30-Oct-2026 17:59:12
ALLDIGI TECH Q2 CONCALL: TARGETS DOUBLE-DIGIT TECH & DIGITAL GROWTH OVER 3 YEARS; ₹82.6 CR NEW ANNUAL CONTRACT WINS, EXPECTS FURTHER BPM MARGIN IMPROVEMENT & ANNOUNCES ₹48 CR BUYBACK AT ₹1,000 PER SHARE
• Tech & Digital Growth Guidance: Management targets low-double-digit annual revenue growth in the Tech & Digital business over the next three years, supported by SaaS products, partnerships and international expansion. • BPM Margin Outlook: Management expects further improvement in BPM margins through higher international revenue contribution, lower employee costs and the exit of structurally low-margin domestic contracts. • H2 FY27 Revenue Outlook: Management expects new contract wins to begin contributing revenue over the coming quarters, depending on client implementation and go-live timelines. • New Contract Wins: Company secured ₹37.2 Cr in new annual contract value (ACV) during Q2 FY27, up 86% YoY. • H1 Contract Wins: New business ACV reached ₹82.6 Cr, more than doubling YoY, comprising ₹66.54 Cr from BPM and ₹16.14 Cr from Tech & Digital. • Contract Conversion Timeline: Management indicated that BPM contracts typically complete their ramp-up within 3–4 months after implementation begins, while Tech & Digital contracts generally require longer integration periods. • European Contract Win: Company secured a multi-year Tech & Digital contract worth approximately ₹7 Cr in annual value, with expected gross margins above 60%. • BOT Contract Win: Company secured a Build-Operate-Transfer contract worth approximately ₹16.8 Cr in annual value, with potential expansion beyond its initial commitment. • BOT Business Expansion: Management indicated that an existing client engagement involving over 1,000 employees could expand by 2–3 times, with a potential workforce opportunity of approximately 3,000–4,000 employees. • International Revenue Growth: International revenue increased 15.1% YoY in Q2, contributing approximately 70% of consolidated revenue versus 64% last year. • International BPM Growth: International BPM revenue increased 12.6% YoY, with its contribution rising to approximately 83% of BPM revenue from 75% YoY. • US Market Expansion: Management is expanding its presence in customer experience, financial services, collections, healthcare revenue cycle management and insurance outsourcing. • Southeast Asia Expansion: Company has strengthened its sales presence in Southeast Asia and reported encouraging initial contract bookings, with further opportunities expected during H2 FY27. • Domestic BPM Strategy: Management will continue reducing low-margin domestic engagements while retaining profitable existing contracts, without pursuing aggressive domestic expansion. • Domestic BPM Performance: Domestic BPM revenue declined approximately 33% YoY due to planned contract rationalization. • Tech & Digital Performance: Q2 revenue increased 12.9% YoY and 2.7% QoQ to ₹41.7 Cr, while segment margin stood at 43.9%. • BPM Performance: Q2 revenue increased approximately 1% YoY and 1.3% QoQ to ₹111.6 Cr, while segment margin improved to 15.6% from 11.6% YoY and 11.9% QoQ. • Payroll Processing Growth: Company processed 51.1 lakh employee records during Q2, up 7.2% YoY, taking H1 processing volume to 101.3 lakh records. • AllDigi 360 Launch: Company launched its SaaS-based human capital management platform in October 2026, covering payroll, core HR, attendance, onboarding, performance and employee management. • AllDigi 360 Analytics: Company introduced an AI-enabled workforce analytics platform covering payroll costs, attrition, attendance, compliance and employee productivity, available as a standalone solution. • Buzzily 2.0: Company launched the upgraded platform in May 2026 as part of its technology-led product expansion. • AI Adoption Strategy: Management is embedding AI across BPM operations, recruitment, training, quality monitoring and customer servicing to improve productivity and operating efficiency. • AI Revenue Outlook: Management clarified that AI adoption is not expected to immediately accelerate revenue growth but should strengthen competitiveness and support profitability. • Workday Partnership: Company has obtained Silver certification and expects to complete the Workday Design badge around mid-November 2026. • Workday Customer Pipeline: Approximately four clients are in the pipeline for Workday connector implementations, with management evaluating connector development as a potential standalone service. • TaxPanner Partnership: Tax-filing services are already operational, with management expecting better revenue visibility after Q4 FY27 as customer adoption increases. • Payroll Pricing Outlook: Management acknowledged pricing pressure in traditional payroll processing and plans to offset it through cross-selling higher-value HR, SaaS and analytics services. • Employee Cost Outlook: Management expects employee costs as a percentage of revenue to decline further through workforce optimization, automation and improved resource deployment. • Q2 Employee Cost Reduction: Employee costs declined by approximately ₹5 Cr QoQ, supported by operating efficiencies, resource-cost optimization and lower staffing costs in Manila. • Q3 Cost Savings Outlook: Management expects further benefits from workforce reductions implemented during Q2 to be reflected in Q3 FY27. • Lease Payment Outlook: Management indicated annual lease payments could remain near the FY26 level of approximately ₹35 Cr, subject to future business expansion requirements. • Share Buyback Announcement: Board approved a proposal to buy back up to 4.8 lakh equity shares at ₹1,000 per share, involving total share consideration of ₹48 Cr, subject to applicable approvals. • Capital Allocation Strategy: Management intends to balance shareholder returns with investments in international expansion, technology platforms and AI-led business development. • Q2 Revenue Performance: Consolidated revenue increased 4% YoY and 2% QoQ to ₹153.3 Cr. • Q2 EBITDA Performance: EBITDA increased 28.5% YoY and approximately 12% QoQ to ₹46.3 Cr. • Q2 EBITDA Margin: Margin expanded to 30.2% from 24.4% YoY and 27.5% QoQ. • Q2 Net Profit: PAT increased 50.9% YoY and 46.7% QoQ to ₹26.6 Cr. • Q2 PAT Margin: Margin improved to 17.3% from 12% YoY and 12.1% QoQ. • H1 EBITDA Performance: EBITDA increased 20.8% YoY to ₹87.7 Cr, with margin improving to 28.9% from 24.9% YoY. • H1 Net Profit: PAT increased 37.5% YoY to ₹44.7 Cr, with PAT margin improving to 14.7% from 11.2% YoY. • Operating Cash Flow: Q2 operating cash flow stood at ₹37.1 Cr, while H1 operating cash flow increased 31.3% YoY to ₹70.2 Cr. • Cash Position: Cash and liquid funds stood at ₹127.2 Cr as of September 2026, with management highlighting a debt-free balance sheet. • Working Capital: Days sales outstanding improved by approximately three days YoY, while management expects further improvement through tighter billing and collection processes. • Key Challenges: Delays in converting ACV into revenue, domestic BPM restructuring, traditional payroll pricing pressure, dependence on international contract wins and sustainability of elevated margins remain important factors.
ALLDIGI TECH LIMITED