Allied Digital Services Limited — Q4 FY25 earnings call

Call held 6 Jun 2025

Management summary

Allied Digital reported its highest-ever annual revenue of ₹807 crore in FY25, driven by strong growth in both domestic and international markets, and significant order wins including an additional ₹80 crore for the Pune Smart City project. Despite these operational successes, the quarter's profitability was impacted by one-time auditor-mandated provisions and higher tax charges, leading to a negative PAT for Q4 FY25. Management remains cautiously optimistic, targeting ₹1,000 crore revenue in 4-5 quarters, and plans to improve margins operationally in the future.

Highlights

  • FY25 consolidated revenues reached ₹807 crore, up 17% YoY, marking the highest ever annual revenue in company history.

  • Q4 FY25 revenues were ₹204 crore, up 16% YoY, demonstrating strong quarterly performance.

  • Order intake exceeded ₹133 crore this quarter, significantly strengthening the order book and future growth visibility.

  • Domestic business surpassed the ₹300 crore mark, with India operations growing 28% YoY, highlighting robust local demand.

  • Services business grew 9% YoY and Solutions revenue rose 58% YoY, indicating strong demand for digital transformation services.

Concerns

  • Auditor observations led to recognition of ₹48 crore foreign exchange gains (prior periods) and ₹20 crore foreign exchange loss (valuation errors), impacting standalone financials.

  • One-time extra provisions of ₹10-12 crore and higher tax implications (deferred tax up to ₹5.5 crore from ₹25 lakh, current tax up to ₹23 crore from ₹17 crore) led to negative PAT for Q4 FY25.

  • EBITDA margins, while resilient, are expected to remain challenging at 11-12% in the near term due to the current order book and pipeline in global markets.

Key financials

3 periods

Headline

  • Consolidated Revenue
    ₹807 Cr
    YoY +17%
  • Dividend per Share
    ₹1.5

Q4

  • Revenue
    ₹204 Cr
    YoY +16%
  • PBT (Reported)
    ₹11 Cr
  • PBT (Adjusted)
    ₹20 Cr

FY25

  • Cash Flow Generated
    ₹60 Cr

What they filed

Q1 FY27: revenue down 4.3%, net profit down 17.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue91 100 100 95 101 +10%95 −5%97 −3%91 −4%
EBITDA10 10 -14 9 9 −11%12 +18%-27 −95%14 +57%
Net profit6 6 -4 8 6 +10%4 −35%-19 −339%7 −17%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Services Business
    9% Revenue Growth
  • Solutions Business
    58% Revenue Growth
  • India Operations
    28% Revenue Growth
  • ROW Segment (US)
    8% Revenue Growth

Order book

high confidence

Total value

₹510 Cr

as of 2025-05-31 quantified

Inflow this quarter

₹133 Cr

Pipeline

deal pipeline tcv

Couple of large contracts in the U.S. ($45-50 million), critical projects in India, strong pipeline in government and enterprise sectors.

Consistent high-quality wins have helped build a more diversified portfolio, enhancing long-term growth visibility. Average ticket size of new wins is increasing.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex Capex disclosed
    See, cash flow generated in FY '25 is to the tune of almost Rs. 60-odd crore cash flow has been generated in this financial year. And there is, as such, we have no major plan for CAPEX for the coming year.
  • Dividend ₹1.5/share (final)
    The Board of Directors has recommended a dividend of 30% for FY '25 amounting to Rs. 1.5 per share of face value Rs. 5. This is subject to shareholders' approval at the upcoming AGM.
  • Liquidity Liquidity disclosed Generated almost Rs. 60 crore cash flow in FY25. 'War chest money' is being kept for potential acquisitions to enhance technical and technological capabilities.
    See, cash flow generated in FY '25 is to the tune of almost Rs. 60-odd crore cash flow has been generated in this financial year. And there is, as such, we have no major plan for CAPEX for the coming year. So, rather than CAPEX, I think we have kept these war chest money for looking out for any potential acquisitions with respect to making sure that we are more technically and technologically advanced. So, that is what the war chest money is kept for.

Guidance & targets

Revenue

  • Top-line Revenue Revenue · within 4-5 quarters · Medium confidence ₹1,000 crore
    As I told in my previous calls also, we are leading steadily towards our Rs. 1,000 crore top-line revenue. And we feel and we expect maybe one quarter here or there, we should be on the track to reach the milestone in the next four to five quarters.

