Intellect Design Arena Ltd Forensic Report - SOIC x StockScans Report

as of Jul 2026

Intellect Design Arena’s record carries a clean auditor rotation, and operating cash flow has covered reported profit in every one of the last six years. Three things deserve attention: receivables and unbilled revenue are growing faster than revenue, and a ₹298 crore capital-work-in-progress balance now stands at 167% of net fixed assets.

Key findings

  1. Receivables and unbilled revenue are growing faster than revenue, and one customer dominates the book Minor - Consolidated trade receivables and unbilled revenue rose by ₹261.8 crore in FY26, and receivable days stretched from 65 to 82, a 24% year-on-year increase. One customer accounted for more than 10% of consolidated revenue in FY26, FY25 (₹291.4 crore), and FY22 (₹213.86 crore), while two customers exceeded 10% in FY24 (₹581.79 crore) and FY23 (₹627.75 crore). Revenue recognition is a Key Audit Matter, an area requiring the most judgement, in both the FY25 consolidated and FY24 standalone auditor’s reports.
  2. Audit trail was not enabled for all transactions in FY24 and FY25, and two properties worth ₹18.92 crore lack title deeds Minor - In FY24 the audit trail facility in the accounting software was not enabled throughout the year for all relevant transactions, and the auditor stated they could not comment on whether the feature was tampered with. In FY25 one software had audit trail enabled at the database level only from 30 July 2024 and another had no feature enabled from 1 April 2024 until 20 September 2024. As of 31 March 2026, two immovable properties aggregating ₹18.92 crore were not held in the company’s name, and the auditor was unable to comment.
  3. Goodwill has grown from ₹29 crore to ₹61 crore in five years through acquisitions, with no impairment ever recorded Minor - Consolidated goodwill stood at ₹61.47 crore as at 31 March 2026, up from ₹29.38 crore as at 31 March 2021. Goodwill of ₹14.07 crore was recognised in FY2025 from Intellect Canada’s acquisition of assets from Central 1 Credit Union, and ₹7.3 crore from the acquisition of DigiVation Digital Solutions. Management stated in every year from FY2019 through FY2026 that the estimated recoverable amount of each cash-generating unit exceeded its carrying amount and no impairment was recorded.
  4. A one-time gratuity charge of ₹30.8 crore was booked as an exceptional item, while buildings are depreciated over 30 years and ₹160 crore of R&D was capitalised in the year Minor - An exceptional item of ₹30.84 crore for the statutory impact of new Labour Codes was recognised in the consolidated profit and loss for the year ended 31 March 2026, representing incremental gratuity expense from notification of four Labour Codes on 21 November 2025. The Group depreciates buildings over 30 years, half the life prescribed in Schedule II to the Companies Act, based on a technical assessment by an expert. R&D capitalisation was ₹160 crore in FY26, with ₹235 crore charged to the profit and loss, per management disclosure in the Q4 FY26 earnings call.
  5. A large GST demand of ₹72.17 crore was dropped in FY26, and a ₹36.77 crore Service Tax demand was quashed by CESTAT in December 2025 Minor - The Commissioner of GST & Central Excise dropped a demand of ₹72.17 crore and penalty of ₹7.14 crore on 17 April 2025, but upheld a demand of ₹7.35 crore and penalty of ₹0.96 crore. On 15 December 2025, CESTAT Chennai set aside a Service Tax demand of ₹36.77 crore along with equal penalty and interest, while remanding a separate demand of ₹1.16 crore for verification of payment proof.
  6. The group has expanded through layered offshore subsidiaries and a controlled trust, with several entities yet to commence operations Minor - As of 31 March 2026, the group comprised 27 subsidiaries and 3 associate companies, up from 22 subsidiaries and 2 associates as of 31 March 2022. Associate Quberix Inteltixa IFSC Limited was incorporated but yet to commence operations as of 31 March 2026. The group recognised share of loss of associate Adrenalin eSystems Limited only to the extent of the carrying value of its investment, discontinuing further loss recognition.
  7. Operating cash flow consistently covers profit and dividends, but rising R&D capitalisation and a large CWIP balance shift capital allocation away from the income statement Minor - Consolidated CFO exceeded PAT in five of the six years from FY21 to FY26, with a CFO/PAT ratio of 1.49x in FY26. CWIP stood at ₹298 crore as of 31 March 2026, representing 167% of net PP&E of ₹179 crore. Consolidated ROCE declined from 18.17% in FY24 to 15.67% in FY25 and 14.01% in FY26.
  8. Statutory auditor rotated from S.R. Batliboi to M S K C & Associates in FY25 after two five-year terms, with no resignation or fee anomalies disclosed Clean - S.R. Batliboi & Associates LLP completed two consecutive five-year terms and became ineligible for re-appointment. At the 13th AGM on 26 June 2024, shareholders approved the appointment of M S K C & Associates for five years with 99.9985% of valid votes cast in favour. The CARO report for FY25 and FY26 each states there was no resignation of the statutory auditors during the year.

What to watch

Bottom line: This is a disclosed and audited record with consistent cash conversion and a clean auditor transition. The governance pattern is the central risk: public institutional shareholders have voted against promoter-family appointments and ESOP restructurings across multiple years, and the board has proceeded each time. Watch the 15th AGM vote on 31 July 2026, and track whether the ₹298 crore CWIP balance translates into a recovery in returns.