Aurionpro Solutions Lands New Deal, But Stock Price Lags

Aurionpro Solutions, though not a household name, quietly powers many everyday technologies. From enabling ticket purchases and storage on Google Wallet for metro systems in Chennai and Delhi, to processing contactless payments at metro gates, their technology often operates behind the scenes. Banks also utilize Aurionpro's software for digital token and queue management systems.

As a B2B and B2G company, Aurionpro provides software platforms and hardware to banks, metro rail networks, and government infrastructure projects. Recently, Aurionpro announced a new multi-year deal with a leading public sector bank for its cash management system. The company already serves major Indian banks such as SBI, Bank of Baroda, Axis Bank, and Kotak Mahindra Bank, alongside global financial institutions. In the previous year, SBI awarded Aurionpro a ₹100 crore contract for licensing and maintaining iCashpro+, its transaction banking and cash management platform.

Despite these contract wins, Aurionpro's stock performance has been lackluster. Following the recent PSU deal announcement, the share price initially declined before partially recovering. Over the past year, the stock has fallen approximately 35%, even with the SBI deal. Currently, it trades about 42% below its 52-week high.

While a struggling stock often prompts scrutiny of the underlying business, Aurionpro's financials present a mixed picture. Over the past three years, revenue from operations has steadily increased by about 32% annually, reaching ₹1,173 crore in FY25. The first half of FY26 shows continued momentum, with revenue reaching ₹694 crore, a 28.5% increase compared to the same period last year.

Banking and fintech deals account for approximately 57% of revenue, with the remaining 43% coming from technology and innovation businesses, including smart transit solutions like the Mumbai Metro contract. Software and services contribute about two-thirds of revenue, while equipment sales and product licenses make up the rest. Geographically, India accounts for around 66% of revenues, with the remainder coming from Asia-Pacific, Europe, and the US.

This revenue mix translates into strong profits. Aurionpro reported an operating profit margin of about 28% in FY25, surpassing IT giants like Infosys and TCS. Net profit margins are also healthy, sitting around 16% and remaining consistent over the past few years.

So, why the market's apprehension despite these positive indicators? Aurionpro's origins trace back to 1997 as VAIDS, a Microsoft and Java coding firm founded by Bhavesh Talsania and Amit Sheth. In 1999, a project involving building cash management solutions for a private sector bank steered Aurionpro toward the banking sector. Paresh Zaveri joined as a promoter that same year, bringing banking expertise. A partnership in 2003 with ex-Citigroup bankers specializing in transaction banking solidified Aurionpro's focus. The company went public in 2005.

From its early years until 2021, Aurionpro's revenues remained relatively stable, between ₹400–600 crore. This was due to the company operating three distinct businesses: Cyberinc (identity management), Trejhara (data centers), and generic IT services. Recognizing the need for focus, management decided to streamline the company.

In 2018, Aurionpro sold Cyberinc to KPMG for ₹217 crore and spun off Trejhara. While the company appeared smaller on paper, this move allowed it to concentrate on its core strengths. The leadership understood that service businesses require constant personnel additions, impacting margins. To compete with global banking tech vendors, Aurionpro needed to commit fully. The sale proceeds provided the necessary capital for strategic acquisitions, beginning in 2020.

Aurionpro acquired SC Soft, a Singapore-based smart city solutions company, Integro to enhance its lending and credit assessment capabilities, and Arya.ai to develop enterprise AI solutions for banking. In FY25, it added Fenixys SAS to expand into European capital markets and Fintra Software to strengthen its cash management offerings.

These moves resulted in a more focused company centered around Banking & Fintech and the Technology Innovation Group. Aurionpro also benefited from favorable timing. The COVID-19 pandemic accelerated banks' need for contactless payments, real-time settlements, and digital corporate banking solutions. Aurionpro's iCashpro+ platform, developed in 2018, was already market-ready. The government's National Common Mobility Card (NCMC) initiative further boosted Aurionpro's transit AFC business.

These developments opened doors to international markets, leading to a near tripling of revenues between FY21 and FY25. That said, the reality is a bit more complicated. rapid growth also raised expectations. At its peak in 2024, the stock traded at a premium, around 33 times earnings. A correction became likely as valuations outpaced reality.

The broader downturn in IT stocks has also impacted Aurionpro, with the NIFTY IT index falling by about 13% over the past year. The recent stock dips appear to stem from a discrepancy between expectations and reality. Management projected consistent growth of 30% or more for FY26, targeting ₹5,000 crore in revenue by FY30. That said, the reality is a bit more complicated. H1 FY26 revenue growth came in at 28.5%, translating to roughly ₹150 crore less than anticipated. Returns on capital have also decreased from 25% in FY23 to around 18% currently.

Ultimately, Aurionpro's stock decline may reflect a correction in investor expectations rather than poor performance. The stock's valuation has likely moved closer to its fair value. Future performance will depend on the company's ability to maintain growth and investors' willingness to adjust their expectations.