Ladies and Gentlemen, good day and welcome to AllDigi Tech Limited Q2 and H1 FY26 earnings conference call hosted by IIFL Capital Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Siddharth from IIFL Capital Services Limited. Thank you and over to you, sir.
Ladies and gentlemen, good morning and thank you for joining us on the post Q2FY26 and H1FY26 results conference call for AllDigi Tech Limited. It is my pleasure to introduce the senior management team of AllDigi Tech who are here with us today to discuss the results. We have Mr. Naozer Dalal, CEO, Mr. Avinash Jain, CFO, Mr. Rajesh Lachhani, Head.
Of Investor Relations in the back there.
We will begin the call with opening remarks by the management team and thereafter we will open the call for a Q&A session.
I would like to now hand over the call to Mr. Naozer Dalal to take the proceedings forward. Thank you. And over to you, Naozer.
Thank you. Thank you so much. Good morning everyone.
I hope all are well and had a good and nice Diwali celebrations earlier in the month. Thank you for joining the Q2 and H1 FY26 earnings call. I'm joined by our CFO Avinash Jain and we look forward to walking you through our performance and responding to your questions. We'll proceed with giving you a brief business overview covering our lines of businesses and follow it up with a detailed financial performance post that we'll be happy to take your questions. A banner achievement for the quarter is the external recognition from Everest Group's PEAK Matrix 2025 as a major contender for multi-country payroll services both for India and Global and CXM services for APAC and Americas. Additionally for MCP we have been recognized as a star performer for our growth, deal momentum and innovation over the past year being the highest in the MCP peer group.
I'm further pleased to report 10 successive quarters of robust financial performance. Operationally we have achieved strong revenue growth with healthy EBITDA margins while expanding our offerings and capabilities.
For the half year revenue from operations of INR 291 crores up 12% YoY while EBITDA was at 73 crores up 17% YoY. The growth has been broad based across both the verticals in line with our strategic intent, the overall share of our international business increased from 62% to 64%, a jump of 2%. EBITDA margins have been marginally lower due to the growth investments in leadership and sales resources.
For the quarter, revenue from operations stood at INR 147 crores, up 12% YoY and 2% quarter-on-quarter, while EBITDA was at INR 36 crores.
Sorry, up 17% YoY and down by 1% quarter on quarter.
Our cash collections continue to be robust. Our cash position as on September 25th was INR 137 crores. Collection for the half year increased to rupees 304 crores up 11% yoy.
Coming to the operational performance, let me first give you the highlights on the.
The tech and digital business reported for quarter two a 15% year on year and 2% quarter on quarter growth. For H1 it was a 17% year on year growth. In H1 26 we booked sales ACV of INR 18 crores which is twice that of the corresponding period of last year. We posted good additions to our managed employee records base and continue to lead India's managed services segment. We processed 47.6 lakhs employee records for the quarter, 10% higher YoY and 5% quarter on quarter. Our base now stands at 16.2 lakh employees as of 30th September. Employee records processed as of 30th September. Our employee record process for FTE has also improved 3% quarter on quarter and 5% year on year.
For Q2, our key service delivery metrics of payroll accuracy, on-time delivery, and query turnaround time continue to improve year-on-year, setting new benchmarks. Moving to the BPM segment, the BPM segment continued its growth momentum in Q2 with an 11% year-on-year and 3% sequential growth, supported by deeper penetration into our healthcare business, and H1 reported a 10% year-on-year growth.
We also continue to grow the international business which is contributing 76% of the total CXM business on a half year basis up from 72% last year. We added INR 22 crores of new ACV in H1, significant contribution from mining of existing healthcare client and addition of one new logo. Our service delivery continues to remain green and we continue to make efforts to infuse artificial intelligence into our current customer landscape. I will now provide a progress update on the two platform projects SmartPay 4 and SmartHR, also known as Bazili. We have successfully completed migration for our India-based customers onto our SmartPay 4 platform. For SmartHR we have won ACV of INR 9 crores period to date of which INR 2.4 crores is for the SME segment.
