Allied Digital Services Limited: services reach 88% in Q2

Allied Digital Services Limited generated 88% of Q2 FY27 revenue from services, or Rs 232 crore of Rs 265 crore, compared with 76% a year earlier. In the same quarter, Rest of World revenue reached 77% and enterprise customers accounted for 87%, showing a more service-led, overseas and enterprise-oriented mix.

Why did Allied Digital's services share reach 88%?

Allied Digital's services share reached 88% in Q2 FY27 because services revenue was Rs 232 crore, compared with Rs 177 crore and a 76% share in Q2 FY26. Solutions revenue declined to Rs 33 crore, or 12% of revenue, from Rs 57 crore and 24% a year earlier, while the company’s total quarterly revenue increased to Rs 265 crore from Rs 234 crore.

Allied Digital defines services as continuous, long-term client support that is typically annuity-based or recurring. Its presentation says services can have a lower initial margin profile than solutions, but offer greater long-term margin potential and strategic stability; solutions are one-time implementations, including infrastructure setups, upgrades and transformative projects, and generally have higher margins.

The change was therefore not only a percentage movement. Services revenue increased by Rs 55 crore between Q2 FY26 and Q2 FY27, whereas solutions revenue decreased by Rs 24 crore. The mix shows that the Rs 31 crore increase in total quarterly revenue was accompanied by a larger contribution from recurring support work and a smaller contribution from project-led solutions.

How did Allied Digital's overseas revenue mix change?

Allied Digital generated Rs 203 crore, or 77% of Q2 FY27 revenue, from the Rest of World, compared with Rs 150 crore, or 64%, in Q2 FY26. India revenue was Rs 62 crore and 23% in Q2 FY27, down from Rs 84 crore and 36% a year earlier, even as consolidated net revenue from operations rose to Rs 265.32 crore from Rs 233.70 crore.

The overseas mix had already increased at the annual level before Q2 FY27. Rest of World revenue rose to Rs 652 crore, or 73% of FY26 revenue, from Rs 505 crore and 63% in FY25. India revenue rose in absolute terms to Rs 316 crore in FY26 from Rs 302 crore in FY25, but its share declined by 10 percentage points to 27%.

Allied Digital lists operations or presence across Canada, the US, Brazil, Ireland, the UK, Spain, Belgium, Germany, Italy, the UAE, China, Japan, Singapore and Australia, alongside Mumbai, India. A separate geographical-revenue overview gives India a 32% share and Rest of World a 68% share, while the Q2 FY27 mix was more internationally weighted at 77% Rest of World.

How did Allied Digital's enterprise customer mix change?

Allied Digital derived Rs 231 crore, or 87%, of Q2 FY27 revenue from enterprise customers, compared with Rs 180 crore and 77% in Q2 FY26. Government customer revenue declined to Rs 34 crore and 13% from Rs 54 crore and 23%, making enterprise accounts a larger part of a Rs 265 crore quarterly revenue base.

This movement extends a change visible in the annual figures. Enterprise revenue increased from Rs 565 crore, or 70% of FY25 revenue, to Rs 741 crore, or 77%, in FY26. Government customer revenue was Rs 242 crore in FY25 and Rs 227 crore in FY26, while the presentation shows the enterprise share rising by 7 percentage points over that period.

The presentation describes recent work that spans both implementation and support. Allied Digital's US subsidiary entered a partnership with a privately held US managed IT and cybersecurity provider for project-based professional services across IT infrastructure, cloud and cybersecurity, delivered through its offshore delivery centre. Separately, the company was engaged by a home health, personal care and hospice provider to assess, implement and provide ongoing support for a 24x7 artificial intelligence-powered service desk.

What did the Q2 FY27 mix mean for Allied Digital's financial results?

Allied Digital reported net revenue from operations of Rs 265.32 crore in Q2 FY27, up 14% from Rs 233.70 crore in Q2 FY26 and 2% from Rs 260.49 crore in Q1 FY27. For H1 FY27, net revenue from operations was Rs 525.81 crore, a 16% increase from Rs 452.72 crore in H1 FY26.

Earnings before interest, tax, depreciation and amortisation, or EBITDA, excluding other income was Rs 24.40 crore in Q2 FY27, up from Rs 21.32 crore in Q2 FY26. The EBITDA margin excluding other income was 9% in both quarters, meaning the revenue increase did not change that reported margin despite the higher services share.

EBITDA including other income was Rs 26.50 crore in Q2 FY27, down from Rs 28.29 crore in Q2 FY26, because other income fell to Rs 2.11 crore from Rs 6.96 crore. Profit before tax was Rs 17.09 crore versus Rs 20.56 crore, while profit after tax was Rs 12.59 crore versus Rs 15.42 crore and the reported profit-after-tax margin declined to 5% from 6%.

Finance costs increased to Rs 4.24 crore in Q2 FY27 from Rs 2.91 crore in Q2 FY26. The company also reported tax expense of Rs 4.50 crore in Q2 FY27 against Rs 5.14 crore a year earlier. These reported items occurred alongside revenue growth and the shift toward services, but the presentation does not assign the profit change to the revenue mix.

Is Allied Digital's service-led mix a new development?

Allied Digital's Q2 FY27 services share of 88% was above the 77% recorded in both FY25 and FY26. Services revenue increased from Rs 618 crore in FY25 to Rs 746 crore in FY26, while solutions revenue increased from Rs 189 crore to Rs 222 crore, leaving the annual services and solutions shares unchanged at 77% and 23%, respectively.

The Q2 FY27 result was therefore a sharper quarterly mix movement than the FY25-to-FY26 annual comparison. Services added Rs 55 crore year on year in Q2 FY27, while solutions fell by Rs 24 crore, compared with the prior annual period in which both segments increased by Rs 128 crore and Rs 33 crore, respectively.

Management said it intends to pursue larger, more complex and multi-year engagements, strengthen direct customer relationships and accelerate artificial intelligence adoption across service delivery. The presentation also identifies cloud infrastructure services, cybersecurity and networking, digital workplace services, digital engineering solutions, and AI operations and automation as its service and solution capability areas.

Conclusion

Allied Digital's Q2 FY27 revenue mix moved decisively toward services, overseas business and enterprise customers: services accounted for Rs 232 crore and 88% of revenue, Rest of World contributed Rs 203 crore and 77%, and enterprise customers generated Rs 231 crore and 87%. Revenue rose 14% year on year to Rs 265.32 crore, while profit after tax fell to Rs 12.59 crore as other income was lower and finance costs were higher than in Q2 FY26.

The next result periods will show whether the 88% services share persists as management pursues larger, more complex and multi-year engagements. The presentation also outlines an insurance managed-services roadmap pilot targeting an automation rate of 70% or more, an 80% reduction in mean time to resolve versus baseline, and a production launch in three months; these are targets and a plan, not reported outcomes.