Ladies and gentlemen, good day and welcome to the ICRA Limited Half-Yearly FY 2026 Investor and Analyst Conference Call, hosted by ICRA. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. Joining us today from the management side, we have Mr. Ramnath Krishnan, Managing Director and Group CEO, Mr. Venkatesh Viswanathan, Group Chief Financial Officer, Mr. L. Shivakumar, EVP Business Development and Chief Business Officer, ICRA Limited and CEO, ICRA ESG Ratings, Mr. K. Ravindran, Executive Vice President and Chief Rating Officer, Mr. Abhishek Dafriya, Head of Group Strategy and Business Transformation, and Mr.
Jayant Chatterjee, MD and CEO of ICRA Analytics Limited, to discuss the performance of the company, followed by the Q&A session. Before we begin today's conference call, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve some risks and uncertainties. Please refer to slide number 19 for the investor presentation for a detailed disclaimer. ICRA or any of its subsidiaries, or the directors, officers, or employees of ICRA or its subsidiaries shall have no liability whatsoever for any loss howsoever arising from any forward-looking statement or use of the investor presentation or its contents or otherwise arising in connection with this conference call. Now, I would like to hand over the call to Mr. Ramnath Krishnan, Managing Director and Group CEO, ICRA, to commence the proceedings. Thank you, and over to you, sir.
Thank you, Operator, and good afternoon, everyone. It's my pleasure to welcome you all to ICRA's First Half of FY 2026 Earnings Call. I would like to thank you for your continued interest and support as we share our progress and performance for the first half of this year. Coming to the financial performance in the first half, ICRA delivered a strong performance in Q2 of this financial year. Consolidated revenue from operations grew by 8.3% year-on-year to INR 136.6 crores, and PAT increased by 29.4% to INR 48 crores. For the first half of this financial year, revenue grew by 8.4% to INR 261.1 crores, while profit after tax increased by 24.4% to INR 90.8 crores. Breaking this down by segment, ratings revenue grew by 13% in the second quarter and 13.6% for the first half of this financial year.
This growth was achieved despite a slowdown in the credit environment, reflecting consistent quality of our ratings. Research and analytics revenue increased by 2.1% in the second quarter and 1.8% for the first half of this financial year. This segment benefited from new product launches, expanded offerings, and strong traction in risk management and market data solutions. Notably, this growth was achieved despite the lingering effect of the ESG business discontinuation. These results underscore ICRA's strong client engagement, diversified business model, and our ability to deliver value. The other key updates are as follows. Key milestones this period were the successful acquisition of Fintellix, a Bangalore-based RegTech and risk solutions company. This acquisition significantly expands our risk technology portfolio and strengthens our position as a preferred partner for risk and investment analytics.
By combining ICRA's domain leadership in credit risk with Fintellix's advanced product suite, we are now able to offer integrated solutions to help banks, NBFCs, and regulators navigate complex regulatory environments and leverage data-driven insights for strategic decision-making. ICRA ESG continues to gain strong traction. In just the first half of this year, we published seven ratings, already surpassing the total number of ratings issued in the previous year. This rapid growth underscores our commitment to supporting clients and investors with credible and independent ESG assessments that reflect increasing demand for sustainability-linked insights across sectors. Moving on to the external environment, the macroeconomic environment in the first half was marked by persistent uncertainties driven by geopolitical tensions. However, subdued inflation prompted the RBI to cut rates, supporting domestic demand.
While global headwinds remain, domestic consumption is likely to stay upbeat, aided by GST rate rationalization, income tax cuts, moderation in food inflation, and healthy crop prospects following the above-normal monsoon. ICRA has revised its GDP growth forecast for FY 2026 to 6.5%, with a possible upside from a probable India-U.S. trade deal and a strong festive season. After an all-time high bond issuances in the first quarter of this financial year driven by rate cuts, Q2 saw a 10% decline as bond yields rose, and the likelihood of further rate cuts receded. Bank bond issuances dipped as credit growth moderated amidst margin pressures, while NBFC bond issuances strong in the first quarter, also moderated in the second quarter.
