Rationale

The rating upgrade for Perfios Software Solutions Private Limited (Perfios) factors in the improvement in the business risk profile as reflected in its increasing scale and comfortable financial risk profile, supported by its established business position as a tech-enabled, software as a service (SaaS) based product and platform provider in the banking, financial services and insurance (BFSI) industry as well as its inorganic growth initiatives. The company acquired three startups in CY2025 – Clari5, engaged in fraud risk management, CreditNirvana, an artificial intelligence (AI) linked debt collection and management software provider and IHX, a healthcare insurance information exchange provider, for a total consideration of about Rs. 580 crore, funded by existing surplus liquidity. These acquisitions are expected to expand the company’s presence in the international market and enhance product capabilities for its existing customer base of several reputed banks and financial institutions with which it shares a high repeat business. In FY2025, Perfios achieved a healthy year-over-growth (YoY) growth of 20% and operating profit margins (OPM) of 23.3% (as against 19% in FY2024), led by its diversified product portfolio across financial data analysis and economies of scale. Moreover, healthy cash flow generation, limited reliance on external debt and an adequate liquidity position further support the financial risk profile. While one-time expenses related to the acquisitions, losses in the subsidiaries and high hiring costs are expected to result in the moderation of OPM in FY2026, revenue growth is anticipated to sustain, supported by expansion of services across customers, higher international sales and synergies from recent acquisitions. ICRA also notes that, as part of its business strategy, Perfios will continue to pursue inorganic growth opportunities to improve its scale, customer base, geographical footprint and business diversification. These investments are likely to be funded though a mix of debt and existing surplus liquidity and the impact of these on the company’s credit profile will be monitored on a case-by-case basis. Additionally, Perfios continues to benefit from the experienced senior management, who have an extensive experience in the industry, and financial flexibility emanating from its reputed private equity (PE) investors such as Bessemer India Capital Holdings Limited (Bessemer), Pear Valley Investment Limited (Warburg Pincus), Kedaara Capital (Kedaara) and Ontario Limited (Ontario). The rating is, however, constrained by Perfios’ moderate scale of operations and sectoral concentration risks, with most of its revenue being generated by the BFSI segment. However, given that its products can be used for multiple other end-user industries such as healthcare, e-commerce and retail, the company is focussed on enhancing the revenue contribution from the same in the future. Further, its working capital intensity remains high owing to a long receivable cycle, since a considerable part of its revenue is generated by public and private sector banks and monthly billings, depending upon volumes of transactions. Additionally, like other industry participants, it continues to face challenges like competition, exposure to foreign currency fluctuations, talent acquisition and retention, and exposure to policies in key operating markets. The Stable outlook on the long-term rating factors in ICRA’s opinion that Perfios will continue to witness healthy revenue growth and accrual generation supported by its diverse solutions’ portfolio, reputed client base and robust recurring revenues, thereby supporting its credit profile.