Thank you very much. We will now begin the question -and-answer session. The first question is from Vishal Pandya, who is an individual investor. Please go ahead.

Thank you for the opportunity I just wanted to understand if there is some kind of competitive pressure because we have seen that the EBITDA margins Q1 FY2027 Earnings Call Transcript and the PAT margins are on a declining trend from last 3 to 4 years. So can you throw some highlight on that? And how can we kind of improve that?

So yes, you are right. There is certain competitiveness that is there in the business from the last 4 to 8 quarters. With that, I would also want to say that we are investing as well while we are growing. So, if you see us consistently over the last 4, 5 years, we have been growing at 20%. And to do that, we have done a lot of investments with respect to hiring new people, getting the leadership in place, getting the mid-level leadership in place. So, one side, we are investing. We are investing on people. We are investing on technology where we are doing a lot of investments on AI to make sure that our service portfolio is AI ready. And third is with the global scenario, specifically in the U.S. market, we have seen a lot of competitiveness happening because of the war issue that was there over the last 3, 4 quarters. Of course, the business actually is growing, but there is a lot of demand when it comes for margin reduction or bettering the bottom line from a service perspective. So that has been a little bit of a challenge. To counter that, what we are doing is that while we are investing in the AI, we expect that once we start implementing all this automation to our clients on a broader basis, we should be able to improve or optimize our service delivery and get better margins over the next few quarters.

Okay. Let me put it on another way. Is AI being a beneficiary to our business? Or is AI a threat to our business? Because of AI, are we losing that competitive edge in the market or something like that? Can you throw some light?

So, AI or any other technology that is always next -gen tech, we always consider it as an opportunity, an opportunity to go to customers and acquire more customers. Of course, the rule of the game changes, it is not going to be as easy as it was for the last couple of years, but the new challenge also gets us new opportunities. And with both our open hands are welcoming AI and making sure that our service portfolio, our people get realigned towards AI and the requirement that the customer has. So that way, I will consider that as an opportunity, not at all a threat. But yes, up to what extent is only when we start implementing and start getting cost optimization done at the customer level is when we will be able to give you an exact strength at which we can get an output from AI implementation.

So as of now, can we understand that there is some kind of revenue deflation because of AI that we are facing?

So, revenue deflation is happening because of 2 reasons. One is in India, specifically, if you recollect, due to this war situation, a lot of the product Q1 FY2027 Earnings Call Transcript prices have gone up. So, we have stayed away, in the last quarter of the last financial year and the first quarter of this year, from going too aggressive on acquiring customers at a relatively lower margin. The reason for that is the speculation in the price changes from the hardware side that is happening. So, things have slowed down a bit there. But having said that, I think from this quarter onwards, we are seeing that a lot of stagnancy is coming in that as well. Prices are getting bottomed out. We are seeing a lot of positive feedback coming in from OEMs to go and bid for it. So probably one mo re quarter and after that, when the RFPs are out and then we start bidding again, we will see a lot of newer deals coming in. So, if not in the second quarter, third quarter, I am pretty confident that we will have some good announcements coming up from the pipeline that we see on hand. So, that is one of the reasons where I feel the top line has been declining a bit quarter-over-quarter.

But I will add here. I think your question I understood. AI is a boon to us actually. We would want the AI to spread more because I do not think so every company will be able to cope up with the change that is going to happen. However, we have been in the industry for the last 42 years and always taken up new challenges, and we are going to be far ahead. And with the new initiative that we have taken by focusing a lot on innovation, I think we will be ahead of the curve. So, the answer is yes, AI is good for us. It is a matter of time that you will see a change that is going to happen.

Okay. So when can we expect the margin pressures to bottom out? And from when can we see an increasing trajectory on the margins? And what will be your sort of guidance for FY '28?

