HRH Next Services Limited — Q2 FY26 earnings call

Call held 21 Jan 2026

Management summary

HRH Next Services reported an 11% YoY revenue growth for H1 FY26, maintaining profitability. The company is strategically investing in its AI division, AINA, to drive future growth and margin expansion, targeting a Main Board listing by January 2027 with ₹100 crores in revenue and 10-12% PAT margins. While addressing past negative cash flows due to AI development advances and client concentration, management expressed confidence in their long-term vision and client retention strategy, expecting AI to significantly improve future profitability.

Highlights

  • Revenue grew by 11% YoY in H1 FY26, indicating solid top-line performance.

  • Strategic focus on AI (AINA) is expected to enhance customer experience and drive future revenue and margin growth.

  • Company aims for Main Board listing by January 3, 2027, with a revenue target of ₹100 crores by FY27.

  • AI wing is projected to achieve a 10% profit margin from 2027 onwards, significantly higher than traditional contact centers.

  • Demonstrated high client stickiness, with long-term relationships with key clients like Vodafone (14 years) and Swiggy (since 2016).

Concerns

  • Negative cash flow of ₹0.86 crore in FY25 and ₹4.47 crore in FY24, attributed to advances for AI development.

  • Significant client concentration risk, with the top 5 clients contributing approximately 87% of revenue and Swiggy alone nearly 40%.

  • EBITDA margins are currently lower than some competitors, though management expects AI monetization to bridge this gap.

  • Variability in AI service pricing due to fluctuating GPU costs from external providers.

Key financials

  1. Revenue Growth 11% +11%YoY
  2. Cash Flow ₹-0.86 Cr
  3. Cash Flow ₹-4.47 Cr

What they filed

Q4 FY26: revenue up 49.8%, net profit up 742.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue21 24 29 29 32 +51%36 +50%
EBITDA4 3 6 3 6 +55%7 +143%
Net profit2 0 2 1 2 +38%3 +742%
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.

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Expansion to two new centers for AI divisions (Mysore confirmed, Indore potential)
    Because the AI divisions will consume a lot of, I mean, will take a lot of our energy and bandwidth. We are also going to expand to two new centers. One in Mysore, that is for sure. We only started identifying properties. The other one could be indore, or some other place, but that'll also require certain capex, but100% we will have to plan for CapEx, because that is the only reason why, I mean, that is the only place where we see that we will reach that 100 crore mark in... by 2027 financial year ending. So CapEx has to be, factored in.

Guidance & targets

Main Board Listing

  • Eligibility for Main Board Main Board Listing · January 3, 2027 · High confidence Eligible
    Obviously, our goal and entire mission is to get to the main board. We become eligible to apply on the main board by January 3rd, 2027.

    — Supriya Kshirsagar

Revenue

  • Total Revenue Revenue · FY27 · High confidence ₹100 crores
    And hopefully, by that time, we would have reached a revenue of 100 crores.

    — Supriya Kshirsagar

Profitability

  • PAT Margin Profitability · by 2027 · High confidence 10-12%
    We want to be on the main board by 2027, with the, you know, PAT margin of over 10-12%.

    — Supriya Kshirsagar

  • Profit Margin (AI Wing) Profitability · 2027 onwards · High confidence 10%
    But in an AI products division, an AI services division, one particular implementation can reach out to hundreds and thousands of customers, so we are pretty confident to, meet that 10% mark in 2027 onwards.

    — Supriya Kshirsagar

What to watch in Q3 FY26

Cash Flow from Operations

Next quarter (H2 FY26 results)
Current Negative ₹0.86 crore (FY25), Negative ₹4.47 crore (FY24)
Target Positive (for current half-year)

Why it matters

Improvement in cash flow is crucial after two years of negative figures, indicating better working capital management and self-funding capacity.

That is because... that is appearing negative, but this half year, it is going to be, positive.

Risks & concerns

  • Client Concentration

    medium

    Top 5 clients contribute 87% of revenue, with Swiggy alone at ~40%. Management views this as a conscious strategy but acknowledges the concentration.

