Detailed Narrative
Strong Q2 FY26 Financial Performance
Allied Digital reported robust financial results for Q2 FY26, with consolidated revenues reaching Rs. 234 crore, marking a 15% year-on-year and 7% quarter-on-quarter growth. This quarter represents the highest-ever quarterly revenue for the company. Profitability also saw significant gains, with PBT growing 32% YoY to Rs. 21 crore and PAT increasing 33% YoY to Rs. 15 crore, while EBITDA rose 23% YoY to Rs. 28 crore. The trailing 12-month revenue now stands at Rs. 878 crore, compared to Rs. 807 crore for the full year FY25.
Robust Order Intake and Pipeline
The company secured new order intake of approximately Rs. 698 crore during the quarter, with 85-90% of this being net new business. Management highlighted a strong future pipeline, including a large Mumbai project renewal valued at Rs. 2,100 crore expected in December/January, for which they are seeking a strategic partner. Additionally, there is anticipation for additional revenue from Pune Smart City, 2-3 new smart city projects, and the Noida RFP is currently underway following budget clearances.
Strategic Global Expansion and Investments
Allied Digital is actively expanding its global footprint, particularly in Europe and the U.S., with plans to hire 120-130 people in Europe to strengthen operations in countries like Germany and Switzerland. These strategic investments in hiring and building operational capabilities, along with upfront costs for new large contracts, are expected to exert margin pressure for the next 3-4 quarters. The company aims to leverage these investments for long-term growth and diversified global revenue.
Margin Trajectory and Operational Efficiency
While current margins face pressure from initial project implementation phases and persistent customer pricing, management anticipates an improvement to 12-13% after 3-4 quarters. This recovery is expected as long-term contracts (typically 3-5 years) mature into their O&M/service phases, where operational optimization and value-added services, including application support and AI-based technology management, contribute higher margins. The company's strategy focuses on value-added solutions and services to enhance profitability.
Smart City Project Milestones and Expertise
A significant milestone was the successful completion and handover of the Pune Smart City Command and Control center, Drishti, in August 2025. This project, aggregating Rs. 510 crore, features over 2,800 cameras, automated alerts, and mobile command units equipped with drones, setting a benchmark for urban surveillance. Allied Digital believes this project will open similar opportunities as India continues to upgrade its security infrastructure, showcasing their ability to execute at scale.
Geographical and Segmental Growth Drivers
Growth was broad-based across geographies and segments. Rest of the World operations grew 17% YoY, driven by improved traction in the U.S. business, while India operations saw standalone revenues rise 12% YoY. From a segmental perspective, the Services business grew 17% YoY, and Solutions revenue increased by 8%. Nongovernment customers increased 18% YoY, outpacing the government segment's 7% YoY growth, reflecting strengthening engagement from enterprise clients. The overall revenue mix is 65% from the U.S. market and 35% from India and the Rest of the World (excluding U.S.).