So, I will give you answer. See, right now, situation is not as solid as going to happen later on. Every large company is also facing the cost pressure because every customer wants in anticipation of the automation norm, they are trying to discount the pricin g from the now itself. So, margins are definitely under pressure for everybody. But once AI gets settled and more and more mature platforms and products are going to be available, the margins would certainly be increased by those companies who have been ahead in terms of deploying that kind of automation. So right now, in a very flux situation, I cannot tell you when, but I think very soon, you will see a change that is going to happen. And in the competitive market, we will fare much better than others.

Okay. And any guidance you would like to highlight for next couple of years?

So, we are seeing 10x growth in 10 years, which turns out to be about 20% a year is what we are looking at. Some quarters here and there based on the macroeconomics. But otherwise, from a strategy perspective and customer acquisition perspective, I think we are on the right track. That should be what we should be aiming at 10x in 10 years, yes, which turns out to be about 20% a year.

Thank you. The next question is from Shreya Mehra from Choice Institutional Equities. Please go ahead.

I want to understand that, given the pipeline we see that and we have explained in the opening remarks. I would like to understand what are the constraints we are facing in the revenue conversion specifically for this year? And when should we expect these to translate into meaningful growth inflection. Can you throw some light on that?

Thanks, Shreya, for your question. Voice was a little feeble, but what I understand is you are asking why there has been a little bit delay in the revenue recognition. As I previously told in my last con call also, the scenario in India was a little difficult from a prod uct pricing perspective. We had won a couple of orders in the railways, which were in the tune of about Rs. 180 crore to Rs. 200 crore. Unfortunately, while we were in the bidding phase, the pricing of the products went up by 25%, 30%. And eventually, we had to bow out of the project because we did not want to take losses in our books. So having said that, we become a little cautious when it came to bidding for such kind of projects where the whole cycle of decision -making is a bit elongated. And because of that, the price confirmation from the OEM was not that great. So, 2 quarters, we had a little bit of silence with respect to larger order wins from the government side in India. However, as we speak today, the scenario is changing, and we are seeing a lot of positive feedback coming in from the OEMs with respect to the consistency in the pricing and the guarantees of the pricing being normal. So, this has entrusted that we keep on bidding for most such projects now. And I feel in the next couple of quarters, we will see some good announcements coming in from that side as well, which would, of course, get us back to the growth track that we were looking at. It is a matter of time before we start announcing some good order wins.

Okay. Thank you. Also, if I can ask a follow-up question. How should we think about the margin trajectory in FY27?

So, the margin trajectory right now, we are anywhere between 10% to 11% EBITDA. While we are focusing on growth, we are also focusing on a lot of changes that we are doing internally to better our governance, better our service delivery, and we are doing a lot of investment on AI. We feel that in a Q1 FY2027 Earnings Call Transcript couple of quarters when large deals kick in is when we will get to improve our EBITDA margins to a considerable level by a couple of bps, like 12% or 13%.

Okay. And this is in consideration with the AI investment as well?

Yes. Yes.

Thank you. I would now like to hand the conference over to the management team for closing comments.

Thank you once again for your participation and engagement during today's call. We remain encouraged by the direction of our business and the significant opportunities emerging across the evolving global technology landscape. Having achieved the Rs. 1,000 crore revenue milestone on a trailing 12-month basis, we believe Allied Digital is entering a new phase of growth and evolution. As we have indicated, our aspiration is to scale the business 10x over the next decade. Over the past few years, we have undertaken a comprehensive transformation across multiple dimensions of the organization, including governance, transparency, leadership development, human capital delivery capabilities in our sales and go -to-market framewo rk. We believe these initiatives have significantly strengthened the foundation of the company and created a more agile, scalable and resilient platform capable of supporting sustained long-term growth. Should you require any further information or have any additional questions, please feel free to reach out to our team or connect with CDR India. We sincerely appreciate your continued support and confidence in Allied Digital Services Limited. Thank you.

Thank you very much. On behalf of Allied Digital Services Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines. Thank you. This is a transcript and may contain transcription errors. The Company or the sender takes no responsibility for such errors, although an effort has been made to ensure a high level of accuracy. Please also note that this document has been edited without changing much of the content, to enhance the clarity of the discussion. No unpublished price sensitive information was shared/discussed on the call.