Allied Digital Services Ltd (NSE: ADSL) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Unidentified Speaker
Mayank Vaswani — Investor Relations Contact
Nitin Shah — Chairman and Managing Director
Nehal Shah — Executive Director
Paresh Shah — Global Chief Executive Officer
Ramanan Ramanathan — Global Head Strategy – Growth, Innovation and Partnerships
Gopal Tiwari — Chief Financial Officer
Analysts:
Unidentified Participant
Kunal Bajaj — Analyst
Jyoti Singh — Analyst
Jayshree Bajaj — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Elite Digital Service Limited Earnings Conference call. 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mayank Vaswani from CDR India. Thank you. And over to you Mr. Vaswani.
Mayank Vaswani — Investor Relations Contact
Thank you Yusuf. Good afternoon everyone and thank you for. Joining us on allied Digital Services Limited’s earnings call for the first quarter of FY 2526. We have with us on the call. Today Mr. Nitin Shah, CMB, Mr. Nehal Shah Hold Time Director Mr. Paresh Shah. Global CEO Mr. Ramanand Ramanathan, Global Head. Of Strategy and Mr. Gopal Tiwari, Chief Financial Officer. We will begin with comments from Mr. Nehal Shah who will cover recent developments across the business. Mr. Paresh Shah will then discuss the operational performance and order wins followed by Mr. Gopal Tiwari who will walk us through the financial highlights. Thereafter we will open the call for. The Q and A session. Before we begin, I would like to. Point out that some of the statements made in today’s call may be forward looking in nature and a disclaimer to this effect has been included in the earnings documents that have been shared with all of you earlier. I would now like to hand over. The call to Mr. Nehal Shah for his. Over to you Neil.
Nehal Shah — Executive Director
Thank you Mank. Good afternoon everyone and thank you for joining us today. I hope you have had a chance to review the earning material we shared earlier. We are pleased to report a promising start to FY 2526 with a solid performance in the first quarter as we have reported consolidated revenues of 219 crore registering growth of 22% year on year. Our performance this quarter has been characterized by growth driven by continued execution of our business pipeline. Our India operations have been the primary growth driver with the standalone revenues rising 27% year on year in quarter one FY26 driven by accelerating momentum in both enterprise and government segments.
The momentum we are seeing in the Smart series revenues on the back of the meaningful order wins over the last several quarters underscores our ability to execute at scale. As India advances its digital infrastructure, as technology and governance increasingly intersect, we are proud to contribute towards building smarter, more connected communities across key cities. Our international business is showing increasing signs of recovery in the US Enterprise. Clients are re engaging with clarity and renewed intent signaling a gradual return to confident decision making and a willingness to commit to long term transformation programs. At the same time, conversations with prospective clients across Europe and Middle east point to growing interest and a more consistent contribution to our diversified revenue base and global order pipeline.
Segment wise, our services business grew by 20% year on year while solutions revenue rose by 32%. Segment often serves as a pipeline for our services business which generates recurring revenues and provides long term stability. We recorded order intake of around 185 crore this quarter, further strengthening our order book. This includes new order wins as well as annual renewals of multi year contracts. Over the past few quarters, consistent high quality wins have helped us to build a more diversified portfolio enhancing our long term growth visibility. Paresh Shah, our CEO will share more on this shortly. Importantly, we are seeing an increase in the average ticket size of new wins, an increasing sign of a growing value proposition and the trust our clients place in I am sure all of you have followed our announcement this morning regarding bidding of rupees 420 crore multi year order with a leading pharma company in Europe.
We are already in the condition phase as hiring is underway with Go live scheduled for customers. One of the key challenges we are facing in the growing pressure is the growing pressure from customers to control costs. With budgets under tighter scrutiny and persistent inflammatory pressures, customers are seeking highly competitive pricing aggressive changing vendors to realize cost savings. This trend is not isolated, it reflects a broader industry wide phenomenon and we anticipate this will continue over next three to four quarters. Under normal circumstances we maintain a firm stance on pricing to protect our threshold margin with the willingness to let go business that is below our threshold.