With bond yields bottoming out and rising subsequently, bank lending picked up in the second quarter after a subdued Q1, resulting in a year-on-year growth of 10.4% as of September 2025, though still lower than 12.9% a year ago. As bank deposit rates repriced downward in Q3, their ability to lend at lower rates improves, which may see large borrowers preferring bank loans to bonds. Commercial paper outstanding is expected to remain at current levels, and securitization volumes remain strong, with likely growth in NBFC AUMs. Geopolitics will continue to create uncertainty and may delay private sector investment, while domestic consumption is likely to remain upbeat. Despite global headwinds, Indian corporates have demonstrated resilience. In the first half of this financial year, ICRA upgraded ratings of 214 entities and downgraded 75, resulting in a robust credit ratio of 2.8, a significant improvement over previous periods.
Upgrades were driven by improvements in business fundamentals, strong parent credit profiles, and reduced project risks, especially in power, realty, and hospitality sectors. Our default rate remained low at 0.2%, underscoring the accuracy and reliability of our ratings. Our research and analytics segment delivered steady growth, supported by new client wins and expanded offerings. We launched several new and upgraded products, including ECL, that stands for Expected Credit Loss Version 3, for accurate credit loss computation, MFI 360 for inventory and rate analytics, and a cloud-based MFI 360 Explorer, all of which received good market acceptance. Our dominance in model validation, stress testing, risk analytics, security-level valuation, and market abuse prevention for asset management companies continued. The knowledge services vertical recorded broad-based growth, and we continue to focus on expanding our global client base and leveraging technology-led solutions.
In closing, I would like to thank all our clients, partners, and stakeholders for their continued trust and support. ICRA remains committed to delivering value, upholding the highest standards of analytical rigor, and supporting the evolving needs of the financial ecosystem. Thank you all once again, and I look forward to your questions. Over to you, Operator.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question now. The first question is from the line of Varun Bang from Bandhan Life. Please go ahead.
Thanks for the opportunity. So the first question is on the rating business. Last two years.
I'm sorry to interrupt you, Mr. Varun. Can you please speak a bit louder?
Is it better now?
Yes, much better. Please go ahead.
Yeah. So the first question is on the ratings business. Last two years, if I see, we have seen a significant shift from bank borrowing to capital markets because it was much cheaper raising capital in the capital markets. Now that MCLR reset is happening, do you expect some slowdown in the corporate debt issuances? Two- to three-year perspective, if you can share what is it that you're seeing.
See, if you see the last couple of quarters, bank and bond essentially have been driven by how the bond yields have been. So H1, and within that, also Q1 specifically, because of rate cuts, the bond issuances picked up. Otherwise, if you go back to last year, a similar period, H1, it was actually more of bank credit. In fact, the last two years, quite a bit of bank credit growth happened. So it's essentially a function of large corporates. They tend to go towards that particular segment of borrowing or funding where they find better rates. The MSME segment continues to rely largely on the bank credit. So that is something which is prevalent. Going forward, at one level, it's a function of how yields pan out. So if we have another rate cut, then possibly there would be a shift to the bond market.
If that doesn't happen, quite likely in Q3 and Q4, the banks would be able to reprice their deposits downwards, which can lead to a pickup in bank credit. Now, this is purely from the funding side or the borrowing side. In terms of growth segments, we do see infrastructure to continue to remain strong in terms of borrowing, partly driven by government spend, and since we do expect the consumption story to stay strong in Q3, Q4, driven by various factors, some of these being the GST rationalization, the income tax benefit, also the policy rate cuts, by and large, which has brought down the interest rates, and a good monsoon, so driven by various factors, we do believe the consumption story to remain strong in the next two quarters, so broadly, we think these would be the drivers for our business.
Got it. And in terms of non-ratings business, the business that flows from Moody's and its associates, what challenges are we facing, and what are we doing to fix the challenges and grow it from there? And last year also, we were told that the business is getting impacted because of one-time ESG-related projects. But even this year, we are not seeing any improvement. So what are the challenges, and what are we doing to fix them?
See, Varun, this is Jayant Chatterjee here. This business, which is the global business for ICRA Analytics, there are various drivers which are in play when the Moody's business is there. One, of course, is the fact that there is a lot of automation which keeps happening within Moody's ecosystem. And as a result of that, some of the business which comes our way does get automated, and therefore, there could be an impact there. You are right. The ESG impact was there, and that continues to some extent in this year as well because the impact of that business gradually went away till Q3 of last year. Some impact of that was also there in H1 of this year. Having said that, in various parts of the Moody's business, we are seeing growth, obviously, because the size of the business is pretty large.
So the growth which has come may not be visible in terms of the scale that you see overall. But largely, there are businesses where technology business, particularly, where we see growth, and also in addition of FTEs in some parts of the business where there are finalization things which we get work on. So there is growth happening, but the lingering effect of the ESG has an impact on the overall numbers that you see. I hope that covers your question.
