HRHNEXT

HRH Next Services Limited, headquartered in Hyderabad, is a leading vernacular Customer Experience (CX) outsourcing and Business Process Management specialist. Established in 2007, the company operates eight delivery centers in South India with over 2,500 employees, providing omni-channel solutions including voice, non-voice, and backend services. They cater to sectors such as telecom, BFSI, retail, FMCG, e-commerce, and utilities, servicing consumers across India. The company was listed in 2024.

HRH Next has launched its artificial intelligence division, AINA, which aims to mirror human emotions in customer interactions across various channels. AINA is designed to support 11 multilingual languages and utilize video bots to understand customer sentiments. This technology is sector-agnostic and is expected to penetrate diverse markets, significantly enhancing customer experience and contributing to future revenue. Management believes AINA will provide a competitive edge and improve overall company performance.

For the first half of FY26, HRH Next reported an 11% year-over-year revenue growth, while maintaining profitability across EBITDA, PAT, and PBT compared to the previous year. The company has set ambitious financial targets, aiming to achieve ₹100 crores in revenue and a PAT margin of 10-12% by the financial year ending 2027. This period also aligns with their eligibility to apply for Main Board listing by January 3, 2027. The AI wing is specifically projected to achieve a 10% profit margin from 2027 onwards, which is significantly higher than traditional contact center operations.

HRH Next emphasizes its strong client retention, citing long-standing relationships such as 14 years with Vodafone and onboarding Swiggy in 2016. The top 5 clients, including Swiggy (~40% of revenue), Meesho (~17-18%), Mpocket (~17-18%), Cars24, and Vodafone India, collectively contribute approximately 87% of the total revenue. Management views this client concentration as a conscious strategy in the BPO space, arguing that deep integration across multiple processes (e.g., 17-18 different processes for Swiggy) makes clients highly sticky and difficult to lose.

The company experienced negative cash flows of ₹4.47 crore in FY24 and ₹0.86 crore in FY25, primarily due to advances provided to clients for AI development. Management expects this trend to reverse, projecting a positive cash flow for the current half-year. Future capital expenditure is planned for expanding the AI divisions and establishing two new centers, with Mysore confirmed and Indore under consideration. These capex investments are deemed essential to support the company's growth trajectory and achieve the ₹100 crore revenue target by FY27.

HRH Next acknowledges that its current EBITDA margins are lower than some competitors, such as One Point One, which achieves 25%. Management attributes this difference to a conscious strategy of avoiding high client concentration, which they identify as a risk for competitors. They anticipate that the monetization of their AI division will substantially improve EBITDA margins, as AI services are asset-light and offer higher profitability compared to the traditional contact center business model.