However, the current environment calls for a more strategic and flexible approach. Looking ahead, we remain cautiously optimistic with macroeconomic uncertainties persist. We are encouraged by the early sense of recovery in discretionary spending and continued customer engagement. The strong business momentum from the last three quarters coupled with a healthy deal pipeline and increased win rates position us well to deliver consistent growth in the coming quarters. Having added some sizable orders in recent months and quarters including the large order. Win announced this morning, we give a strong execution momentum. We are confident in our ability to sustain this growth trajectory throughout FY26 and beyond. That’s all from my side. I’ll hand over to Mr. Parish, Global CEO who will walk you through the order book and strategic initiatives in more detail.
Paresh Shah — Global Chief Executive Officer
Thank you Nehal Good afternoon everyone. I want to start by thanking you for joining us today for our Q1 FY26 earning call. This quarter our focus on targeted innovation and global reach has translated into tangible business success. We have seen a healthy flow of wins and renewals underscoring the strong value proposition we offer our clients. Our team has delivered impactful solutions across multiple sectors and I am proud of the work we have done. Here is a look of some of the key wins for this quarter. As already announced, we won a very large deal with the pharmaceutical giant globally of deal worth of rupees 421 crores for five years for doing digital transformation for their end user services.
I will further announce that in India we are deploying an AI based video analytics for a leading real estate developer to enhance human safety on construction sites and executing turnkey networking and surveillance project for a new university campus in Hyderabad. We are also secured a project with a major Indian fashion retailer to implement a face recognition solution for employee productivity tracking across their 800 plus stores. Our work extends to critical infrastructure where we provide CCTV EMC services for a leading power sector brand and a turnkey surveillance and PA system for a major transportation and logistics company.
On the service front, we will be providing managed services, service desk and end user service services to a very large global provider of digital business transformation and consulting. Our cybersecurity expertise is also in high demand as we conduct an IT ISO 27001 audit for a power transmission and renewable generation company and a security operation center assessment for the Old and large commercial bank in Bhutan. Moving to the U.S. we have been awarded a three year contract by leading global investment bank to provide comprehensive workplace support services across North America, Europe and Asia Pacific. A global leader in premium fuel systems, a large E charging company has chosen us for a digital workplace services contract to support their employees and contractors across the us, Latin America, Europe and Asia Pacific.
Finally, we are a strong partner for a newly independent global recognized premium ice cream brand providing 24, 7 global service desk operations as they establish a robust standalone IT infrastructure. These means demonstrate our ability to adopt innovation, innovate and deliver impactful results for our clients on a global scale. We are confident in our position and look forward to the opportunities ahead. I will now hand it over to our CFO Mr. Gopal Tiwari who will provide a detailed overview of our financial performance for this quarter.
Gopal Tiwari — Chief Financial Officer
Thank you thank you Paresh and good afternoon everyone. Let me highlight some of the key financial achievements in Q1 FY26. We are pleased to report continued strong double digit growth in our top line performance revenue for Q1FY26 stood at 219 crore reflecting a 22% year on year increase. This marks the fourth consecutive quarter with revenues exceeding 200 crores, showcasing the underlying momentum of the business. To further illustrate the expanding scale of our operations, our trailing twelve months revenue now stands at approximately 850 crores. This represents a meaningful increase from Rupees 807 crore reported for the full year FY 2025 and indicates that the solid progress we are making towards our goal of achieving 1000 crore in annualized revenue.
As you evaluate our performance, I would like to begin with a disclaimer. The consequential comparison with Q4FY25 is not very meaningful as that quarter included several one time items and adjustments. You may recall that our new auditors conducted a multi year revenue of our financial statements and the resulting adjustments were incorporated into Q4FY25 only. Therefore, Q1FY26 figures are more appropriately compared with Q1 of the previous year allowing for an apple to Apple comparison. In Q1FY26, EBITDA rose by 16% year on year basis to 22 crore. While we continue to see strong visibility in top line growth, margin pressures are expected to persist over next three to four quarters.