Just to add further to that, if you look at the non-ratings business, despite the discontinuation of the ESG business and the consequent impact on the top line, there has still been growth in the non-ratings business of what we call the research and analytics business, albeit modest growth. That is largely on the back of a fairly significant growth that we have seen both in the risk management vertical and in the market data vertical. We obviously continue to expand both the risk management business and the market data business organically and also by looking at inorganic growth opportunities.
Got it. Got it. A couple of questions on Fintellix. What was the PAT Fintellix delivered in FY 2025, and how is the growth trajectory evolving in FY 2026?
See, Varun, from a number perspective, I think we have put around. From an EBITDA perspective, I think it delivered around 20% EBITDA, and this is what we have articulated in the presentation.
Correct.
That has been covered. See, the PAT was a bit negative because there is an amount of accelerated depreciation involved, which will linger around for another 10 months- 12 months. But at an EBITDA level, it has been positive. The size of the company, as we articulated, roughly is around INR 91 crores that we see as of date.
Correct.
And on the valuation front, we seem to have paid significant premium for this acquisition based on FY 2024 earnings. Are we anticipating significant ramp-up from current revenue base of, let's say, INR 90 crores and 20% margins? And are we expecting this acquisition to be earnings-accretive?
See, there are two aspects that you have covered. One is from the valuation side when we have looked at the valuation. See, obviously, it's more future-based. And also, when we look at the past financials, we have to be mindful that there are some businesses which this firm had discontinued. So there is some impact. There has been a gradual shift from a service to a product orientation somewhere in the last couple of years. And there's been a fair amount of consulting business that they used to do, which has been discontinued. So there will be some bearing on that numbers. From a value, when we looked at the valuation, apart from the size of the business and what we are seeing in the next two to three years, it looks okay for us from that perspective.
And apart from that, there are a couple of synergies that we see from this acquisition, which we have also articulated. Especially, there's a global aspect where we are looking to leverage this with our knowledge services. There's a tech consolidation opportunity that we have, unified offerings that we look across, and there's a set of talent that this company brings into it. So if we all look at these aspects, I think it seems to be as of now a good deal.
In short, to respond to your question, do we believe that the consideration that we paid for this is actually reasonable? The answer is absolutely yes. We see significant value in this particular acquisition going forward, given the way the regulatory landscape is actually changing and given the proposition that this particular company has as part of its offering. So we see a lot of potential there, and then we see this acquisition being value-accretive, not dilutive.
In initial years, also, we think it will be earnings-accretive.
Yes.
See, at a deeper level, I think you have to be mindful. What Ram is saying is an EBITDA level. Obviously, when we look at the overall numbers, you will have an amortization which will come on account of the investments. You have to reevaluate and amortize. So if your question is whether with that amortization it is, it won't be in the initial three years at least.
And also, from the other income perspective, let's say INR 250 crores. We would have earned roughly 12-14 crores post-tax on the other income. So from that perspective, there will be a shortfall of 12 crores- 14 crores at PAT level because that other income will go away.
That's correct.
So to a certain extent, from a treasury perspective, your question is yes.
You are right.
Got it. Got it. And on the D2K, I think we have been able to scale it from the revenue perspective, at least what I see from the annual report. How do you think about the profitability in D2K going forward?
From a D2K perspective, I think we had articulated this last year also. We have to make some kind of an investment in this entity, and that will continue for this year, at least for one and a half years. We'll continue to make investments in D2K because if you recollect, we had articulated it's a promoter-driven company, and where actually the investments in the product is something which we are looking to ramp up, so from a top-line perspective, there's a fair amount of interest for the product, but having said that, we'll have to also invest in the company, so one and a half years, we'll continue to invest in this company. At least that's how we see it.
Got it. Got it. And just one last question. Let's say there was always this effort which wasn't talked about, growing the non-rating and non-Moody's business. What progress have we made except acquisitions, if I see? What progress have we made so far, and what is it that we are looking for, let's say, in FY 2026 and FY 2027? On non-rating, non-Moody's, and except acquisitions.
