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    All E Tech

    ALLETEC
    Information Technology·10 Nov 2025
    Management Summary

    All E Tech reported a mixed Q2 FY26, with strong QoQ profit and margin growth but a slight YoY decline in income due to macroeconomic headwinds and prolonged international sales cycles. The company maintained high recurring revenue and added new customers, while strategically investing in AI and cybersecurity. Management anticipates growth momentum to return in the next two quarters, driven by these new initiatives and a healthy pipeline, despite current market uncertainties.

    Highlights

    5

    • Q2 Revenue stood at INR 33.35 crores, with total income from operations at INR 37.13 crores, reflecting a 2.2% QoQ growth.

    • EBITDA margin for Q2 was 28.2%, showing a 19.1% growth QoQ, and reported net profit was INR 7.38 crores, up 16.8% QoQ.

    • Repeat plus recurring revenue remained strong at 92.3% for Q2 and 94.4% for H1 FY26, indicating high customer stickiness.

    • The company added 9 new customers in Q2 (6 domestic, 3 international) and was recognized as a Microsoft Inner Circle Partner for the region.

    • Cybersecurity work is picking up, with SOC 2 certification expected within six weeks, and AI is viewed as an opportunity for future revenue streams.

    Concerns

    4

    • Total income growth for Q2 Y-on-Y was -2.4%, and H1 income growth was a modest 0.6%.

    • International business experienced longer decision-making cycles and deals slipping to the next quarter, resulting in lower than usual customer adds.

    • Overall global macroeconomic sentiment has been sober, prolonging sales cycles, especially for mid-market customers.

    • The potential HIRE Act in the U.S., levying a 25% tax on outsourcing, poses an uncertain risk if passed.

    What Changed1

    vs Q3 FY26

    Risks discussed3 → 5 (+2)
    Key financials

    Metrics

    13

    Periods

    2

    Headline

    10
    • Revenue
      ₹33.35 Cr
    • Total Income from Operations
      ₹37.13 Cr
      YoY-2.4%QoQ+2.2%
    • EBITDA Margin
      28.2%
    • Reported Net Profit
      ₹7.38 Cr
    • Net Profit Margin
      19.9%

    Q2

    3
    • Other Income
      ₹3.8 Cr
    • Interest Income
      ₹2.54 Cr
    • Forex Gain
      ₹1.2 Cr

    Segment breakdown

    Industry Mix
    35% Professional Services15% Manufacturing10% Retail9% Green Energy and EPC7% Food and Beverages6% Financial Services5% Trade and Distribution5% Digital Natives4% Education3% Travel
    Geographical Mix (Overall Business)
    45% India55% International
    Geographical Mix (Services Revenue)
    60% Americas
    List

    Order Book

    medium confidence

    Pipeline

    deal pipeline tcv

    Healthy pipeline in international business

    Cancellations / Deferrals

    • deferred:Some deals slipped to the next quarter due to longer decision-making cycles internationally.
    • deferred:One, two or three deals went from one quarter to another quarter.

    "The company has a healthy pipeline, but longer decision-making cycles and macroeconomic sentiment have led to deals slipping to subsequent quarters and lower customer additions in Q2. Some deals closed in Q2 will reflect in future numbers."

    Source:
    Prepared remarks

    Capital allocation

    2
    high confidence
    CategoryHeadline
    M&A

    One company (unnamed)

    acquisition · pending regulatory

    Liquidity

    Cash ₹139 crores

    Cash on books is almost one-third of the market cap and is parked for a certain purpose, not for buybacks.

    Guidance & targets

    3
    CategoryTargetPriority
    Growth
    Growth momentum return
    Return of growth momentum
    		Medium
    Certification
    SOC 2 Certification
    Certification in place
    		High
    Revenue
    AI offerings revenue stream
    Revenue stream built
    		Medium

    Return of growth momentum

    next two quarters
    CurrentQ2 Income growth Y-on-Y was -2.4%; Q-on-Q was 2.2%. H1 Income growth 0.6%.
    TargetPositive YoY and QoQ growth in total income from operations.

    Why it matters

    Management guided for growth momentum to return in two quarters, which is crucial for the company's overall performance and investor confidence.

    Yeah, so clearly, I would say it's hard for anybody to say that it'll be like 5% or 7% or 10% or 2%, given the current situation. We can only say from the point of view of the business momentum that we see. ... I would say two quarters.