As Nehal mentioned earlier, customer pricing pressure remains a key challenge. In response, we are maintaining operational flexibility and agility to ensure our margin performance remains resilient. Our teams are actively working to drive efficiencies and we tend to see margins improve as contracts mature. Once initial activities are complete and processes are fully established. This quarter there was also an impact due to the recognition of deferred tax assets. In contrast, Q1 of the previous year had negligible impact from deferred tax. This has augmented the year on year increase in profit after tax which rose by 44% to 14 crore.
I’m also pleased to inform that board have declared 30% dividend as in the last previous year in 2324 for the year 2425 again this year. With this I conclude here. Thank you so much. I now hand over it over to the moderator to open the forum, the forum for Q and A session. Thank you.
Questions and Answers:
operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue Assembles. First. Question is from the line of Kunal Bajaj from Choice India. Please go ahead. Mr. Kunal, your line is unmuted. Please go ahead with the question.
Kunal Bajaj
Hello, am I audible?
operator
Mr. Bajaj, your line is unmuted. Please unmute yourself and go ahead with the question.
Nehal Shah
Hello.
operator
Hello.
Kunal Bajaj
I’m audible.
operator
Mr. Bajaj, you are not audible. As there is no response from the current questioner we will go to the next question from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead.
Jyoti Singh
Yeah, thank you for the opportunity sir. Wanted to understand like revenue from India grew strongly this quarter. So it is because of any specific sector like government or enterprises and that are driving growth. And is this sustainable into H2 and second with India now contributing 37% of our revenue. And earlier we used to say that our focus basically more on U S and other geographies. So do you foresee this growth further from India only OR is international 3 pillar your growth plan?
Nehal Shah
Thanks Jyoti for the question. I think to answer your first question regarding the growth momentum, I think you’ve seen that we have put out order win just about last quarter regarding the Pune City surveillance project that we won. That project is going fantastic and most of the building that you see this quarter and the next quarter will happen from that project. To tell everyone, we would be inaugurating the newly made command center this Friday with the government of Maharashtra inaugurating it for the police city. Having said, the momentum is very strong for India as well as global.
As you have seen, we typically have two set of different companies working in tandem to make sure that the growth happens everywhere. Here we are seeing in India we are seeing more opportunities due to the smart cities and the government business. The ticket size is larger because of the solutions business. The revenue for some quarters look to be a little higher. And that’s one of the primary reasons. That we are seeing a lot of. Growth happening in the India region. However, the large deal that we are closing globally also is going to push us to the revenue growth in the US as well. We just announced today morning of a very large deal that we won which is a $50 million kind of 420 crore kind of deal which will be bailed out for the period of next five years. So we feel that the momentum for growth in the in the global market is also going to be parallelly very high. I hope I answered your question. I just wanted to say while we are running a company, we have started getting a large ticket business and one or two large ticket in India can overweight what revenue we are getting from us vice versa.
Often we get a good deal last ticket did in US market or international market. So then you will see that. So it’s more bent towards international business than India business. So while running a business, we are not constantly watching whether India is better or international revenue is better. We ordered it. Now we can keep give us idea only to order book side. As communicated earlier in my previous call as well, we typically don’t give an order book number because that generally I’ve seen is confusing. Because our order pipeline is a mix of renewals, the extra farming that we do in the current customers and let new order wins. So giving a number will typically not be justifiable. Hence we always try to give out. The new order bills with the renewals. That we do every quarter. And any large deal that we bring, we have a separate communication given to the stock market which is material in nature. And that’s how we would want to continue.
Jyoti Singh
Okay, good catch. Now 188cr and any possibility or chance of a position or interrupt.
operator
Ms. Jyoti, your voice is breaking.
Jyoti Singh
Yeah, so what I was asking.
operator
It’s still not clear. Ma’, am, your voice is still breaking. Please go ahead. In between its bricks. Please proceed.
Jyoti Singh
So just wanted to understand like currently strong. So are there any plant decorations or for anything?
