Alldigi Tech Limited — Q4 FY26 earnings call

Call held 8 May 2026

Management summary

Alldigi Tech reported strong financial performance for FY26, driven by robust growth in its Tech & Digital business and significant margin expansion. The company is strategically shifting its BPM segment towards higher-margin international business, leading to some headcount rationalization. Management highlighted ongoing AI integration across operations and new platform releases to enhance efficiency and customer value, while also planning investments in infrastructure.

Highlights

  • Full year FY26 revenue from operations stood at ₹598.7 crores, up 9.6% year-on-year.

  • Full year FY26 EBITDA was at ₹162 crores, up 25% year-on-year, with margins improving to 27.1% from 23.7% in FY25.

  • Q4 FY26 PAT increased significantly by 49.7% year-on-year to ₹28.9 crores.

  • Tech & Digital business reported strong growth with Q4 revenue up 22.3% YoY and full year revenue up 16.5% YoY to ₹156.2 crores.

  • Operating cash flow for FY26 was ₹144.1 crores, with a healthy conversion rate of 88.9%.

Concerns

  • BPM segment revenue for Q4 FY26 was broadly flat year-on-year at ₹110.4 crores.

  • Headcount decline in BPO business due to strategic shift away from low-margin business, which management expects to continue in FY27.

  • Large client onboarding in BPM was put on hold due to global macroeconomic conditions and war, impacting step growth.

Key financials

2 periods

Q4 FY26

  • Revenue
    ₹154.7 Cr
    YoY +5.9% QoQ +1.3%
  • EBITDA
    ₹43.7 Cr
    YoY +24.2%
  • PAT
    ₹28.9 Cr
    YoY +49.7% QoQ +38.6%

FY26

  • Revenue
    ₹598.7 Cr
    YoY +9.6%
  • EBITDA
    ₹162 Cr
    YoY +25%
  • EBITDA Margin
    27.1%
  • PAT
    ₹82.2 Cr
  • Operating Cash Flow
    ₹144.1 Cr

What they filed

Q1 FY27: revenue up 4.2%, net profit up 20.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue131 139 146 144 147 +12%153 +10%155 +6%150 +4%
EBITDA31 32 35 37 36 +16%46 +44%44 +26%41 +11%
Net profit12 20 19 15 18 +50%21 +5%29 +53%18 +20%
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

Share of Revenue (FY26)
₹598.6 Cr Total
  • BPM ₹442.4 Cr 73.9%
  • Tech & Digital ₹156.2 Cr 26.1%

Capital allocation

high confidence
  • Capex Capex disclosed
    • New office in Chennai ₹20 Cr
    So, for Chennai, we have identified a facility where currently, we are building our new office. So that will, of course, lead to some investments to the tune of INR20 crores.
  • Liquidity Cash ₹147.7 Cr
    Our cash position at the end of year stood at INR147.7 crores

Guidance & targets

Profitability

  • EBITDA Margin Growth Profitability · year-on-year basis · Medium confidence 1% to 1.5%
    we typically target 1% to 1.5% kind of margin growth year-on-year basis.

    — Avinash Jain

  • EBITDA Margin Improvement Profitability · FY '27 · Medium confidence 1% to 2%
    we should look at about 1% to 2% improvement for FY '27 as well.

    — Natarajan Laxsmanan

  • BPM Segment Margin Profitability · going forward · High confidence 13% to 14%
    we should anticipate that around that 13%, 14% margin continuing on the BPM segment.

    — Natarajan Laxsmanan

Revenue

  • Revenue Growth Revenue · FY '27 · Medium confidence mid-teen
    while we're looking at the mid-teens again, so we should see the mid-teen growth for this year as well in terms of revenue.

    — Natarajan Laxsmanan

Diversity

  • Diversity and Inclusion Percentage Diversity · High confidence 50%
    We set ourselves a target of 50% and we're confident we'll be able to achieve this number.

    — Natarajan Laxsmanan

Technology

  • HRMS Version 2 Release Technology · this year · High confidence Released
    There is a HRMS Version 2 that we'll be releasing this year, which is an AI-enabled platform.

    — Natarajan Laxsmanan

Efficiency

  • Efficiency Gains from SP4 platform Efficiency · per annum · High confidence ₹3 crores
    we are looking at an efficiency of INR3 crores per annum on our Tech & Digital business.