Our relentless commitment on diversity and inclusion has been yielding results with gender diversity improving from 46% to 48% in H1, a 2% increase YoY. We continue to receive high ratings and increasing feedback on social media, Glassdoor, AmbitionBox, etc. A direct outcome of our continued focus on employee engagement. We also continue to encourage our employees to participate in the corporate social responsibility CSR activities of the company. Looking ahead as we know, FY25 has laid a strong foundation for our journey as altogether and now under a new parent Digitech Solutions, our strategy remains crystal clear. We are deepening client relationships, expanding our global reach, driving efficiencies through technology and AI and building a future ready high performing team.
With our platform scaled, sales channels expanded, execution culture intact and the potential sales list from the Everest PEAK Matrix assessment, we are confident of delivering another good year in FY26. With this, I would now like to hand over to Avinash to walk us through the detailed financials. After that, we'll be happy to take your questions. Thank you.
Thanks, Naozer.
Good morning, everyone, and thank you for your interest in AllDigi Tech, now a part of Digitech Solutions. Let me begin with our performance on the operational revenue front. Revenue for the quarter stood at INR 147.4 crores, reflecting a growth of 12.2% YoY and 2.4% QoQ. For the half year, our revenue reached INR 291 crores, representing a strong growth of 11.7% over H1FY25. Both business verticals BPM and KMD have shown contributed to this growth. In the BPM segment, Q2 revenue stood at INR 110.5 crores, growing 11.1% YoY and 2.7% QoQ. International BPM revenue grew 16.1% YoY while domestic BPM decreased by 1%.
For the half year BPM revenue grew by 10% YoY to INR 218.1 crores. Growth was driven largely by international markets which now contribute to 76% of BPM revenues up from around 71.5% last year. In the TND business, revenue for Q2 stood at INR 36.9 crores marking a 15.3% YoY growth and 1.7% QoQ growth. For the half year TND revenue grew by 16.9% YoY. Notably, employee record volumes increased by 10.7% to 93 lakh reports underscoring strong operational momentum.
Now moving to margins, EBITDA for Q2 came in at INR 36 crores rising by 16.9% YoY and down by 1% QoQ. For the half year EBITDA was INR 72.6 crores growing 17.1% YoY. In the BPM segment margin for Q2 was at INR 12.8 crores flat YoY. In TND segment margins are at 40% for Q2. Segment margin for Q2 was at INR 14.7 crores posting a 34.9% YoY growth driven by better volume expansion and better cost absorption. Coming to the bottom line, PAT for the quarter stood at INR 17.6 crores, increase of 45.5% YoY and 18.1% QoQ. For the half year FY26 PAT was down by 26.3% YoY to INR 32.5 crores with PAT at 11.9% basically down by 5 basis points YoY primarily due to investments or divestments of LLC business in H1 of last year.
On our cash flows, our operating cash flows for the quarter was INR 33.4 crores. Growth of 41.5% YoY and 66.2% QoQ and OCF to EBITDA conversion remained strong at 92.8%. Half year OCF stood at 53.5 crores and 9.2% YoY growth. With this I conclude the financial highlights and now hand over the session to moderator for taking up your questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchtone telephone. If you wish to remove yourselves from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
SA.
The first question is from the line of Raghuram N.S. from Eurindia Ventures. Please go ahead.
Yeah, hi Naozer. Hope I am audible.
Yeah hi Raghu. Good morning.
Good morning. I had about five questions. I can just go through them in line. One or two obviously seems like more financial matters. But the first question was, and you also alluded to it.
That is.
Sales team and that's maybe the reason why on the tech and digital side there has been a dip in the segment profitability. If you can, please help us. Because obviously with SP4 coming in, we were looking forward to the margins not only stabilizing but also may be increasing over a period of time. But here the margins have taken a.
Bit of a dip.
If you can help us run through that. The second question was on, I can see a number of ads on the Philippines recruitment and portals saying RCM billing seems to be pretty significant addition to the whatever range of services that AllDigi presents or is able to offer from Philippines. If you can help us whether that is something that all of us as investors have also been looking forward to seeing how the next step of growth will be led by whether that has really been a successful addition. The second and the third question seems to be more on the financial side, which is on the tax assessment status. We were looking forward to some kind of clarity on that which will help us also recognize some of the tax refunds that have already happened but are.