Nehal Shah
Yeah, so that’s correct, Jyoti. We are looking at possible acquisitions in the cyber security and the cloud space. However, we are shortlisting some of them the as and when it reaches the next stage of finalizing someone, we will be announcing it. So right now the search is on. And that’s one of the reasons that we have kept cash in hand. So that whenever we need to acquire, when the market is down, we are in a strong position to do that kind of acquisition.
Jyoti Singh
Okay, thanks. This last question because there’s a the presentation on the engine side. So are they doing commerce set or are they part of engagement?
Paresh Shah
This is Paresha. I understand your question is around Agent Ki. So it is part of our engagement already. So it’s in production. Our lot of US customers and some Indian customers are already on the Agent Ki platform. We are doing some pilots with some Indian customers and we are actually running our NOC operations using agentic AI. So this is our own indigenous development of agentic AI architecture. And we are moved forward into production this quarter and we see a very strong, you know, result moving forward because as we get into more strength in developing these applications, we will be seeing A good future into this.
Is that answering my your question or you have? Because we had a lot of voice break.
Jyoti Singh
No. Thank you.
operator
Thank you. Next question is from the line of Kunal Bajaj from Choice India. Please go ahead. Hello.
Kunal Bajaj
Am I audible?
operator
Yes, you’re audible now. Please go ahead.
Kunal Bajaj
Yeah, good afternoon. Congratulations. So I had three broad questions. Firstly being the revenue top line target of 1000 crores and quarterly revenue run rate of around 250 crores. So are we sticking to the timeline of 4 to 5 quarters? The second question being EBITDA margins had some pressure. So are we looking at 1011-12% margins level for FY26 and what are the levers we have to improve the margins? And the third question is update on the sales team. In the last Concord the Martin has mentioned about setting up sales team for direct customer acquisition. So what is an update on that? So yeah.
Ramanan Ramanathan
Yeah. Can I, can I answer? Hello. Hello. Yes. Yes. Yeah. So a couple of responses to this. Number one, I think from the point of view of the type of projects that we are targeting, they are more solutions and services oriented and so you’re going to see the EBITDA margin grow in the organization. There is more and more value adding component not only in terms of the services themselves but also in leveraging technology like agentic AI and so on in our solutions. So you’re going to see an improved margin in the quarters ahead. Of course it takes some time for it to reflect but that is sure trajectory from the point of view of the organization.
The second is from the point of. View of direct sales. In fact most of our bins during the last quarter in India have been direct sales in the international market also we are targeting very clearly a new value proposition in terms of direct sales. So they are increasing the sales capability in the US as well as in other parts of the country in other parts of the world. We have already inducted a few sales people during the last quarter and some more will be inducted during this quarter. So again the emphasis there will be to diversify our partnerships. We have very core strong partnerships but our attempt is to diversify these partners and have more stronger partnerships.
We also are looking at SI partnerships which will bring our site capability to 4 in these markets because there is a big opportunity for projects, smart city projects as technology is becoming more and more important in many counties, in many states across the across the country. And finally in terms of our approach to in India there is a very strong focus on enterprise sales in addition to government smart city projects. And that’s been reflected in some of the wins that Pradesh mentioned. So in terms of being on track regarding our forward growth, I think we are doing all the right things to be on course and you should see the effect of it over the next couple of quarters and couple of years.
Nehal Shah
I just answered the question that you had regarding the revenue top line and the quarter on quarter top line. So we are still sticking to the revenue top line growth of thousand crore in the next four to five quarters. Top line 250 crore. We should be ideally be moving towards that in a couple of quarters because generally in the Smart City or the other kind of projects, whenever you typically bill out depend there are a lot of dependencies. So if you ask me, do I. Have the order book, I mean the orders in hand. Yes, but when will they be billed out? Probably it might shift here, there 1/4. So we are very confident. Not next, maybe next to next quarter we should be doing 250crores kind of quarter. Regarding EBITDA margin. Yes, you are right. The EBITDA margins have been a little lower this quarter. We are targeting to be in the steady state of 11 to 12%. Hopefully we should be reaching there in a couple of quarters. Whenever we are in the Smart city implementation phase there is a lot of product billing that happens due to which there could be a little bit jittery in terms of margins because you all are aware that margins during the product bill out is typically lower than the services.