Yeah. See, the intent, there are two parts to this. One is to increase the size or the proportion of the non-ratings business itself. I mean, there, I think directionally, we're actually trending well. So as of FY 2025, I mean, you would know this, the composition is roughly around 60%, 40%, 60% of the revenue is coming from ratings business and 40% from the non-ratings business. Within the non-ratings business, while at the present time, pre-acquisition of Fintellix, the knowledge services business or the business which is largely done with Moody's was still a significant contributor to that particular vertical. We expect this to actually change with the contribution increasing from the non-knowledge services verticals. So that should we have, I mean, obviously, plans in terms of rebalancing that book.
We believe that with the acquisition of Fintellix and with the scaling up of the D2K business, which is what Venkat was alluding to, I mean, some of our businesses which are actually small, our focus is actually on increasing the top line quite significantly because that is where the investments are being made. Once that gets corrected, beyond a point, I mean, naturally, they will all become margin-accretive.
Got it. Thanks. I'll join back the queue.
Thank you. Participants who wish to ask a question may press stars and one now. The next question is from the line of Harsh Kachchhi from Banyan Tree Advisors. Please go ahead.
Yeah. Hi. My first question is on the ratings business. Just wanted to understand in a challenging macro environment, what are the factors that have led to this growth? And also, we see a sizable improvement in margins on a Y-o-Y basis. So if you can just help us understand that.
Yeah. I'll take the first part, so essentially, as we've been mentioning in the last couple of analyst calls, our focus has been in the growth segments, which is infrastructure and BFSI, so we've clearly identified entities, regions where growth is likely to come, and we have focused on that. I think that continuous effort has what has helped us in terms of both this kind of revenue growth. Yes. On the second part, yes, obviously, the margins are very good for H1 and has been good for H1, and that's simply, I think, a leverage of the growth, actually. This is a high-leverage business. In terms of if there's a growth, you'll see this getting reflected in the margins, and we have seen good growth, so that's where it sits.
And we've also been actually investing a lot of time and effort in process re-engineering, technology, etc., etc., which is also resulting in a lot of efficiency. And that naturally is contributing to improvement in margins as well. And this trend has been quite noticeable, if you notice, over the last probably about seven to eight quarters.
Sure. My other question was on the non-rating business. So we are seeing a decline in margins over there. And as you mentioned that going ahead, knowledge services, you will be trying to grow the non-knowledge services business. So what will be the implication on margins going ahead in the non-rating business?
I mean, I think one must acknowledge that the margins in the non-knowledge services business just is definitely likely to be lower than what might be the margins in knowledge services. That is just the nature of the business. As we rebalance that book, we'll see a dilution in margins as far as the non-ratings business is concerned. And as the non-knowledge services business grows, I mean, that is an absolute fact. And we are mindful of that. But as long as it is actually margin-accretive and as long as it actually at an aggregate level, it actually results in margins which meet our internal thresholds, naturally, that's what we will be working towards.
Sure. Thank you.
Thank you. The next question is from the line of Ravi Purohit from Securities Investment Management. Please go ahead.
Yeah. Hi. Thanks for taking my question and congratulations on a strong set of numbers. Just a couple of things. If you could kind of share some thoughts on Fintellix in terms of what kind of addressable market does it throw open for us. And you had mentioned there were certain synergistic opportunities we have in that. So if you could just throw some light on where, what kind of addressable market, how does it kind of increase our own capabilities or ability to expand our overall time on that is on Fintellix. And second is on the generally the acquisitions that we've made over the last few years, how would have is there a way for us as investors to kind of keep track of how they have performed?
Of course, one basic metric is always that you invest INR 100 and over a period of time, it has added that much value for the investment that we've made. So from ICRA's point of view, now that this is probably the third acquisition that we've made. So just to kind of get a sense of every rupee that is being spent, does it kind of give you the commensurate ROIs back? Or how does one kind of really judge? It's like when you send your kid to school, you get a report card every year, right? So is there any report card that you kind of could share with investors every quarter or at least once in a year to kind of say that this is what we acquired this company for and this is how it has fared?
So it allows us to kind of judge or understand or appreciate and understand where these acquisitions are being made or what thought process is going behind them.
Sure. So hi, this is Abhishek here. I'll take up the first question. The whole M&A strategy which we have devised in the last few years has been to look at entities which will help us scale our existing portfolio products which we have on the ICRA Analytics side. So Fintellix was sort of shortlisted with that vision on our minds. It provides us with largely a set of products catering towards the same lenders or the lending community where ICRA Analytics also would have some presence, but we are now expanding our suite of products which we can offer. So that's a synergy which comes in. The other thing which it opens up is new geographies. So ICRA Analytics, if you keep the knowledge services aside, is largely a domestic-focused business so far, while a good share of Fintellix sales is happening in the foreign geographies.