Sitting.
More in the balance sheet rather than flowing through the P&L. Fourth question is on CapEx, there seems to have been an increase in the.
CapEx.
In this H1 of FY26 as compared to H1 of FY25. You can help us with that. The last one is on the outlook on depreciation. Obviously there has been a continuous increase in depreciation for the last three quarters and now it stands at about INR 14.8 crores which is a significant number. If you can help us just give us some kind of outlook on how this will go forward. Thank you.
Thanks.
Thanks Raghu. Yes, so coming to the first question on tech and digital margins. So as you would see, I mean our margins have made a significant improvement quarter on quarter all through last year. So we were at a Q2 of FY25 margin of 34%. We are almost touching 40% in Q2 of FY26. So that's a straight 6% higher than the same time last year. Yes, we have acknowledged that from Q1 it has come down, but I think that is a mere technicality. I mean there were certain cost accruals for the overall sales and operational leadership which we have invested in. We are not able to sort of account for that in Q1, so I think that's just a marginal timing correction.
But accounting for that, I mean I would expect the margins to again come back at least to where we were at the end of Q4 2025, which is in the 41%-42% range for the next quarter for Q3. And coming to your question on Philippines recruitment. Yes, we did mention that we have been able to extend our offerings in the healthcare space. So we started the relationship with our largest healthcare customer on the customer access space. But now we have been able to based on the comfort which some of our new sales leadership who come with RCM experience have given. We have been able to win a contract for a modest size of FTEs to start with for that same customer. So we are in the process of ramping it up and we should start seeing revenues for that RCM business in Q3.
On the three financial questions, I'll hand you over to Avinash.
Sure.
Raghu, on your tax assessment status question, like last time we had updated that out of the two financial years which we received refund in Q4 of 2025, one of the financial years was under scrutiny and the transfer pricing audit is also going on for that which is near finalization. So once the transfer audit, transfer pricing audit is finalized by department typically they are able to close in a quarter's time. So we expect that over the next three to four months we should at least get one of the orders out of the two assessment years. Coming to your question on CapEx, so there was an infra upgrade done specifically for one of our large clients. So that was one part. Another is that all our Bengaluru facilities have been consolidated at SS Plaza. So that has been another investment.
Depreciation outlook remains roughly similar in this range. There are plans for, let's say, a similar infra facility upgrade for our Chennai and Noida facilities also, but that is something which will happen over the next few quarters.
Okay, so on the CapEx also, is it something that now you have stabilized or is it ongoing and it will keep on? We will have to incur it for the next two or three quarters also.
It all depends, Raghu. Because we typically do business modeling and we look at all type of models. Whether we should ask the service provider to invest in a new office facility or whether we should ourselves invest. And then whatever most optimum solution is there, we proceed according to that. So in case we decide, let's say for Chennai facilities we have to invest. Yes, that would be one CapEx which would come up. But that will get finalized over the next couple of quarters.
Okay, thank you.
Thank you guys.
Thank you.
Thank you. The next question is from the line of Harsh Kundnani from INS Alpha. Please go ahead.
Yeah.
Hi Naozer. Hi Avinash.
Couple of questions, so on the margin bits. On the margin bit you said that you know the impact was on account of some leadership hiring. So fair to assume that is now done, and actually this quarter the impact on the margin was coming from other OPECS rather than employee costs. So is there something sitting in there that you would like to just highlight? That is the first question. The second is on the collections bit, so this quarter collections have been quite strong, so is there any backlog from previous quarter and you know if you could just help us to quantify that number.
Yeah, so coming to the first question, I mean I think what we do is that you know some of these staff are in our U.S. entity and in a U.S. sister company. So I think it's more an accounting in terms of these expenses are accounted for under professional fees and comes under other expenses. But in reality, I mean they are a staff inclusion and leadership inclusion. On the second question I'll hand you over to.
Yeah, so Harsh.
Basically, like if you recollect, earlier also we had updated that there were a couple of large customer collections which got pushed by a week in Q1 and which was collected eventually in first week of Q2. So yes, you're right to that extent to about INR 15 crore plus kind of collections were delayed last quarter but were subsequently collected in first week of July. But overall our collection percentage and our OCF performance remains on track and we continue to expect.