So whenever we are in this implementation phase of any Smart City there is a lot of product billing that happens and that is one of the reasons which could have had some kind of pressure on our margins. But I would request if you would look at our margins from a year on year perspective rather than keeping it very strict to quarter over quarter. And I think regarding the sales team, Ramanam has already updated you that we have hired some people and we are in the process of hiring a very senior resource in the US as well for which probably in the next two or three weeks you will see some kind of announcements coming in as well.
And this would be typically only to onboard direct customers. So we are very confident in the next couple of quarters we will see some direct wins coming in from our international customer as well. Does that answer all your questions or you have any?
Kunal Bajaj
Sure, that helps. Also one more question. So we reporting a strong order wins. So can you provide some color on the breakup in terms of winds and renewables and also the breakup mix in. Terms of solutions and services?
Nehal Shah
Yeah. So what I’ll do is we will. I don’t have the numbers currently at hand. We will send it across on email. If you could share your details with our team, we’ll give you the makeup of the details.
Kunal Bajaj
Sure, that helps. Thank you.
operator
Thank you. Next question is from the line of Jaishree Bajaj from Trinitra Asset Managers. Please go ahead.
Jayshree Bajaj
Hello sir. Thank you for the opportunity. My question is what like how much the Pune Smart City project has Contributed to quarter one of FY26 and when we can expect a significant contribution from Pune Smart City project.
Nehal Shah
So currently if you look at in the current top line for India, I. Think about 15 to 20% would have been coming in from Pune city. And this will keep on happening for the next two quarters as well because as we keep on implementing, we are implementing safety with surveillance, I mean across the city. So it is going to be staggered over three to four quarters so there won’t be a sudden spike or a sudden drop in the next three, four quarters is what we think. So it’s going to be staggered in three or four quarters.
Jayshree Bajaj
Okay. So in three or four quarters it will be fully operationally contributing to the revenue.
Nehal Shah
Yeah, yeah. The solution, the solution portion of the. Project will go live in the next three to four quarters. Services will kick in once we go live with the project which will be build quarter over quarter for next five years.
Jayshree Bajaj
Okay, thank you.
operator
Thank you. Next question is from the line of Santosh, an individual investor. Please go ahead. Yes, please go ahead.
Unidentified Participant
First of all, Congratulations on this 420crore order in last quarter. You have discussed that from us. Is there any updates on that side?
operator
Sorry to interrupt. Mr. Santosh, your voice is not clear. Can you please repeat your question?
Unidentified Participant
Okay. In last quarter you guys have mentioned there is 45 million to 15 million.
Nehal Shah
Yes. Thank you for congratulating us on the result. I think the 50 million order pipeline.
Nehal Shah
That we are talking of is what. We announced today morning which we won. And while we are talking the pipeline is still stronger and we’ll have more orders coming up in the, in the near future.
Unidentified Participant
Okay, thank you.
operator
Thank you. Next question is from the line of Pratik Didia, an individual investor. Please go ahead.
Unidentified Participant
Thank you for the opportunity. I’m audible, right?
operator
Yes, you are audible, sir. Please proceed.
Unidentified Participant
Okay. Yeah. Thank you. So in your opening remarks you mentioned about pricing pressure. So I wanted to check where are you seeing the pricing pressure in terms of if you can point out two regions and also on in which segment is it the solution part or services and if you can quantify in terms of how much pricing pressure are you seeing in terms of percentage points? That would be helpful.
Paresh Shah
Yeah, this is Parisha. So the pricing pressure is due to a lot of uncertainties the businesses see today, as you know, on the global tariff challenges which US is putting. And these uncertainties are making the companies feel a lot of cost pressure and it really affects their forward plans. But this is something we are not looking at a very big one. But it’s a small pricing pressure. They want to make sure that their long term operations become more stable at the same time their profitability remains intact. So a lot of customers in US especially are feeling that pressure.
