Fractal Analytics (FRAL.NS): Improving growth trends, reaffirmed margin outlook; raising PT

Fractal reported a beat vs. MSe on revenues by 1%. Revenue growth was broad-based, and segments such as TMT that dragged growth in the past have started to recover QoQ. Strong traction was seen in the products business (now 4% of revenues) with good new client additions; RPO is above the current annual revenue run rate, implying continued momentum in coming quarters. Partnership-led deals could be accretive to growth, and investment in the large deals team could provide a fillip to growth rates. CPGR, the largest vertical, saw volatility due to delayed decision-making led by macro factors and some client-end consolidation, and EBIT margins fell marginally short of expectations, though the company sounded confident on improving margins in 2HFY27. Products momentum is building but has yet to show meaningful non-linearity in revenue per billable FTE. We increase USD revenue assumptions by 1-2%, maintain adj EBITDA margin assumptions, lower EBIT slightly on higher depreciation and raise EP