The same way.
Understood, understood.
These hirings that we are speaking about, these are for.
Both these segments. Is it or is there for any particular segment that this hiring was done?
So the leadership hiring is across both segments. The sales hiring is largely focused on the CXM business because I mean we are not in the US selling payroll as we develop capabilities around that.
Understood now, sir. Thanks, Naozer, and thanks so much. Thank you so much.
Thank you. The next question is from the line of Jyoti Singh from Arihant Capital Markets Ltd. Please go ahead.
Thank you for the opportunity. So basically wanted to understand what new features that differentiate the updated HRMS v2 and HRAI tools from competitor in multi country payroll. And another like with the HRMS V2 upgrade and onboarding of seven new clients. Seven clients. What is the expected contribution from the upgrade platform in 2627?
We are really moving our customers. So as I mentioned, the XP4 platform is an internal platform. You know clients are agnostic to.
So over a period of time we do hope to generate savings both from the infra part of it and also providing better turnaround times to customers in terms of how they can submit their payroll inputs. As far as HRMS is concerned. What we believe is that we have modernized our product and I mean ensure that there is infusion of better UI/UX, ensure that the mobile experience is seamless. I mean whilst we always had a great mobile experience but we have tried to take it to the next level we have also looked at the whole employee experience part of it because an important part of our business is how the employees of the end customer of our customer feel about using our HRMS. So the journey has been a part of that.
As part of the journey, we have also tried to mitigate some gaps which we had, gaps in terms of, say, performance management module or learning and development module, to give you two examples. So, I think it's a bit of all of that. So, it's a bit of upgrading the tech stack, a bit of upgrading the end user experience, and filling gaps in our product which to make it more holistic and intuitive.
Okay, thank you sir. And another like what are the current capacity utilization level across India and Manila delivery centers and how are you planning for future seat addition?
So we have always had largely, I mean in terms of, with a view to optimize costs we have always struck a fine balance in terms of almost just in time capacity addition. Our capacity utilization as far as Allsec is concerned is always upward of about 90%. And you know, and we will continue to do that of course we engage with our customers early enough so that you know, when we believe that there is a large opportunity coming, you know, we engage them early enough so that we can plan the next phase of growth of our capacity. And of course when we take a new capacity we always try to keep as I said at least a 5%-7% headroom so that the smaller ramp ups are not disrupted or we don't have to say no to the smaller ramp ups.
That is the whole philosophy in terms of how we manage facilities and we will continue to do that. I mean, don't see any change in terms of that philosophy.
Sure.
Sir, are we planning for any?
New acquisition that will open new geography for us as we are overall doing very well.
And also, like, earlier you talked about on the margin.
So if you can give us some further guidance on the margin side. So that would be great. Thank you.
We continue to, I mean both for AllDigi and the parent Digitide. I mean you know as a group we continue to explore and you know keep our eyes open, you know for any new acquisitions which fit couple of things and I've said that and I'm not talking in the context of AllDigi where if it would give us onshore presence or a nearshore presence for our CXM business, that would be one criteria or if it significantly increases our footprint in the known, in our chosen verticals of largely BFSI and healthcare. So that would be the second criteria. And of course the third criteria would be that the asset should be appropriately priced in terms of what the expectation of the potential seller could be.
So we are very clear that yes, you may have the capacity to make acquisitions in terms of robust cash positions, but we have to ensure that the value which we get from that acquisition either as I said in terms of niche skills addition or increase in the geographic footprint has to come across and has to be balanced in terms of the price that you pay for it. So again for M and A that would continue to be our guiding principles as far as AllDigi is concerned.
Thank you sir.
Thank you.
Guidance on the margin side, I've said this in the past that on a year-on-year basis we look to be able to improve our EBITDA margins anywhere between 1% to 1.5% year on year in terms of the margin percentage and don't see any significant challenge in achieving that, and of course we will continue to invest a part of that margin accretion into newer skill sets or newer leadership or sales leadership as we have done some part in FY25 and also to FY26.