    — Natarajan Laxsmanan

Capex

  • Depreciation Increase Capex · next year · High confidence sub-10%
    I mean, actually much lower actually, sub-10% actually...

    — Avinash Jain

What to watch in Q1 FY27

BPM Low-Margin Business Rationalization

FY27
Current ~10% of portfolio
Target Further reduction

Why it matters

Continued rationalization of low-margin business is key to improving overall segment profitability and achieving strategic goals.

We should anticipate this probably not on a quarter time line, but for the FY '27, we would continue to exercise this intent of moving away from low-margin business. Even as of today, from our portfolio, we still carry about 10% of our business into this segment. So we'll continue to move away from this business based on the macro conditions of the business.

Risks & concerns

  • Global Macroeconomic Conditions and Geopolitical Events

    medium

    Global macroeconomic conditions and war caused customers to put large client onboarding decisions on hold in the BPM segment.

    Management acknowledged

  • AI Disruption and Downsizing

    medium

    AI is seen as both a challenge and an opportunity; management is evaluating the threat of AI leading to downsizing and actively implementing AI solutions.

    Management acknowledged

Q&A highlights

8 direct
HRO Revenue Growth vs. Payroll Process Volume Direct
So, the revenue, if you have to look at it, not exactly directly proportional to the growth of the number of employees because there are revenue streams on the payroll side, which comes from our onetime change requests as well and also the year-end. So, there are configuration changes, there are tax proof vouching. There's a new wage code implementation. So, there are revenue streams that come from those onetime activities as well. And also, our increase in international business also gives us the benefit from the currency fluctuation. So it's a combination of all these factors.

Clarifies that HRO revenue growth is driven by multiple factors beyond just employee count, including one-time activities and international business mix.

Asked by Harsh Kundnani

BPO Headcount Decline and Strategic Rationalization Direct
Yes. So, you're right in your observation, Harsh. Yes, there has been a headcount decline. And this is a strategic move that we've done of moving away from some of our low-margin business and also a strategic intent of increasing our international business compared to the domestic one. So, this headcount decline is a reflection of that intent.

Confirms a strategic shift to exit low-margin BPO business and focus on higher-margin international segments, impacting headcount.

Asked by Harsh Kundnani

Impact of AI on Business and Risk Mitigation Direct
I wouldn't call it a risk, Keshav. It's both a challenge and an opportunity. So, it's not overall a risk. And this is something which we've identified now. And that is the reason why you see a lot of Al enhancements that is coming in and AI infusion that is coming in.

Management views AI as an opportunity for efficiency and value addition, not just a risk, and is actively integrating AI into operations and offerings.

Asked by Keshav Garg

Reasons for FY26 Revenue Growth Below Mid-Teens Target Direct
So I'll answer the first part. In terms of why our growth has been below that mid-teens is because of the strategic intent I already answered. We are moving away from some of our low-margin business. So we're looking at more international and high-margin business that comes into the business. And that is something which we've already initiated.

Explains that the lower growth was a conscious strategic decision to prioritize higher-margin international business over volume from low-margin segments.

Asked by Keshav Garg

BPM Segment Margin Q-o-Q Degrowth Direct
See, Q-o-Q degrowth in segment margin is a one-off thing. So there was some onetime leave policy alignment, which we did with our holding company. And subsequent to that, there was certain reversals. So you can treat that quarter as an aberration.

Clarifies that the Q-o-Q margin decline in BPM was an isolated event and not indicative of a trend, reassuring investors about margin stability.

Asked by Maitri Shah

HRO Opportunity and Winning Strategy Direct
The strength of Allsec comes basically from two prospects, Shrey. One is the platform. The platform is a 100% owned IP and also it's one of the strongest platforms. If you look at compared to the competition and the various platforms that I have personally experienced with, this is one of the very strong platforms with flexibility. ... With our case, we have both a robust performance as well as the flexibility, which makes it very interesting for clients and especially for large clients who want to have a global solution, but at the same time, the flexibility of the local country, that's a very sweet spot that Allsec is pretty strong on and we are continuing to strengthen that with the AI interventions that we are bringing in.

Highlights the company's competitive advantages in HRO: a robust, flexible, 100% owned IP platform and strong service delivery, especially for global clients.