And when you talk, and these are mainly on the services side because they are all long term operation services, there is a pressure from the solution point of view. There are a lot of. There is a big adoption on AI based solutions and technologies and we see quite a good margin there. And as you know, we have adopted an AI first strategy and we have already put AI operations in the forefront. So this is going to also a strategy to where we want to make sure we can improve our margins by injecting lot of technology over services. As Mr. Ramanan pointed out.
Ramanan Ramanathan
If I can just add to what Parish said, you are going to see because the whole one is the global uncertainty in terms of decision making which is being driven by the economic landscape. But that’s true for everybody. And so that is putting a little pressure as well as delay on certain key decisions which have already been envisaged but not yet being taken. And we see that stabling out over the next couple of quarters. But more importantly also there is an expectation of more AI integrated and identity AI driven managed services and solutions. And we are in a very good position in terms of our forays into this as well as what we have already done.
For example, in the managed services arena. We already have, we are technology driven by a tool called Digital Desk that has been developed internally and that is now being integrated with AI. So we are into and into AI based managed services rather than just managed services. And therefore this is going to help us in driving our margins up. Even though you may have pricing margins from the market, there is an expectation that because of AI you will be able to reduce the cost, but by leveraging technology you can increase your margins even in under these circumstances.
And secondly in the solutions that are being expected in the Indian market solutions, that is a lot of AI component that is going to get introduced and that is going to add to the value. And so you are going to See that pricing pressures will be balanced by margin improvements through the leveraging of technology and through the leveraging of tools that we are already in progress.
Unidentified Participant
Okay, got it. That’s helpful. So just a follow up on this. How do you see the traction of the AI enabled managed services in terms of the recognition coming in to the numbers, in terms of timing 2/4, 3/4 down the line?
Ramanan Ramanathan
Actually agentic AI is, is in its infancy right now. And so from my point of view over the next 3, 4/4 you start seeing the impact not immediately because people are also getting that act together in terms of where to optimally utilize agentic AI for their businesses. In terms of managed services themselves and infrastructure management services. We are already integrating AI because that helps us in preventive AI preventive management rather than, you know, corrective management. And that is, that is being appreciated by most of our customers and we are looking forward to such implementations from our side.
Unidentified Participant
Got it. Okay, thank you. Second question in terms of the smart city. So just wanted to check I think couple of quarters before you had mentioned good healthy bid pipeline. So do we have any nearby order announcement coming up for different smart city project and has any of them given you better margins as compared to the previous wins? Like something like a Pune smart city. So yeah.
Nehal Shah
Pratik, thanks for the question. I think margin wise Pune is going to be a little better than the. Previous launch, the previous one because it’s the same team that we are utilizing for phase two as well. Coming to new order wins. There is a strong pipeline. There are a couple of smart cities, safe cities that you are bidding for which should be, you know, concluded by September end. So the next two months are going to be heavy bidding. Generally whenever the monsoon season is on, this is the time when the government wants to give out orders so that as soon as the monsoon season season is over we can start implementing those projects in the city.
Generally during the monsoon season you do not get the digging permission and stuff. That’s the reason that this time is utilized for shortlisting vendors, getting RFAs done, getting the budgets in place and making sure that, you know, somebody is handed over the project by the end of September so that by order October made or October ends, maybe we can start implementing the project. So there are a good line of good number of projects that are there in the pipeline. We will select the ones that we are keen on in a chronological order and then go ahead and acquire customers.
That’s the idea.
Unidentified Participant
Okay, got it. Okay, that’s helpful. And last question from my end. Any update on the data center side in terms of how that business is getting traction or any new order wins around that.
Nehal Shah
So any smart city wins that we have, we have a data center that. We need to build. Even for the Pune phase two, we will be building up a brand new data center for them wherein it will be a mix of on premises and cloud. So the traction there is pretty high. Even the future cities that we are talking of where we will have the surveillance done, the data centers will be a part of it. So I think the traction there is very, very high. Even from enterprise side, if you ask me, there are customers that are coming up where there is a possibility of doing migration from into cloud or there are projects wherein we need to upgrade just their standalone data center or migrating to a cloud one.