    — Nehal Shah

  • Quarterly Revenue Run Rate Revenue · within 3-5 quarters · Medium confidence ₹250 crore
    For that, from our revenue perspective, we should be ideally targeting a quarterly revenue of about Rs. 250 crore. If you see, in the last three quarters we have been successfully able to go beyond the Rs. 200 crore mark and slowly progressing. Depending upon how and when the billing happens, we are targeting to reach towards the Rs. 250 crore quarterly mark. That's the first short-term target that we have kept for ourselves.

    — Nehal Shah

Profitability

  • EBITDA Margin Profitability · near term · Medium confidence 11-12%
    So, Deepak, we are trying to work on our EBITDA margin but looking at the current order book and the pipeline that we have in the U.S. market, global market, it could be a little challenging. We will be happy to continue at the margin that we are showing right now and try to improve it operationally as and when we can in the near future.

    — Nehal Shah

  • PAT Margin and EBITDA Profitability · coming periods · High confidence better than current year
    So, our tax implication is much higher in this year because of that our PAT is squeezed to that extent. So, going forward, this is a one-time phenomenon. Going forward, it's not going to be remaining same. So, our PAT will improve considerably in coming periods. So, our PAT margin and EBITDA is going to be better than the current year.

    — Gopal Tiwari

Order Wins

  • Border Security/Cyber Security RFPs Order Wins · 2-3 quarters · Medium confidence positive news
    So, yes, hopefully, maybe in the next two or three quarters, you will hear some positive news on that side as well. But having said that, Allied Digital is in the right space and right position when we want to do any such kind of projects due to the various Smart City projects that we have done.

    — Nehal Shah

What to watch in Q1 FY26

Progress towards ₹1,000 crore revenue milestone

next quarter
Current ₹807 crore (FY25)
Target Continued progress towards ₹1,000 crore

Why it matters

This is a key strategic revenue target for the company, indicating overall business growth.

As I told in my previous calls also, we are leading steadily towards our Rs. 1,000 crore top-line revenue. And we feel and we expect maybe one quarter here or there, we should be on the track to reach the milestone in the next four to five quarters.

Risks & concerns

  • Challenging macroeconomic environment

    medium

    Despite the challenging macroeconomic environment, including inflationary pressures and heightened competition, margins remained resilient.

    Management acknowledged

  • Macroeconomic uncertainty

    medium

    While macroeconomic uncertainty persists, management is encouraged by early signs of recovery in discretionary spending.

    Management acknowledged

  • EBITDA margin pressure

    medium

    EBITDA margin could be challenging in the near term due to the current order book and pipeline in the U.S. and global markets.

    Management acknowledged

Q&A highlights

8 direct
Order book and FY26 revenue growth Direct
As I told in my previous calls also, we are leading steadily towards our Rs. 1,000 crore top-line revenue. And we feel and we expect maybe one quarter here or there, we should be on the track to reach the milestone in the next four to five quarters.

Management provided a clear, albeit medium-term, revenue target for FY26 and beyond, indicating confidence in future growth.

Asked by Shweta

Impact of financial restatements Direct
See, restatement was required as per Ind AS 8. However, there being very minor overall impact on our financials. After the gains and losses are booked in the current year, there is hardly, I mean, a very minuscule impact was there. So, that's why we, management, took the decision not to restate and take all gains and losses in the current year itself. So, you will see that our gains and losses are more or less on a similar line. So, there was hardly any impact. I mean, just you can say less than a crore gain was there overall.

Clarified that the auditor-mandated restatements had a minor overall financial impact, despite several adjustments, reassuring investors about the underlying financial health.

Asked by Shweta

Direct client onboarding strategy Direct
Coming to direct customers, very soon we are going to be hiring more salespeople who would be focusing predominantly only on identifying and going behind the mid-segment Tier 1 customers in the global market. So, we are very, very confident that in the next three to four quarters, you would be hearing some or maybe a good number of direct customers, maybe smaller in size, but those customers will come, and we should be direct to us, which will help us in bettering our margins in the future quarters.

Outlined a strategic shift towards direct client engagement for mid-segment customers, which is expected to lead to improved margins in the coming quarters.

Asked by Shweta

CAPEX plans and 'war chest' Direct
So, rather than CAPEX, I think we have kept these war chest money for looking out for any potential acquisitions with respect to making sure that we are more technically and technologically advanced. So, that is what the war chest money is kept for.

Revealed a strategic focus on inorganic growth through acquisitions to enhance capabilities, rather than significant physical CAPEX, indicating future growth avenues.

Asked by Amit

Participation in Border Security/Cyber Security Direct
So, yes, hopefully, maybe in the next two or three quarters, you will hear some positive news on that side as well. But having said that, Allied Digital is in the right space and right position when we want to do any such kind of projects due to the various Smart City projects that we have done.

