply and wait for selling pressure to subside before re-entering the stock.
3. Margin Compression Delayed Earnings Growth
The biggest operational concern has been profitability margins, which have declined since the IPO. While the market has largely accepted Indegene’s growth story, investors are waiting for proof that the company’s investments in AI, sales capabilities, and acquisitions can translate into sustained margin expansion and stronger earnings growth.
If margins recover while revenue continues to compound at its current pace, the gap between operating performance and stock performance could begin to narrow.
Now, for the stock to re-rate, it requires three things. Revenue growth must remain above the broader IT sector, margins need to begin recovering as investment spending moderates, and management must demonstrate that AI platforms can generate higher-value revenue rather than simply improving internal productivity.
What Lies Ahead for Indegene?
Indegene’s numbers make a genuine case that it doesn’t belong in the same bucket as traditional Indian IT services. Therefore, it demands a premium valuation compared to others. However, it all depends on how the company executes its growth plan to recover its margin to the pre-IPO era.
The management expects the momentum to continue, supported by a 17% higher deal pipeline, commercialisation of AI-led solutions and a recovery in margins from the second half of FY27.
Its deep relationships with the world’s top 20 biopharma companies, improving client quality and AI-led platforms position it well to benefit from the next phase of digital transformation in the life sciences industry. Management estimates the outsourced life sciences operations market could nearly double from $54 billion in 2024 to around $100 billion by 2030 and believes Indegene is well positioned to cross $500 million in annual revenue over the next few years.
That said, execution remains the key monitorable. The company must demonstrate that investments in AI, acquisitions and go-to-market capabilities translate into sustained margin expansion and earnings growth. With the stock still trading at a premium to most IT peers, any delay in margin recovery or slower-than-expected AI monetisation could weigh on valuations.
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Deepan Datta has spent over a decade studying stocks and mutual funds. His passion is to uncover interesting stories in the financial markets and share them through his writings with investors at large. He is focused on delivering clear, easy to understand and research-backed insights. Deepan began his career as a Research Associate at S&P Global, where he developed a strong foundation in financial research and data analysis.
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