They have a good presence in the Middle East, in the U.S. as well. And this is something which we plan to leverage. So our products also add value when Fintellix goes to these geographies in terms of the offerings which they would have. So we definitely see a lot of synergies. And as one sort of integrates with them over a period of time, we are sure more capabilities will be assessed. There would be certain cost synergies also which will come into the picture. And that's the action plan which we have in mind when we decided also on the valuation. So there are certain thresholds in terms of what kind of IRRs, let's say, one would want to achieve with this investment. And we feel it is something very much doable with keeping Fintellix in mind. The second question, probably Venkat, you can take over.
Yeah.
Ravi, I think the second question. I think in the last three years at least, this is the second acquisition. So I heard third acquisition. So it's the only two acquisitions that we have done. One is on the D2K, which was a very small acquisition, and this is comparatively a larger size for us. In terms of tracking this, I'm sure because these are separate entities in itself, some of these numbers will definitely get published as a part of the financial statement on an overall. We'll publish the results of the subsidiaries. And the annual report itself, I'm sure some of these areas we will cover what you're referring here. And these are the two. And specifically, if you want to, I think because there are only two acquisitions, it will be straightforward for us to track this also because we have specifically focused on the analytics space.
So, whatever growth, considering that knowledge service more or less is a bit static or it's showing a moderate growth, I think the larger it will straightaway get reflected in the growth of that segment itself, both in terms of revenue growth as well as because these are separate disclosures that we anyway make. And we can discuss how we can carve this out. You can look in the annual report, and some of these related to knowledge services we can easily figure out from there. The balance is essentially the play from these two acquisitions.
Okay. So Venkat, I heard you mentioned earlier part of the call that I think in the presentation, we've mentioned it's about 20% EBITDA margin. But below the EBITDA level, there are accelerated depreciations as a result of which there is probably not a lot of profit left. These are all non-cash charges, right? So I'm assuming these are all investments that Fintellix has already made in the past. We are acquiring that company, and the company is basically writing off the investments that it has made in the past from its P&L, right? So in a sense, when we report our numbers, will we be actually showing I don't know what cash profits? Because I'm assuming from what you said, and please correct me if I'm wrong, at the cash level, it's not a loss-making entity, right?
It's a 20% EBITDA margin, which I'm assuming it's like a 20% cash margin business, right? And that's assuming the rest of it is all non-cash charge.
That's correct. So there were two components I'll refer. One is the EBITDA, which we are seeing it's 20% for the standalone entity. That is essentially it's a cash. You will see that kind of a cash coming in part one. So that's what I think you're also asking. So that's correct. What you understood is right. The second is when we actually talk about the other non-cash charge item, which is essentially the investment amortization, what we have paid, the INR 250,000 crores, that will also come out as a charge to the P&L, and it will impact EPS. But it won't because you have already paid the cash. You won't see a cash charge for that.
And so, okay, I was referring to the depreciation in Fintellix P&L because I heard you mentioned that Fintellix also below EBITDA, they did not have much profit. And I heard you mentioned that it is because of some depreciation that they are taking. So I was actually referring to Fintellix numbers.
Correct. So your part is negative mainly because of non-cash charge. So at EBITDA level, it is actually cash positive. And as a business, it is actually cash generating.
Okay. And I'm assuming these are investments that they would have made in tech side. So if you could just throw some light as to what kind of products do they sell and how does that kind of help ICRA Analytics to kind of because the end customer is still the same bank or financial institution, so to speak. What kind of areas do they cover and what kind of areas do we cover, and when we kind of approach the same client, how does that kind of help?
Sure. See, the addressable market, I mean, essentially for the entire risk analytics space is basically the BFSI segment, be it in India or be it outside, right? So what we are looking to do when we look at inorganic growth opportunities is to try and see which are the organizations that might have a proposition that is actually complementary to what we already have in ICRA Analytics in the risk analytics space, but essentially targeted at the BFSI segment. So that is how we have been evaluating opportunities. Naturally, there are a number of other criteria that we look at in terms of size, scale, the strategic fit and synergies and so on and so forth.