    Management acknowledged

  • Working Capital / Negative Cash Flow

    medium

    Negative cash flow of ₹0.86 crore in FY25 and ₹4.47 crore in FY24 due to advances for AI development. Management expects it to turn positive in the current half-year.

    Analyst acknowledged

  • AI Pricing Volatility

    low

    Variability in AI service pricing due to fluctuating GPU costs from external providers (Google, AWS), which impacts the hardware component of pricing.

    Management acknowledged

Q&A highlights

6 direct
Long-term vision for HRH Next Services Limited Direct
Long-term vision is pretty simple. We want to be on the main board by 2027, with the, you know, PAT margin of over 10-12%. We're looking at delivering a 10 crore to 12 crore PAT and from there on, once we enter into the main board, we want to see how we can tap into that potential. Obviously, the vision is to become the largest vernacular contact center provider, and the best in-house AI services company in the country.

Provides a comprehensive overview of the company's strategic goals, including financial targets and market positioning for the coming years.

Top 5 clients by revenue share and retention rates Direct
Swiggy contributes, close to 40-odd percentage of our revenue. Followed by, Fast near Technologies, which is Meesho, contributing another 17% to 18%, followed by Mpocket, which is a financial services giant.Doing another 17% to 18%, followed by Cars24, which is again a unicorn, followed by Vodafone India.The top 5 will contribute almost 87% of our revenue.

Highlights significant client concentration, particularly with Swiggy, but also demonstrates strong client stickiness and long-term relationships.

Bridging EBITDA margin gap versus 25% done by One Point One (competitor) Direct
I think, see, One Point One, if you study it very closely, the client concentration is pretty high. We took a conscious call not to have our client concentration very high. The other thing that we are kind of focusing on, is our Al winning. The answer to, the question is, you know, once the AI division starts monetizing, the EBITDA margins will improve substantially.

Addresses competitive landscape and outlines the strategy to improve margins through AI monetization, while also pointing out a perceived risk in a competitor's business model.

Negative cash flow despite net profit (FY24, FY25) Direct
This is because of, actually, we have given advances to our clients, to develop that, software's, to develop in the AI sector. So, the standard setting, so...That is because... that is appearing negative, but this half year, it is going to be, positive.

Explains the reason for past negative cash flows (investment in AI development via client advances) and provides a positive outlook for the current half-year, indicating potential working capital improvement.

Steps to diversify client base Partial
I want to tell you that it is not a bad strategy to have a focus like this in the BPO space, okay? If you looked at other examples of HTMT or other large enterprises, like Aegis BPO, the entire genesis of this industry is that you rely on a large client, and you grow along with them... But, yeah, and what will happen with AINA is that we will have very easy access to go into them and pitch our cutting-edge technology services.

Management defends its current client concentration strategy by citing industry norms and explains how the new AI offerings will naturally facilitate future diversification.

Debtor days and future for AI-enabled service offerings Direct
See, with Madur, the data is usually... our cycle is that post-invoice, approval, they take almost 60 days.But some of the things that happened in the past 1 year is 3 of our clients went for IPO... The audit mechanisms take a little bit of time, so the data is stretched a little bit, but I think now we are back in track. With the BPO services, sorry, with the AI services, the model is going to be pretty different. We are going to do... An advanced payment mechanism.

Provides reasons for extended debtor days (client IPOs) and outlines a strategy for AI services to implement advanced payment mechanisms, which could improve working capital.

Capex plans for next 1-2 years Direct
Yeah, obviously, I think, the capex, has been planned, Because the AI divisions will consume a lot of... We are also going to expand to two new centers. One in Mysore, that is for sure... The other one could be indore... that'll also require certain capex, but100% we will have to plan for CapEx, because that is the only reason why... we will reach that 100 crore mark in... by 2027 financial year ending. So CapEx has to be, factored in.

Confirms future capex for AI division expansion and new centers, directly linking these investments to the ₹100 crore revenue target for FY27.

2 min read 6 chapters

Detailed narrative

Introduction to HRH Next and Services

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.

Strategic AI Initiative (AINA)

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.

Financial Performance and Outlook

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.

Client Strategy and Retention

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.

Working Capital and Capex Plans

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.

EBITDA Margin and Competitive Positioning

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.

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