So the traction there is pretty high.
Unidentified Participant
Okay, so essentially you are getting outside of smart city also data center managed services projects, right? Correct.
Nehal Shah
Yes, you’re right. In fact we were doing that before also, but now it has come more into the forefront. Even if you look at us, we are not only focused on smart cities. There was a couple of quarters back, we had also announced the first metro project that we had won for Chennai Metro. So where we are doing surveillance for all the coaches of a metro wherein there are 22 stations involved with about, with about 800 or 900 cameras. I may be a little up and down on the camera count, but these are the kind of projects that are also opening up for us.
So we are not only dependent on smart city, safe city even for that. Matter, for enterprise customers, wherever there are. Large factories, those also open up gates for doing complete physical security. So whether it is a combination of CCTV cameras, access controls, boom barriers and other stuff, those also become direct customer for us. And with the kind of implementation that we have done for CFCP smart cities, those projects are comparatively easier to do manage and sometimes even better at margins.
Ramanan Ramanathan
Yeah, if I can add to this, see there are managed services is extending to the manufacturing floor now and I think Nehal just referred to that. So that’s a growing opportunity because more and more edge technologies and edge AI is being integrated into devices on the manufacturing floor. Whatever be the nature of manufacturing and that these need to be managed as well as these need to become smart or smarter in terms of the management so that we are able to analyze the data that comes in and are able to provide high quality of maintenance. The second is there are a number of GCCs which are coming up in our country and they have already come up and again there There is an opportunity for managed services for many of these large customers who are looking constantly at new ways of reducing their cost or managing their infrastructure as well as data centers better.
And third of course is this smart cities and large SI projects in the government which again give us a scope for not only developing a solution but also managing the infrastructure subsequently as a service area.
Unidentified Participant
Got it. Okay, thank you. And one question on the reported numbers with the change in auditor. Do you see any further revisions upwards downwards going ahead or that exercise has been done and any internal controls being implemented to ensure that such kind of revisions do not happen with the change in auditor or why would it have happened? Any color on that would be helpful.
Gopal Tiwari
Yeah, yeah, I’ll answer that. In fact, that change of auditor was not because of the choice. It was because of the SOB regulators requirement because that earlier auditor was there with us for 10 years. That was the maximum term we can have. So because of that we had to change our auditors and new auditors when they onboarded and they did thorough checking because earlier auditors were there with us for 10 years. So they did the thorough scrutiny and checking of the numbers and they came out certain adjustments and corrections and we call it classifications which were implemented to the extent I think it’s a full extent.
It is done in the last quarter itself. Now hardly anything is going to be there for the. So we are not going to see any such adjustments or any corrections in the near future. So that everything has been taken care of in the last Q4 25.
Unidentified Participant
Got it. And any perspective, I think from perspective we have set of processes, systems, risk committee and all of it being made up on the even at the board level. So there are a lot of changes that we are doing the way we are going to be looking at our revenue and performing certain processes. So those corrections are also done and I think we have been lucky that those kind of corrections have been have happened at the stage that we are currently at so that when we grow in the stage we don’t encounter any further hiccups.
Gopal Tiwari
Yeah, a number of SOPs have been implemented and control measures are being implemented process also. So we are trying to be most compliant organization so far as this industry is concerned.
Unidentified Participant
Okay, got it. All right, thank you. I’ll come back.
operator
Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and one next question is from the line of Bhupendra Mantria, individual investor. Please go ahead. Yes, Mr. Mantrip, please go ahead.
Unidentified Participant
Thanks for accepting My question, I just want one answer. Whether American tariff is going to affect. Our export business or the out of India business?
Paresh Shah
Thank you for the question. Mostly if you see the American tariffs that has been given us, given out is typically for the product exports that have been happening so far. There is no tariff that has been implemented for service exports because it typically becomes a little challenging for them to realize where and actually how the services are happening from which part of the world. So I don’t see that the tariffs are going to be affecting us directly. Yes, there could be some kind of disruptions when some of our customers who are getting affected because of these tariffs could in turn, you know, try to negotiate and reduce their spendings.
