Fractal, Meesho Slide Over 6% Each After Q1 Results

Post the announcement of their financial results for the first quarter of FY27, shares of new-age technology companies Fractal and Meesho slumped over 6% each during the intraday session today. 

Shares of AI and advanced analytics company Fractal slumped as much as 7.5% on the BSE to reach a low of ₹797. At 14:15, the stock pared some of the losses and was trading over 6.87% lower at ₹802.9. The company’s market capitalisation stood at ₹13,791.6 Cr (about $1.42 Bn).

Meanwhile, ecommerce major Meesho’s shares slid as much as 6% to ₹177.6. At the time of publication, the shares were trading 2% lower ₹185.2. Its market capitalisation stood at ₹85,601.5 Cr (about $8.8 Bn). 

Both companies announced the financial results for Q1 FY27 last evening after market close.

Fractal Misses Internal Expectations 

Fractal reported a nearly 92% jump in profit after tax to ₹72.3 Cr as against ₹37.7 Cr in the year-ago quarter. Sequentially, profit declined 37.6% from ₹115.8 Cr. Revenue from operations grew nearly 20% to ₹912.5 Cr during the quarter from ₹760.5 Cr in Q1 FY26. Sequentially, the top line grew a mere 2.9% from ₹886.3 Cr.

CEO Srikanth Velamakanni acknowledged that the company “underachieved what we could have achieved” during the first quarter, with the technology, media and telecom (TMT) vertical performing worse than expected.

The company attributed some of the pressure to a shift in spending patterns among large technology companies, which have significantly ramped up their AI-related capital expenditure, which has simultaneously put pressure on operating expenditure. 

However, Velamakanni also acknowledged that Fractal needs to “reimagine” itself to become more relevant to TMT customers. 

The weakness in TMT was also reflected in Fractal’s large-client metrics. The number of clients generating more than $20 Mn in trailing 12-month revenue declined from six to five sequentially, with management confirming that the customer which slipped below the $20 Mn threshold belonged to the TMT vertical.

Fractal, however, expects the TMT vertical to begin recovering sequentially from Q2, claiming to have a “pretty significant pipeline” of projects already in the bag, driven largely by new deals from existing customers rather than the addition of new clients. Fractal said that excluding the drag from TMT, the rest of its business grew about 35% YoY during the quarter, compared with overall growth of about 20%.

The company also said that the rapid adoption of AI is fundamentally changing the nature of demand for analytics and technology services. This is resulting in some traditional areas of analytics work shrinking or disappearing altogether. 

Velamakanni said work such as ad-hoc analysis and building dashboards could “go to zero anytime soon, if not already zero”, adding that AI would lead to compression as projects that previously took a year could potentially be completed in a month. 

Despite this, Fractal expects the increase in AI use cases to more than offset the decline in traditional work. It said enterprise AI spending has shifted from experimental allocations to core technology budgets, while the size and ambition of AI-related requests for proposals (RFP) are also increasing. 

Looking ahead, Fractal expects growth to improve in the second quarter as the TMT vertical begins to recover and new projects ramp up. However, profitability could face some near-term pressure from higher employee costs. The company’s annual salary increase became effective from June 1, meaning Q1 absorbed only one month of the wage hike while Q2 will reflect the impact for all three months. 

Management said the increase had an impact of around 120-130 basis points at the overall P&L level in Q1. Nevertheless, Fractal expects YoY profitability to continue improving over the coming quarters as revenue scales and operating leverage kicks in.

Meesho Slides On Weak Q2 Outlook

Meesho narrowed its consolidated net loss by 54.1% to ₹132.8 Cr in Q1 FY27 from ₹289.4 Cr in the year-ago quarter. On a sequential basis, loss declined 20.2% from ₹166.3 Cr. Operating revenue climbed 48% to ₹3,707 Cr during the quarter from ₹2,504 Cr a year earlier. Sequentially, it rose 5% from ₹3,531 Cr. 

Despite the improved margins, investors remained vary of its weak Q2 outlook as Meesho expects YoY growth in net merchandise value (NMV) to moderate in the ongoing quarter. Notably, NMV rose 34% YoY to ₹11,614 Cr in Q1 FY27, while placed orders increased 29% to 72.5 Cr.

However, the company has moved its mega blockbuster sale to Q3 this year from Q2 in FY26, shifting a key festive demand event and creating an unfavourable YoY comparison for the ongoing quarter. 

Adding to the near-term concerns, Meesho is also expected to step up customer acquisition and marketing investments ahead of the festive season, which could moderate the pace of margin expansion over the coming quarters. 

Brokerage firms also appeared disappointed in the ecommerce company’s quarterly results, with Morgan Stanely terming it a mixed quarter that showed better than expected profitability growth but weak revenue upside. The brokerage also highlighted that the miss on NMV was driven by weaker-than-expected order growth.

Meanwhile, JM Financial maintained its ‘Reduce’ rating on Meesho with a target price of ₹185, noting that the stock was trading at around 45X its FY29 estimated enterprise value-to-adjusted EBITDA. 

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