Now, if you look at D2K, ICRA Analytics risk products, and Fintellix for that matter, which has just come into the ICRA fold fairly recently, each one of them has products which are actually complementary, and pretty much all the products are actually targeted at the BFSI segment. Now, to explain very, very simply, Fintellix essentially has a reg-reporting tech platform, which is again targeted at the BFSI segment, be it the insurance sector, be it banks, be it NBFCs, and so on and so forth, so the client universe from an addressable market standpoint, it's actually fairly uniform for us across these three entities, so what we will naturally work towards is try and ensure that we have a higher share of wallet in this entire space by having a product suite which is actually much larger than where we probably started about a couple of years ago.
Okay. Okay. And last question from my side. So when we kind of hear S&P and Moody's discuss the impact of AI in their con calls and annual reports and presentations, there is a fair bit of adoption that is taking place there. And because we, as rating agencies, with more than 50 years, 60 years, 70 years historic data, there is a lot of data that is sitting in the universe of the rating agencies, right? And will AI be able to kind of help them monetize some of these assets? So in that sense, they have, of course, discussed a lot of those things. But how does ICRA at the India entity level, how are we kind of looking at that aspect? Does it kind of help?
Are we allowed to, or is it possible to monetize or utilize the depth of information and historic data that we have and use agentic AI tools to kind of monetize those? So if you could just share some of the things that we would have thought or looked at.
Sure. The AI is definitely an area that's receiving a lot of attention, not just within the Moody's ecosystem, but within the ICRA ecosystem as well. But if I look at just the ratings business, I mean, naturally, we're not looking at using AI tools to actually monetize any of the data that we have. But what we are looking at, and some of it actually has gone into application or into production already, is to use AI to bring in better operating efficiencies in our processes itself. So some use cases have gone live. They've gone into production already. Some are actually getting tested as we speak. And there are a lot more that are actually in the pipe which are actually getting evaluated. So this is something that is being looked at pretty much on a daily basis. And we will continue to look at it.
But within the ratings business, we will be using this essentially to drive better operating efficiencies, to reduce the load on the analytical team. That is what we are actually looking to achieve. And by achieving that, by ensuring that the analytical team has more time at their disposal, which can be actually repurposed.
Okay. Okay. Fair point. Thanks a lot and all the best, and I'll get back in the queue.
Thank you.
Thank you. Ladies and gentlemen, to ask a question, you may press star and one. The next question is a follow-up question from Mr. Varun Bang from Bandhan Life. Please go ahead.
Yeah. Thanks for the opportunity again. On the Fintellix again, if I see between FY 2022- FY 2024, the revenue and profitability of Fintellix declined sharply. Actually, margins also fell from 38%-39% to 14%. So what were some of the reasons for this decline? If you can highlight on that.
So again, I'll tell you a couple of reasons actually which I mentioned earlier. One is there was an entity in the U.S. which they had swapped. So certain client billings were actually which were earlier done from India due to some restructuring. That got shifted to a U.S. entity. And what you are seeing on the standalone entity is not a consolidated numbers. So that's why if you look at it, we have put a note down which articulates that some of the revenue from the U.S., if we add it back, that's the whole size of Fintellix. Because it was spread out in three locations, the U.S. revenue was actually getting consolidated or not consolidated in the Indian arm, and it was not getting reported. So as a part of this deal, a separate entity is formed in the U.S., and all the client contracts will be transitioned there.
Post our acquisition, anyway, this will come as a part of Fintellix revenue and ICRA's consolidated revenue. That's one thing which is also distorting the numbers if you look at it because the US revenues are not getting captured. The revenue drop, I think, largely happened because they also discontinued their or tapered down their consulting services. When we actually looked at this business, that was anyway not a part of the business we were interested in, and they also had discontinued. That's what we are seeing, those effects in the revenue.
Got it. And expenses, I think employee costs and other expenses kept on rising in this period. So how should one look at it?
See, I think the better way to look at it would be we have given a sizing on that EBITDA level of INR 91 crores and 20% EBITDA, which is the current sizing. We have actually factored all these nuances and put it across because of this kind of complexity which we thought guys like you will encounter. So I think that is a number you should look at.
Got it. Got it. Yeah. Thanks.
The other thing that also happened is Fintellix from about a year or two ago, they changed the revenue recognition model from actually taking the license cost upfront to a subscription model. So this actually will result in more stable annuity kind of revenues going forward.
Got it. Yes. Thanks for the follow-up.
Thank you. Participants who wish to ask a question may press star and one. Anyone who wishes to ask a question may press star and one now. As there are no further questions, ladies and gentlemen, on behalf of ICRA Management, that concludes this conference call. I thank all the participants for joining us. Thank you.