Thank you sir. The next question is from the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead sir.
Thank you for the opportunity. So my first question was on the 100-150 basis point margin improvement. So this will be based on the HR platform and the tech and digital business growing as a share of our total revenue. Or this is just based on us moving our BPO services towards higher margin services or higher value added services. So if you could just help us.
Understand
it will be a mix of couple of things. So largely three drivers. One is for both the BPO and the HR business, growing our share of the international revenues is a key part of our strategy and we have demonstrated our ability to do that consistently again over the last 10 quarters. So that would be an important part where our higher margin businesses so the international business within BPO and doing more of international within the HRO would be a key part of the strategy. The second would be our focus on operational efficiencies and that is more relevant to the payroll business where we have been tracking a metric called payroll records per employee in terms of how many payroll records an employee can process.
There too we have demonstrated that 2%-3% quarter-on-quarter and a 5%-6% year-on-year improvement. So that's the second component which will contribute and the third component is of course I mean tighter control on overall costs, indirect costs. As the revenues grow, you know, I mean that itself gives a bit of an uplift, you know because we ensure that we don't increase the indirect costs in proportion to the revenues. So I think it's a three-tier strategy which will help us continue to get the margin improvements in spite of the fact that every year we have both staff and non-staff inflation and many times we don't get regular inflation from our customers basis the contracts.
But of course we try to push that and we are trying to get a little more aggressive with our customers also to ensure that we get compensated for annual cost of living adjustments.
Got it sir, on the HR platform side. Sir, if you just help us understand what is differentiation that AllDigi has versus either ADP Workday or local player like Ramco Systems. And sir, what is our right to win? And sir, I was comparing our growth with a competitor Humanica, that is based in Thailand. And so they've grown at 25-30% for a. So what will help us to grow at those levels over the next five years?
If you could just help us understand that.
So what we are known for in the managed services space is our ability to customize. So I think we are known to be able to manage complex payroll. You know, and when I say complex payroll it could mean payroll across a number of plants and offices. So you know, so maybe a combination of blue collar and white collar complex payroll in terms of, you know, the composition of the CTC sheet. You know, while many customers and organizations are now moving to simplify that. So we would continue to sort of build and then of course our seamless service delivery which is also reflected, you know, in our kind of operational service delivery excellence and the fact that you know, year on year we get increasingly positive net promoter scores or customer feedback which is reflected in that.
So, as I said, for the payroll, the platform is very customer agnostic. So even the SB3 to SB4 migration which we have done is more from ensuring that the tech stack of the platform is more up to date and that will enable us to give a bit of benefit of the turnaround time in terms of how long or how closer to the month end customers can close the payroll rather than, say, asking them five or six days ago to close. So as far as HRMS is concerned, I already answered the question earlier. Our upgrade is a mix of ensuring we fill the gaps, ensuring that our tech stack is modern and improving the UX experience for the end employees.
Got it.
With all the investments in marketing leadership hiring sir, when can we expect our this quarterly run rate of INR 50 lakhs? Closer to INR 50 lakhs. Moving to INR 1 crore employee process payroll.
Processing from our end.
Sorry, what is 50 lakhs? I did not get that.
The quarterly payroll that we process. How fast or when can we expect this to move to 1 crore or more than 1 crore payroll?
That we process over the next.
So when can we expect that?
And.
Also.
If you're asking me when would we double? I mean yeah, I think the desire is to sort of, you know and as I've said in the past also that we expect both our platforms, you know, to show high teen growth, you know, so I mean just sort of 20% or thereabouts. So if I just do a simple math and then again do a bit of compounding, I would say that we could double our EXM and business over the next say four to five years. The pacing of it within that five years of course would depend on a lot of things in terms of how the economy does, what our competition do and we are very mindful of that in terms of keeping a very close eye on all of that.
But yeah, we believe that we will continue to grow at a CAGR in the high teens, and I don't see a challenge in that. You know, that can only accelerate, but as a baseline I don't see a challenge in growing in the high teens.
Teens year on year.
Got it.
So just a final question from my end, sir. We had launched HR processing for the MSME segment. Is the segment where there is less competition and where we can get an advantage for ourselves, or if you could just help us understand how are we looking at this segment?