    How to verify

    key_financials.metrics[label='Total Income from Operations'].yoy_growth

    Risks & concerns

    5
    RiskSeverity

    Global macroeconomic slowdown

    Sober macroeconomic sentiment has led to longer decision-making cycles internationally and deals shifting to subsequent quarters. — Management acknowledged

    high

    Prolonged sales cycles for mid-market customers

    Sales cycles have been prolonged for significant mid-market customers, impacting deal closures. — Management acknowledged

    medium

    Potential HIRE Act in the U.S. (25% tax on outsourcing)

    A proposed U.S. act could levy a 25% tax on outsourcing, potentially impacting IT services providers, though management believes they can adapt. — Analyst acknowledged

    medium

    AI disruption and delayed revenue realization

    While AI is seen as an opportunity, its translation into a significant revenue stream will take a few quarters, causing a temporary lag. — Analyst acknowledged

    medium

    Seasonal slowdown during Christmas and New Year

    The current quarter typically experiences a slowdown in the West due to holiday seasons, affecting business momentum. — Management acknowledged

    low

    Q&A highlights

    7

    “What does slow down the process sometimes is, if the overall macroeconomic situation is such that people are taking longer to make big investment decisions, which has been the case, since the beginning of this year that starts to impact. Which basically means that if somebody has to, let's say, if it is an SMB company who has to invest, let's say, $200,000 on a modernization project, they also consider their business momentum.”

    Addresses the core reasons for tepid growth, distinguishing between macroeconomic delays and AI as an opportunity, while acknowledging delayed revenue realization from AI initiatives.

    asked by Divy Agrawal

    2 min read7 chapters

    Detailed Narrative

    01

    Q2 & H1 FY26 Financial Performance Overview

    All E Technologies reported Q2 FY26 revenue of INR 33.35 crores, with total income from operations at INR 37.13 crores, marking a 2.2% QoQ growth. Despite this, YoY income growth was -2.4%. The EBITDA margin stood at 28.2%, growing 19.1% QoQ, and reported net profit was INR 7.38 crores, up 16.8% QoQ. For H1 FY26, total income from operations was INR 73.45 crores, with a modest 0.6% growth, and net profit was INR 13.69 crores, with a margin of 18.6%.

    02

    Strategic Focus on AI and Productization

    The company is actively investing in embedding AI capabilities across its offerings and productizing solutions to cater to changing market needs, particularly in the SMB segment. Management views AI as an opportunity, not a threat, and is aligning its offerings with AI advancements like Microsoft Fabric and Copilot. While there's significant traction and inquiries regarding AI, its translation into a substantial revenue stream is expected to take a few quarters.

    03

    Geographical Performance and Customer Acquisition

    The India business has shown gaining momentum, contributing approximately 45% to the overall revenue (product and services combined), and saw an increase in new customer additions. Internationally, the Americas contribute nearly 60% of services revenue, with the Middle East showing growth. In Q2, the company added 9 new customers, comprising 6 domestic and 3 international clients.

    04

    Macroeconomic Headwinds and Sales Cycle Prolongation

    The global macroeconomic sentiment has been 'sober,' leading to longer decision-making cycles internationally and deals slipping to subsequent quarters. This has resulted in lower than usual customer adds in Q2 and a -2.4% YoY income growth. Sales cycles have also been prolonged for mid-market customers, who are significant in size but require more time for investment decisions.

    05

    Cybersecurity and Contact Center Initiatives

    The company's cybersecurity practice is picking up, with a team in place and a couple of small deals closed related to Microsoft Security Solutions. SOC 2 certification is expected within the next six weeks, which will enable the company to serve a broader client base. Additionally, the contact center offerings are progressing, with a Canadian customer project going live this month, and many other opportunities in the pipeline.

    06

    Capital Allocation and M&A Strategy

    All E Technologies holds a significant cash balance of approximately INR 139 crores, which management states is reserved for specific strategic purposes rather than immediate buybacks. The company is actively pursuing inorganic growth, with discussions at a 'very serious level' with one potential acquisition target, though no agreements have been signed yet.

    07

    Industry Recognition and Market Positioning

    The company was once again recognized by Microsoft as an Inner Circle Partner for the region, placing it in the top 1% of global Microsoft partners in business applications. This recognition underscores its leadership position despite the current market challenges🌐 and its deep alignment with Microsoft's ecosystem, including contributions to Dynamics 365 Business Central.

    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.