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    Allied Digital

    ADSL
    Information Technology·22 May 2026
    Management Summary

    Allied Digital delivered record revenues in FY26, growing 20% YoY to ₹968 crore, driven by strong domestic and international performance. Profitability was affected by one-time charges, but underlying performance remained robust. The company successfully addressed prior audit qualifications and is strategically investing in AI to enhance margins and service delivery, while maintaining a strong order pipeline for future growth.

    Highlights

    5

    • Achieved highest annual revenue of ₹968 crore in FY26, a 20% YoY growth.

    • Reported highest quarterly revenue in Allied Digital's history in Q4 FY26.

    • Profit after tax for FY26 grew 10% YoY to ₹36 crore, despite one-time charges.

    • All audit qualifications from the previous year have been addressed and are in the process of being fully resolved.

    • Strong order pipeline, including a ₹150-200 crore Mumbai Government contract and over ₹2,000 crore in Maharashtra.

    Concerns

    3

    • Profitability in FY26 was impacted by certain one-time charges and provisions, including a ₹36 crore ECL provision.

    • Government revenues were lower by 6% in FY26 due to geopolitical events and equipment cost fluctuations.

    • The Western Railway project (₹165 crore and ₹85 crore) had to be rebid due to significant equipment cost increases.

    Key financials

    Single quarter

    05 metrics
    1. 01Consolidated Revenue₹968 Cr+20%YoY
    2. 02Adjusted EBITDA₹112 Cr+14.0%YoY
    3. 03EBITDA Margin11%
    4. 04PBT (before exceptional items)₹81 Cr+33%YoY
    5. 05PAT₹36 Cr+10%YoY

    Segment breakdown

    Domestic Business
    17% Revenue Growth FY2637% Revenue Growth Q4 FY26
    International Business
    22% Revenue Growth FY26
    Services Business
    21% Revenue Growth FY26
    Solutions Business
    17% Revenue Growth FY26
    Enterprise Customers
    31% Revenue Growth FY26
    Government Customers
    -6% Revenue Growth FY26
    List

    Order Book

    high confidence

    Inflow this qtr

    ₹ 166 crores

    Pipeline

    deal pipeline tcv

    Maharashtra state pipeline, two large contracts in Maharashtra, Noida Smart City, Western Railway re-tender, high court orders

    Cancellations / Deferrals

    • other:Western Railway project rebid due to 25-30% equipment cost increase, impacting two orders.

    "The pipeline is very strong, both domestically and internationally, with significant traction from existing and new customers. The company is confident in converting the pipeline into active delivery, despite some delays in customer acceptance and billing."

    Source:
    Prepared remarks

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Debt

    Debt disclosed

    Dividend

    ₹1.5/share (interim)

    Guidance & targets

    7
    CategoryTargetPriority
    Revenue
    Revenue Growth
    20-25%
    		High
    Revenue
    Long-term Revenue Growth
    10x
    		High
    Margin
    EBITDA Margin
    12.5-13%
    		High
    Margin
    EBITDA Margin
    13-15%
    		High
    Tax
    Tax Rate
    25% +/- 1-3%
    		Medium
    Project Timeline
    Mumbai Project Implementation
    9 months
    		High
    Headcount
    Resource Reduction due to AI
    20-25%
    		High

    RBI approval for loan conversion

    next 2 quarters
    CurrentProcess started, 50% done (US part)
    TargetFull RBI approval and clean audit sheet

    Why it matters

    Crucial for resolving past audit qualifications and enhancing governance perception.

    in next 2 quarters, we should be able to get a clean sheet coming in from everywhere.

    How to verify

    capital_allocation.debt.actions[type='equity_conversion']

    Risks & concerns

    3
    RiskSeverity

    Government project slowdown due to geopolitical events and pricing volatility

    Ongoing war between Iran and Israel caused equipment cost fluctuations, leading to tender delays and project re-bids (e.g., Western Railway project). — Management acknowledged

    medium

    Impact of one-time charges and provisions on reported profitability

    Profitability in FY26 was affected by certain one-time charges and a ₹36 crore ECL provision, masking underlying operational strength. — Management acknowledged

    medium

    Delays in RBI approvals for loan conversion to equity

    While most loan conversions are complete, RBI approvals for remaining procedures are pending, which could delay a 'clean audit opinion'. — Management acknowledged

    low

    Q&A highlights

    8

    “There are, of course, major margin pressures that are happening across the industry, and we are also facing the same. But we look at that as an opportunity because a lot of our service delivery, we have started using Al. And with Al getting implemented, AlOps getting implemented, we are seeing that there is a cost reduction that is happening across the line.”

    Management acknowledges industry-wide margin pressure but highlights AI as a key strategy for cost reduction and margin improvement.

    asked by Kunal Bajaj

    2 min read6 chapters

    Detailed Narrative

    01

    Record Annual and Quarterly Revenue Performance

    Allied Digital achieved its highest-ever annual consolidated revenue of ₹968 crore in FY26, marking a 20% year-on-year growth. This performance was capped by the highest quarterly revenue in the company's history during Q4 FY26. The company also confirmed that its Q4 revenue run rate has pushed it past the ₹1,000 crore annualized revenue milestone, aligning with its long-term aspirations.

    02

    Profitability Impacted by One-Time Charges and Provisions

    While revenue growth was strong, profit after tax for FY26 grew by 10% year-on-year to ₹36 crore, up from ₹32 crore in FY25. This modest growth was attributed to certain one-time📎 charges and provisions, including a ₹36 crore ECL provision. However, adjusted EBITDA, excluding these non-recurring📎 items, increased by 14% year-on-year to ₹112 crore, maintaining resilient EBITDA margins at 11% and indicating strong underlying operational performance.

    03

    Resolution of Prior Audit Qualifications

    Management announced the successful resolution of all observations and qualifications raised by their new auditors in the Q4 FY25 audit report. This included the conversion of ₹112 crore out of ₹117 crore of non-interest-bearing loans to subsidiaries into equity, with interest now being charged on the remaining small loans. The company expects to receive full RBI approvals for the remaining procedural aspects within the next two quarters, aiming for a clean audit opinion.

    04

    Mixed Segmental and Geographic Growth Dynamics

    Both domestic and international businesses contributed to growth, with India revenues up 17% YoY in FY26 and international revenues growing 22% YoY. The Services segment saw a 21% growth, and Solutions grew by 17%. Enterprise customers were a strong driver, growing 31% YoY. However, Government revenues declined by 6% in FY26 due to geopolitical events and equipment cost volatility, though a rebound is anticipated in FY27-28.

    05

    Strategic AI-First Approach for Margin Enhancement

    Allied Digital is adopting an 'AI-first strategy' across its offerings, including Smart City Solutions and Managed Services. The company is investing in AI, automation, and training to reduce labor costs and improve efficiency. Management projects that AI implementation could lead to a 20-25% reduction in customer resource counts within 6-12 months, driving short-term EBITDA margins towards 12.5-13% and long-term targets of 13-15%.

    06

    Robust Order Pipeline and Key Deal Wins

    The company secured ₹166 crore in new orders and renewals during Q4 FY26. A significant Mumbai Government contract, valued at ₹150-200 crore, is expected to be announced within 2-3 weeks. The pipeline remains strong, with over ₹2,000 crore worth of opportunities in Maharashtra, including two individual ₹600 crore contracts. The Western Railway project, previously lost due to equipment cost increases, is expected to be re-tendered in mid-July.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.