Significantly higher competition and not less competition, but that segment is very different, so that's more a software as a service or a self-service segment where we don't actually do the payroll, so it's more subscription-based and it's a very different operating model. We are trying to even build internally because we don't want to cannibalize our managed services payroll business because that gives us the higher revenue per payslip. So this is a separate capability we are building because with India growing, India Shining, the number of MSMEs growing and there was a market demand in the past where we could not meet and we have lost business in the past, so it really fills up that requirement.
And not that it's less competitive, in fact the competition is even more significant and the payslip realization per employee is actually lesser than what we do in the overall business. So therefore I also said in one of the past calls that we will do a very measured approach to this because it's very easy for us to sort of drop prices but then it becomes a bit of a P and L and a cash guzzler. So we would strike a balance in terms of how we grow there so that we continue to remain within that, we continue to play in that market space, but ensure that we do it profitably and it doesn't drag the entire organization down in terms of a negative drag on the EBITDA. But we have actually had some reasonable successes.
We have had wins of almost about INR 2.5 crores across 18 wins from this time. We started this journey sometime in January, I believe November, December last year, you know, which got accelerated in January. We have won about 18 deals with an ACV of about INR 2.5 crores. And we continue to build a funnel and you know, continue to sort of invest, you know, sales and marketing resources into that.
Got it sir.
Thank you so much.
And all the guys.
Thanks, thanks.
Thanks.
Thank you. The next question is from the line of Vivek Chaturvedi, an individual investor. Please go ahead.
Hi.
Thanks for the opportunity.
Naozer, the first question is to you.
I have been listening to the calls for the past few quarters and you've been very consistent that the top line growth will be in and around the mid teens going ahead. For the past few quarters we've been able to grow only at about 12 odd %. So what gives you the confidence that going ahead in the future we'll be able to basically grow at 13, 14, 15 percentage points, and yeah, that's the first question.
No, I think Vivek, what we try to do is we try to ensure consistency of the revenue growth, even quarter on quarter. But when I'm referring to the high teens growth, I'm referring to the full year growth. So if you look at our results, you know, 25 over 24 and 24 over 23, we have grown, you know, in the high teens, you know, just shy of 20%. So we have been able to record 20% year on year growth. And that is what I mean, timing it quarter on quarter, you know, may be difficult primarily because it depends on the timing of, you know, when we sign the sales ACV, how can we convert that?
In many times there is a big client interface and dependency in terms of when they would start the business with us in terms of revenue realization even though they may have given us the contract. So that said, we will continue to show growth quarter on quarter. It may not be a straight line in terms of to get us there. We also know that typically Q4 is always our best quarter. But that also is coming down because with the move to the simplified tax regime that is also that reliance on Q4 also has come down. But subject to all of these what I mentioned, we still believe that on a year on year annual basis we should be able to continue to show the high teens growth.
So do you have the confidence that going into Q3 and Q4 we'll be able to make up for the shortfall in the first few quarters? Because then I am assuming you would be looking at a run rate for the next two quarters put together of at least INR 325 crores. So is that something which sitting today on 31st of October you are able to see for the company?
See, we don't get into specific forward-looking statements, but as I said, looking at our pipeline, looking at some of the investments we have made, we believe that we should continue to be in the mid- to high-teens, which is what, and as you rightly remember, I'm consistently saying this. I'm not maintaining our position so that I continue to hold, and we'll continue to grow in the mid- to high-teens on an annualized basis.
Sure, and coming to the second question now, is the fall in the segment margin for the BPM linked to the depreciation, the increase in depreciation?
Depreciation is allocated to all and so is the investments in sales initiative and leadership growth. No specific, I would say, expenses debited to BPM business.
As I said in the beginning of the call, there was a timing difference in terms of cost recognition of some of the investments which you have made. So it's 2/4 cost which we have sort of caught up in this quarter. So I think there is some bit of impact of that which should now even out in Q3 and then be a bit of consistent run rate going forward.
But is there any specific reason why the depreciation on a YoY basis has gone up by more than 50% from INR 10 crores to INR 15 crores this quarter?