About that. If you look at us, most of our revenues that are coming in the global market are also coming because of our presence in the us so we are delivering in the US from US And a very small portion of our revenue goes as an export to the US based company. It’s a completely US based company with physical people there on the ground delivering services to our clients.
Unidentified Participant
Thanks, thanks.
operator
Thank you, thank you. Next follow up question is from the line of Pratik Dedia, an individual investor. Please proceed.
Unidentified Participant
Yeah, thanks for the follow up. So just on what we discussed earlier in terms of the margins, any ballpark guidance on how many, how much margin improvement could you see with everything that you’re looking at in terms of AI, better solution wins and improving margins on the product side? This is more probably two, three years horizon that I’m looking at.
Nehal Shah
Go ahead.
Ramanan Ramanathan
Yeah, sorry, yeah, I think I just want to highlight once again our trajectory in Allied Digital is towards increasing solutions business services, business and technology driven or AI driven solutions and services. Now all of these would be towards increasing margins and therefore from the point of view of trajectory of solution services and the quality of revenue that we’ll be targeting and winning in the quarters ahead, they should result in increase in margins. But at the same time the nature of our business, as you are aware, large SI projects often have requirement of initial delivery of products and equipment and so on and so forth before the services revenue kicks in.
So you will see that odd quarter or that odd particular instance where you’re going to have a boost in revenue but not a corresponding increase in the margin. That’s the nature of our business. But overall, if you look at the absolute numbers in terms of EBITDA growth or on an annual level, the EBITDA margins, you will see an increase in all of them.
Unidentified Participant
Okay, got it. Any quantification possible? So More on annual side, not. Not looking from a quarterly perspective. I understand the business nature and it could be lumpy on the quarter side, but say two, three years down the line we are at around, roughly currently around 12%. Are we looking at around 15, 16% kind of margins?
Ramanan Ramanathan
That could be our goal. That would be a goal. But I don’t want to put a time frame or say an exacting time frame and. But Nehal, you may be wanting to answer that also.
Nehal Shah
Yeah, so three years down the line is a big, is a long period of time. If the way AI is going and is doing work easier for us and if the way we are forecasting that it will help us in bettering our bottom line, if all of that happens, then yeah, we can surely look at a higher number maybe in the tunes of 13, 14 or even 15%. But it is too early for us probably as quarters pass in and the implementation that we have done as a pilot for some of our customers, we see how the realization is.
So there are still lot of pros and cons both for AI getting implemented. We are right now in the auto detection mode. We might also move to auto remediation mode. If all of the things that we have planned and they fit in, then we see that there is a possibility of margins improving to quite a good number. So it’s probably a little too early to say. But yes, the constant endeavor is to make sure that we keep on improving our margins quarter over quarter.
Unidentified Participant
Okay, got it. This is helpful and just on the AI side. So again do you see the implementation of AI having any impact on workforce? So this is more from a larger sector question because a lot of big tech companies are also looking at headcount reduction. So just wanted some color on that.
Paresh Shah
Yeah, yeah. So being a services company that is one of the optimization where you know, workforce reduction, in fact that could happen. But as I mentioned that has a direct also improvement on the margins. At the same time AI brings in a lot of opportunities for new projects, new solutions transformation, which is now pretty much in the center. So what we see is lot of new projects also being added for you know, which use as ease of work optimization for other day to day initiatives for customers, customer relationship management solutions, HR solutions. So we see that also as a big scope, not only on services but also on the solution side.
Unidentified Participant
Got it. Okay, thank you, that’s helpful.
operator
Thank you ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to the management for the closing comments.
Mayank Vaswani
Thank you for your participation and engagement in today’s call. Should you have any other further questions or need additional details, please feel free to reach out to our team of CDR India. Thank you once again for your continued interest and support. We look forward to engaging with you again next quarter. Thanks.
operator
Thank you, sir. Thank you on behalf of Elite Digital Service limited. That concludes this conference. Thank you all for joining us. And you may now disconnect your lines.