Asked by Shrey Loonker

Capex Outlook and Depreciation Impact Direct
So, for Chennai, we have identified a facility where currently, we are building our new office. So that will, of course, lead to some investments to the tune of INR20 crores. And otherwise, we remain pretty much, I would say, consistent in terms of our admin and facility capex is typically in the range of INR20 crores to INR25 crores for a year. So, I don't foresee any significant changes to the depreciation part other than probably the office which we are building. So that may add a couple of crores for the year.

Provides specific capex plans for a new Chennai office and clarifies the expected impact on depreciation for the next year.

Asked by Shrey Loonker

International Sales Engine and Deal Closure Levels Direct
So what is critical here is the compatibility in terms of the integration through APIs, the data flowing through automatically without having to do manual reconciliation. So that's a sweet spot that we have in terms of our international business as such. ... The smaller size of the deals, 500, 600, less than 1,000 employee's kind of a client are usually closed at an HR level. With the larger ones, especially when we are looking at about 5,000-plus employees, multi-country, those ones, we have the CEO, CFO levels.

Explains the value proposition for international clients (API integration, automated data flow) and the typical decision-making levels for different deal sizes.

Asked by Shrey Loonker

3 min read 6 chapters

Detailed narrative

Strong Financial Performance in FY26

Alldigi Tech delivered robust financial results for the full year FY26, with revenue from operations growing 9.6% year-on-year to ₹598.7 crores. EBITDA saw a significant increase of 25% year-on-year, reaching ₹162 crores, which led to an improved EBITDA margin of 27.1% compared to 23.7% in FY25. For Q4 FY26, revenue stood at ₹154.7 crores (up 5.9% YoY), and PAT surged by 49.7% YoY to ₹28.9 crores. Cash collections remained strong at ₹626.1 crores for the full year, with an operating cash flow of ₹144.1 crores.

Strategic Shift in BPM Segment

The company is undergoing a strategic rationalization in its BPM segment, moving away from low-margin business to focus on higher-margin international clients. This shift resulted in a broadly flat Q4 FY26 BPM revenue of ₹110.4 crores and a headcount decline, which management expects to continue into FY27. International business now contributes 78% of the total CXM revenue, up from 73% last year, indicating the success of this strategic pivot. The segment margin for BPM for FY26 was ₹62.3 crores, growing 16.8% YoY.

Robust Growth in Tech & Digital (T&D) Business

The Tech & Digital business demonstrated strong performance, with full year FY26 revenue growing 16.5% year-on-year to ₹156.2 crores. Q4 FY26 revenue for this segment increased by 22.3% YoY and 14.5% QoQ to ₹44.3 crores. The segment margin for T&D for FY26 was ₹66.6 crores, reflecting a robust growth of 28.9% YoY, with Q4 margins remaining strong at 44%. The company added ₹40.1 crores of new ACV in this segment and processed 191.5 lakh employee records for the full year.

Technology & AI Initiatives

Alldigi Tech is actively infusing technology and AI across its operations to drive efficiency and enhance offerings. A new AI-enabled HRMS Version 2 platform is slated for release this year, alongside an AI-based payroll analytical module. These initiatives are expected to yield an efficiency of ₹3 crores per annum in the Tech & Digital business. The company is also integrating AI into existing BPM operations to improve accuracy, reduce turnaround times, and provide more value-added services to customers.

Capital Allocation for Infrastructure and Efficiency

The company is investing in upgrading its infrastructure, including a new office in Chennai, which will involve an investment of approximately ₹20 crores. This is part of the typical annual admin and facility capex, which ranges from ₹20-25 crores. Management anticipates that the depreciation for the next year will increase by less than 10-15% (or even sub-10%) from the current ₹58.6 crores, primarily due to these new investments. The focus is on enhancing operational efficiency and providing a better working environment.

Outlook and Growth Drivers

For FY27, Alldigi Tech aims for mid-teen revenue growth and a 1% to 2% improvement in EBITDA margins. The company expects BPM segment margins to remain in the 13-14% range. Growth will be driven by deepening client relationships, expanding global reach, and leveraging technology and AI. Management is confident in sustaining growth momentum through platform scale, expanded sales channels, and execution discipline, despite some large client onboarding being delayed in the BPM segment due to macroeconomic conditions.

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