Like I.
Replied to Raghu. Also see there has been significant investments in the.
Bengaluru facility and our right of use assets also has grown which you would have seen. Also there was a significant investment for an infrastructure upgrade for one of our leading clients in TND. So and then of course there are routine CapEx requirements in terms of your replacements to your laptops, desktops, etc. All those things are there. So from that point of view depreciation has come to this run rate and I think it should remain roughly here unless and until there are another capital expenditure requirements which come up in future.
Avinash, the point I'm trying to understand is that whatever increase we are getting in terms of the operating margin or the EBITDA is basically getting nullified by the increase in depreciation minus 2:1. If you look for the last three, four, five quarters that has been the case and that is getting reflected in both the PVT numbers as well as in the share price. And that is what I'm trying to understand because without there being any kind of a delta in the EBITDA growth over the depreciation and interest growth, the PVT doesn't look like it's going anywhere in a hurry. That is what I'm trying to understand. Say not just this year in FY27, would you expect the EBITDA growth to outpace the depreciation growth resulting in a meaningful growth in the PVT?
Or is it that the depreciation will keep growing at a faster rate or equal rate as the EBITDA grows and then we don't see any bottom end growth?
See, this depreciation growth is primarily linked to the investments which we have done in our both Manila and Bengaluru facilities over the last few quarters. As I told you, couple of other facilities are still due for that. And all these things will lead to long term benefits. Like take for example if your office infrastructure is upgraded it gives more confidence to our international clients and leading multinationals to place in higher dependence or higher volumes to us. So from that point of view the benefit will start flowing in.
Probably next few quarters and will be more visible over the next three- to four-year period.
Yes, and to add to what Avinash is saying, you know that can result in higher sales which in turn will become a virtuous cycle. And what I do want to highlight is that even in the past we have been very cautious in making these investments. You know, it's only in the last couple of quarters we have tried to accelerate that. So it's a bit of trying to correct historical.
Issues which you have been carrying, which are due to. And of course that said, we are very, very mindful in terms of what ROI we get on any of these investments. So we'll continue to have a disciplined approach. But there is some bit of catch up also which is happening particularly on our facilities of great institution is concerned. Sure, thanks.
That's all from my side.
Thanks G.
Thank you. The next question is from the line of Shrey Loonker from One-Up Financial Consultants. Please go ahead.
Good morning, sir. Just one question, you know, on the HRO side the international and the domestic mix, the international revenue seems to be flatlining versus our ACV commentary was tilting more towards international. So is it that the international ACVs are a longer lead time in terms of execution and that's why it will take time to reflect or how should we think about?
Yeah, so Shey if I do a quarter on quarter view. Yeah, you know, I mean, from where we were in Q2 to where we are now, you know, we are almost.
You know, almost 16% higher. So in Q2 last year we were INR 71 crores international revenue. We are at INR 82.4.
So that just comes to the fact that we are also improving our international domestic mix in the ACV. Even for what we have done in H1. About 60% of this thing is international and the other is domestic. No, I would not say that there is any different employee, sorry customer behavior in terms of how fast or how slow we can convert. But yes, you are right, you are seeing a dip, a very marginal dip of about INR 1 crore between Q1 and Q2 which is about 1%. So that, as I mentioned in the context of the overall construct, it's very difficult to manage in a quarter because as you know there is an element of one-time component in terms of both the sign-up fees and the customization fees.
So depending on a particular customer, if that changes, you know, and there we really can't control, you know, whether it's a one timer from an international customer or a one timer from a domestic customer. So that will continue to bring us some blips up and down. But you know, as you see we have even, we have grown, you know, about 16% from the same quarter of the last financial year. Got it in the international revenue.
Yeah, got it.
You can help us with the.
So the overall, you know, the overall 12% growth, 11% growth which you have seen is entirely come from international because our domestic revenues coincidentally are flat. You know, it was INR 28.5 crores in Q2 last year and we are INR 28.1 crores. So all the growth, the other way to look at this, to answer your question is that all the growth which we have seen in the EXM revenues has come from the international side.
Got it. And is there a way you can help us understand the outstanding order book as it stands today? On the HRO side, what will be the mix between international and domestic?
