Financial Performance Summary

Revenue Performance

  • Consolidated revenue for Q1 FY27: INR775 crores
  • Year-on-year growth: 5.3%
  • Sequential decline: 3.1% (impacted by lower book-to-bill conversion and selective contract decisions)

Profitability Metrics

  • Reported EBITDA: INR76.9 crores
  • EBITDA margin: 9.9%
  • Sequential EBITDA decline: INR11 crores (including INR9.9 crores one-off from lease accounting changes in March quarter)
  • Like-to-like sequential operating decline: ~INR1 crore
  • EBIT for the quarter: INR22 crores (up from INR21 crores in preceding quarter)
  • PAT: INR2.9 crores (return to profitability after two quarters)

Segment Performance

  • Tech and Digital segment: Grew 20.3% YoY to INR237 crores (31% of revenue)
  • International business: Grew 10.2% YoY to INR296 crores (38% of revenue)

Cost Impacts

  • Wage cost impact from new labor codes and minimum wage revisions: INR10 crores in the quarter
  • Active client discussions ongoing for repricing and cost-of-living adjustments

Depreciation and Finance Costs

  • Total depreciation and amortization: INR55 crores
  • INR36 crores: Right-of-use lease depreciation under Ind AS 116
  • INR19 crores: Own asset and intangible depreciation
  • Finance costs: INR15 crores (including INR11 crores lease interest)
  • Expected total lease outflows for FY27: INR175-180 crores

Operational and Business Metrics

Headcount and Delivery

  • Approximately 55,000 people mapped to business units
  • AI interactions: 5.7 million at 80-85% containment rate

Bookings and Pipeline

  • TCV bookings: INR205 crores
  • Key logos added: 26
  • Book-to-bill conversion: 11-13%
  • Pipeline includes three large international deals with hyperscalers

Working Capital

  • DSO: 82 days (up from 75 days previous quarter, better than 91 days YoY)
  • Increase attributed to contract revisions, repricing discussions, and wage-related billing impacts
  • Expect normalization as pricing conversations conclude

Strategic Updates from New CEO

Leadership Introduction

  • Sameer Ahluwalia, new CEO and Executive Director, brings over two decades of experience in technology, operations, and consulting
  • Focus on private equity mindset with disciplined execution and measurable outcomes

Four-Part Strategic Framework

1. Get Unified - New Operating Model
  • Simplified into four components:
  • Business units (own P&L, service delivery, people careers - 55,000 employees)
  • Service lines (competency roadmap, capabilities, products, alliances)
  • Go-to-market engine (two forces: West focus US/Canada, India Plus focus)
  • Corporate functions (consolidated with new COO office alongside CFO office)
2. Strengthen and Modernize Core
  • Rigorous review of account profitability, pricing discipline, delivery efficiency
  • More selective about business pursued
  • Applying automation AI to reshape delivery models and improve productivity
  • Objective: Growth that creates value, not growth at any cost
3. Go West and Go Digital
  • Expanding Western corridor operations (customer care, healthcare RCM, collections, BPM)
  • Insurance-focused technology platform with AI and cloud professional services
  • Multi-sector deployment of digital capabilities
4. Going All Out - BPA Strategy
  • Build: Continue investing in existing platforms (payroll, insurance, collections)
  • Partner: Pursue partnerships with hyperscalers and platform companies
  • Acquire: Selective M&A to strengthen priority markets, capabilities, and client relationships

Management Guidance and Outlook

Margin Expectations

  • Q1 identified as margin trough
  • Target: 200-bps EBITDA margin expansion in FY27
  • Focus on margin improvement over pure revenue growth

Growth Philosophy

  • Prioritizing quality of revenue and earnings over volume
  • Not chasing top line for its own sake
  • USD 1 billion revenue target remains but with profitability focus

Capital Allocation

  • No immediate plans for equity dilution
  • Flexibility to invest in capability platforms and partnerships
  • No immediate plans for land/building monetization (previously discussed INR150 crores potential)

Entity Structure Clarification

  • Alldigi operates as separate entity with both BPM and Tech & Digital businesses
  • Operating model is interlocked across entities with centralized functions
  • Corporate expenses partially allocated on arm's length principle
  • Board will decide on potential merger at appropriate time

AI Strategy Details

  • AI-led revenue: ~INR15 crores (2% of revenue, net new projects)
  • AI funnel: INR100-150 crores pursuing through the year
  • Six new AI clients signed in Q1
  • AI deployed internally in BPM operations but not separately reported
  • Separate AI-specific sales, solutioning, and delivery teams
  • Potential future AI business unit with own P&L

Vertical Focus

  • Priority sectors: BFS (banking, financial services), insurance, healthcare, oil & gas, CMT
  • US insurance focus: Mid-market clients, underserviced segment
  • Curated approach to client qualification and response

Tax and Regulatory Matters

  • Received income tax refund for FY25-26
  • Closure of several GST matters with clean orders
  • Strengthened financial operations discipline