How did Allied Digital Services perform in Q2 FY26 and what is driving its revenue and profitability growth?
Allied Digital Services Limited (NSE: ADSL, BSE: 532875) reported consolidated revenue of ₹234 crore in the second quarter of FY26, marking a 15 percent increase over ₹203 crore posted in Q2 FY25. Profit after tax rose sharply by 33 percent year on year to ₹15 crore, with operating earnings (EBITDA) also improving by 23 percent to ₹28 crore, signaling a quarter of robust execution and diversified client wins. These results represent one of the company’s strongest showings in recent quarters, with both sequential and annual growth visible across geographies, customer segments, and service lines.
In terms of profitability ratios, EBITDA margin expanded from 10 percent in Q1 FY26 to 12 percent in Q2 FY26. Profit before tax increased 32 percent year on year to ₹21 crore, translating to a PBT margin of 9 percent. The PAT margin remained steady at 6 percent. Allied Digital Services also reported an 18 percent year-on-year growth in consolidated revenue for the first half of FY26 at ₹453 crore, up from ₹382 crore in H1 FY25. PAT for the half year stood at ₹30 crore, compared to ₹22 crore in the corresponding period last year, reflecting a 36 percent increase.
The margin gains were underpinned by higher realization in the solutions business, improved utilization in international contracts, and continued strength in services delivery, particularly in Smart City deployments, workplace modernization, and cloud infrastructure.
What insights do segment-wise and geographical splits reveal about the company’s performance momentum?
The services segment contributed ₹177 crore in Q2 FY26, up 17 percent year on year, while the solutions business grew 8 percent to ₹57 crore. From a half-year perspective, services revenue totaled ₹342 crore, and solutions revenue reached ₹111 crore, both showing an 18 percent increase over H1 FY25.
Geographically, revenues from India stood at ₹84 crore in Q2 FY26, representing a 12 percent year-on-year growth, while revenue from the rest of the world reached ₹150 crore, growing 17 percent. International operations continue to be a critical pillar, with substantial traction in Europe and North America.
From a customer mix standpoint, non-government revenue surged to ₹176 crore in Q2, up 18 percent year on year, while government-linked revenues reached ₹58 crore, increasing 7 percent. For the first half of the fiscal, non-government revenues stood at ₹343 crore and government revenues at ₹110 crore.
These splits highlight that Allied Digital Services is steadily de-risking from public sector dependency while expanding private enterprise partnerships across key verticals such as pharmaceuticals, retail, industrial safety, and real estate infrastructure.
How significant are the ₹698 crore in contract wins during the quarter and which sectors contributed to the pipeline?
During the second quarter, Allied Digital Services secured over ₹698 crore in orders comprising both new deals and renewals. These multi-year contracts underline customer confidence and reflect the company’s growing capabilities in managed services, end-user computing, and digital workplace transformation.
Key contract wins included a managed services agreement with a Europe-based pharmaceutical and healthcare major covering infrastructure support across continents. Another highlight was a global engagement with a leading American fashion and lifestyle conglomerate behind brands such as Tommy Hilfiger and Calvin Klein. The mandate spans retail and warehouse infrastructure across offices and outlets, aimed at enhancing digital uptime and customer experience.
Allied Digital Services was also chosen by a fire and gas safety systems provider for IT services across North America and Europe. The scope includes incident management, infrastructure refresh, and on-site support.
In India, the company partnered with a Mumbai-based real estate developer for CCTV and networking solutions across multiple states, and also renewed support service contracts with a government infrastructure planning body in Jaipur. In addition, the company executed extensions with clients in sectors including FMCG, BFSI, mining, gas distribution, and textiles.
These wins reinforce Allied Digital Services’ positioning as a cross-vertical digital infrastructure partner, capable of delivering large-scale, multi-site managed services across jurisdictions.
What was the market reaction to Allied Digital Services’ Q2 FY26 results and how does investor sentiment currently stand?
As of November 7, 2025, shares of Allied Digital Services closed at ₹173.00 on the National Stock Exchange, reflecting a 1.79 percent gain over the previous close of ₹169.95. The stock touched a high of ₹175.50 during the session and recorded a traded volume of 2.69 lakh shares, with a turnover of ₹4.57 crore. The free float market capitalization is estimated at ₹473.79 crore, while the total market cap stood at ₹976.20 crore.
While the stock is still trading well below its 52-week high of ₹295.00, institutional investors have taken note of the improving earnings quality and consistent deal flow. The adjusted price-to-earnings ratio remains stable at 26.43. Analysts tracking the mid-cap IT space have generally expressed constructive sentiment, citing the company’s ability to maintain delivery momentum despite macroeconomic volatility in North America.
Post-result flows indicate neutral to moderate institutional interest, with volumes led by retail and HNI participants. In terms of valuation, the company’s expansion in Smart City, retail workplace, and AI-based infrastructure services is being seen as a long-term value unlock, especially as clients move toward outcome-based contracts.
What are the management’s forward-looking priorities and how is Allied Digital Services leveraging AI for differentiation?
In his quarterly commentary, Chairman and Managing Director Nitin Shah emphasized the company’s strong performance in Europe and India, citing margin stability, Smart City traction, and contract renewals as major contributors. He reaffirmed Allied Digital Services’ focus on full-scale artificial intelligence integration across its delivery stack, an initiative designed to enhance operational agility, cost efficiency, and client value.
The flagship Drishti Command and Control Centre in Pune was flagged as a major success. Developed under the city’s surveillance initiative, it now includes 2,800 high-resolution CCTV units, public address systems, mobile command vans, and drone support for real-time urban emergency monitoring. This solution is being marketed as a reference deployment to other city and state governments exploring tech-enabled surveillance and disaster management.
Shah also highlighted continued investment in workforce upskilling, particularly across AI, cybersecurity, and cloud-native services. With over 3,000 employees and operations across 70 countries, Allied Digital Services is positioning itself as a global partner to Fortune 500 enterprises and government organizations navigating hybrid infrastructure needs.
The company’s recent recognition as AsiaOne Magazine’s “Fastest Growing Technology Brand in the UAE” further underscores its growing international profile and branding strength in the Middle East.
Key takeaways: What investors and market watchers should note from Allied Digital Services’ Q2 FY26 performance
- Allied Digital Services Limited posted ₹234 crore in Q2 FY26 revenue, marking 15 percent year-on-year growth.
- Profit after tax increased 33 percent year on year to ₹15 crore, with EBITDA up 23 percent at ₹28 crore.
- The company booked over ₹698 crore in new and renewed contracts across Europe, North America, and India.
- Services revenue contributed ₹177 crore, while the solutions segment added ₹57 crore during the quarter.
- Non-government business rose 18 percent year on year in Q2 FY26, now forming the dominant revenue share.
- Net cash position stood healthy with ₹162 crore in reserves versus ₹98 crore gross debt as of H1 FY26.
- The company received industry recognition as the UAE’s fastest-growing tech brand at AsiaOne Forum.
- AI integration and Smart City deployments like Pune’s “Drishti” are core pillars of future growth.
- The stock closed at ₹173.00 with a price-to-earnings ratio of 26.43, reflecting cautious investor optimism.
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