As I said, for H1.
We are about 60-40 in terms of Europe. For H1 we have signed international of 60% and domestic is 40%.
Okay, great. That will be helpful. Thanks.
Thank you. The next participant, the next question is from the line of Raghuram N.S. from Eurindia Ventures. Please go ahead.
Yeah, Naozer, this was a follow-on question to your.
Comments on Bazili. Obviously you have got some clients about 18 you were mentioning. But typically what I have seen in.
This segment, it is very, very partner driven.
How are we approaching this business?
Are we approaching it from a direct kind of a customer approach kind of?
Basis or are we also building a?
Partner network which will help us scale.
This business much, much faster?
So Raghu, you're right. I think it's going to be a mix of both. So what we have done is, I mean as we have continued to sort of upgrade the product but we are largely there as far as the product readiness is concerned. So we would be adopting a lot more direct charges because for this business you have to keep costs very, very sharply under control. And the more proportion of direct sales you have, the better it will be for the margins. Because as you may be aware, the pricing pressure in the market for this business is going to be very fine. And the partners do sort of help the top line but they come with a cost in terms of their commissions. So we'll continue to. I mean it will evolve, Raghu.
I mean we are not there in terms of having completely refined the model, but in my mind the direct sales would be a significant portion of how we approach this market. We have also refreshed our website. I don't know whether you've seen it in mid-July, so we had done one refresh last year but with Digitide and the change of that we also thought that it could be further refreshed, so we continue to see the direct channel both for enterprise and for the SME segment. What we have also seen is that very leads come to us directly through our website and particularly on the enterprise side the conversion timelines are significantly faster because here someone specifically has reached out to you knowing about our positioning in the industry and wants a service.
So we will continue to grow the direct channel both for SME and for enterprise sales. And as far as partnerships are concerned, we are open to that also. So we continue to sort of be partnerships also. As you know, that has been a strategy from last financial year. I think mentioned that in earlier calls also. So at the moment, if I recall, I guess we have about 14 sales partners. But the sales partners also are more for the international markets, you know, where our own coverage is more limited. While domestically also we have sort of partners. But we believe that our domestic sales team itself is sort of sufficient to get us that coverage. So yeah, we continue to grow the partners.
In fact, this quarter we signed a very leading name which is UK-based, which is again into largely finance and accounting outsourcing. So we have signed up with them, a partnership to say that if they get any HR outsourcing customers we could support or they could take, or they will take us to their existing customers and let's see how we can offer, and this is for multi-country. So that is a development for this quarter, so yeah, we'll continue to do a mixed model direct plus partnerships.
Okay.
Because on the domestic markets I would imagine partnership model has been the way.
For everybody to grow.
So I just wanted to bring that up.
Sure.
We just keep a balance in the cost of the channel which gives us the acquisition. But you know, I mean our own reach and we continue to sort of draw that fine, fine line.
Understand. Thank you so much.
Thanks.
Thank you. The next question is from the line of Nilesh from Anand Rathi. Please go ahead.
Hello sir.
Could you give us a?
Expected revenue guidance for FY26 and FY27 along with EBITDA margin for both the segment.
Sorry, we couldn't get the question very clearly.
I want to know about the revenue.
Guidance for next year along with EBITDA margin for both the segment.
I think I'll just be repeating myself, but it's a risk of repetition. I've already said that Nilesh that we'll continue to grow revenue in mid- to high-teens. We'll continue to endeavor to add anywhere between 100-150 basis points, you know, to our EBITDA margins even going forward.
Okay, sir, thank you.
Thank you ladies and gentlemen. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you. So I would like to thank all of you for the time that you.
Have given us today.
On the back of our strong results in both Q2 and for H1FY26 across all parameters, supported by investments in key business drivers over the past few years. We believe that we are well poised to capitalize on the market opportunities and continue to deliver superior financial and operational performance. He is also wishing you and your families a happy festive season in advance with this. We would like to close the call and look forward to interacting with you again sometime in the future. Thank you so much and have a nice remainder of the day and a good weekend.
Thank you.
Thank you sir. On behalf of AllDigi Tech Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.
Thank you.