Indicated potential new growth opportunities in the high-demand defense and cyber security sectors, with specific timelines for announcements.

Asked by Tushar Parekh

Net profit margin decline vs. consistent EBITDA Direct
So, our tax implication is much higher in this year because of that our PAT is squeezed to that extent. So, going forward, this is a one-time phenomenon. Going forward, it's not going to be remaining same. So, our PAT will improve considerably in coming periods. So, our PAT margin and EBITDA is going to be better than the current year.

Clarified that the decline in net profit margin was due to one-time provisions and higher tax charges, which are not expected to recur, suggesting future PAT improvement.

Asked by Harshit

Pune Smart City project execution and benefits Direct
So, I would rather point this way. Pune city surveillance is a very large project. Unfortunately, no benefit that is being accrued till now in this balance sheet. But next quarter, coming quarter, you will see a lot of benefit which will be coming. So, unfortunately, we have not benefited from balance sheet point of view. But Rs. 500 crore project is yet to be executed. And you will see a lot of upside during the next quarter and post that.

Provided clarity on the timing of revenue and profitability recognition from the large Pune Smart City project, indicating significant upside in the near future.

Asked by Harshit

Reclassification of investments/deposits Direct
No, no, no. It's other way round. In fact, it is reclassified from investments to deposits. So, no, this thing is done because it's basically, it's in the nature of quasi-equity only. So, that amount is going to be converted into equity in the near future. So, there is no provision, nothing has been done against that. That amount is intact.

Addressed a historical accounting reclassification, confirming its nature as quasi-equity and that the amount is intact with no provisions, resolving potential concerns about asset quality.

Asked by Harshit

2 min read 6 chapters

Detailed narrative

Record Annual Revenue and Strong Quarterly Performance

Allied Digital achieved its highest-ever annual consolidated revenue of ₹807 crore in FY25, marking a significant 17% year-on-year growth. This strong performance was underpinned by a robust Q4 FY25, which saw revenues increase by 16% year-on-year to ₹204 crore. The domestic business played a crucial role, surpassing the ₹300 crore mark for the year and exhibiting a 28% YoY growth, while the ROW segment, particularly the US, also contributed with an 8% YoY increase in revenues.

Strategic Order Wins and Robust Pipeline

The company reported a healthy order intake exceeding ₹133 crore in Q4 FY25, reinforcing its growth trajectory. Key wins included a significant engagement with an omni-channel furniture leasing company in Plano, Texas, and a critical SD-WAN infrastructure upgrade for a major state-owned electricity transmission company in Maharashtra. An additional ₹80 crore order for the Pune Smart City project in May 2025 brought the total engagement to over ₹500 crore, with management highlighting a strong pipeline including a potential $45-50 million large contract in the US.

Profitability Impacted by One-Time Auditor Adjustments

While operational performance was strong, Q4 FY25 profitability was affected by one-time adjustments mandated by new statutory auditors. These included the recognition of ₹48 crore in prior-period foreign exchange gains and ₹20 crore in foreign exchange losses. Additionally, extra provisions of ₹10-12 crore and significantly higher tax implications (deferred tax increased to ₹5.5 crore from ₹25 lakh, and current tax to ₹23 crore from ₹17 crore) led to a negative Profit After Tax for the quarter, compared to a positive PAT in the previous year.

Margin Outlook and Operational Improvement Initiatives

EBITDA margins remained resilient at 11-12% for the year. Management acknowledged that maintaining and improving these margins could be challenging in the near term due to the current order book and pipeline in global markets. However, they expressed confidence in enhancing margins operationally through additional change requests, securing new business from existing customers, and leveraging AI to reduce operational costs, with improvements expected in coming periods as one-time impacts subside.

Capital Allocation Focused on Strategic Acquisitions

Allied Digital generated approximately ₹60 crore in cash flow in FY25 and has no major CAPEX plans for FY26. Instead, the company intends to utilize its 'war chest money' for potential acquisitions. This strategy aims to enhance its technical and technological capabilities, ensuring the company remains advanced and competitive in the evolving IT landscape, signaling a focus on inorganic growth for future expansion.

Diversification into Emerging Growth Verticals

The company is actively exploring new growth avenues, particularly in border security and cyber security. Management indicated that technical evaluations are underway for several RFPs in these sectors, with potential positive announcements expected within the next 2-3 quarters. This strategic diversification leverages Allied Digital's core competencies in Smart City surveillance and AI-enabled managed services, positioning it for opportunities in high-demand government and enterprise segments.

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