Hinduja Global Solutions Ltd (NSE: HGS) Q1 2026 Earnings Call dated Aug. 08, 2025
Corporate Participants:
Unidentified Speaker
Darshan Mankad — Investor Relations
Venkatesh Korla — Global Chief Executive Officer
Vynsley Fernandes — Whole-Time Director
Mahesh Nutalapati — Global Chief Financial Officer
Rajiv Bhargava — Chief Financial Officer – NXTDigital
Analysts:
Unidentified Participant
Presentation:
operator
Good evening ladies and gentlemen. A Warm welcome to Q1FY26 earnings call of Hinduja Global Solutions Limited from the senior management. We have with us today Mr. Venkatesh Karola, Global Chief Executive Officer. Mr. Wensley Fernandez, Whole Time Director SGS and CEO of NXD Digital Media Business Mr. Mahesh Kumar, Global Chief Financial Officer. As a reminder, all participants line will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call please signal an operator by pressing Star then zero on your touchstone phone.
Please note that this conference has been recorded. I now hand over the conference to Mr. Darshan Mankat from AD Factors PR. Thank you. And over to you sir.
Darshan Mankad — Investor Relations
Thank you Pari. Good evening everyone. Welcome to the Hinduja Global Solutions Limited’s earning call for the first quarter ended June 30th, 2025. As a reminder, some of the commentary you hear today may contain forward looking statement. Such statements are based on current expectations and assumptions and are therefore subject to risks and uncertainties. Should a call drop occur, we’ll ensure it is reconnected as soon as possible. Thank you for your patience. I will now hand over the call. To Venkatesh sir for the opening remarks. Over to you sir.
Venkatesh Korla — Global Chief Executive Officer
Thank you. Good afternoon everyone. Hope all of you are doing well. On behalf of the HGS team, I warmly thank you for joining us on today’s earnings call. We truly appreciate your time and continued support. Please note that our earnings call presentation has been uploaded to the stock Exchange and on our website. A quick snapshot of our Q1 performance. We achieved a total income of 1,187.3 crores and an operating revenue of rupees 1,056.2 crores. In the quarter, EBITDA stood at rupees 159.7 crores with strong margins of 13.5%. An increase of 169 basis points year over year.
While the number shows a mixed performance, it presents steady progress for us. We believe it is setting a solid foundation for sustainable growth in the year. Our performance this quarter was shaped by ongoing macroeconomic volatility and extended client sales cycles alongside sector seasonality and customer ramp ups. We have made a conscious decision to prioritize margin expansion over top line growth given the changes in the market and this focus is evident in our improved ebitda margins in Q1. The improvement was boosted by the changing mix in revenue led by digital services and increasing deployment of internally developed IP in the Agentic AI platform called HGS AgentX, we have a robust sales pipeline, particularly in digital services, underpinning our optimism for future growth.
The current order pipeline in our Americas region is upwards of 55%. In the digital services segment, we have over 1,000 multinational customers in our BPM and HRO businesses. We are starting to cross sell to and expand our technology services or digital services into these customers. In addition, we have added quite a few new logos for digital services in the last two quarters and these digital services customers typically start small and grow into larger accounts. From a revenue footprint standpoint, this shift will change the quality of the revenue profile leading to higher margin growth. We expect to see these impacts in the fourth quarter of this year.
We’re planning to take a portion of this enhanced profitability and invest in aggressively reskilling our people and developing solutions that will drive future revenues in the digital services space as we transform our organization. I’ll be on slide 7 now orchestrating the future of AGS the world around us, as you all know, is further evolving into agentic AI based solutions where we are focused on systems of execution. What we see is that there’s going to be a shift from traditional BPO largely centered on human intensive services to AI enabled BPM services which are much more focused on cost savings.
Today it’s about reinventing our systems of execution where AI acts not just as a bolt on technology but as a transformative bridge seamlessly embedded within the operations working hand in hand with humans. Unlike incremental technology adoption, a robust AI strategy incorporates AI agents the scale effectively and align closely with the client cultures and business goals. This augmented approach enhances efficiency, quality and agility, driving innovation beyond mere automation. The AI enabled BPA model is redefining outsourcing, turning it into a strategic partnership that leverages intelligent augmentation rather than just replacing human effort. What this means from an implication to the buyers perspective what we are noticing is that the buyers are starting to seek providers with a solid AI offering on their hand.
The buyers are looking for service providers who are focused on outcome driven customer experience. We call it intelligence Reacts. It is focused on growth, retention and digital enablement. We want service providers who have vertical software solutions or expertise, have a credible partnership ecosystem and a clear roadmap of how they’re going to bring automation to help their businesses. They are starting on the data and AI readiness location, focused on journey redesign, managing risk compliance and transformation of governance. They’re also looking for companies who can help easily implement AI assistance to help them deliver frictionless experiences both to their customers and their employees.
So given this moving to slide 9 now our new ethos have changed. We as a company are reinventing ourselves to be an intelligent experiences company. Our vision is to be the most trusted partner for clients driving global business transformation to create intelligent experiences. The HGS Team leadership presented a five year business transformation plan to the Board recently. It’s been approved and it largely focuses on the future direction of the company and the approach to achieving our mission. At hgs. Our ambition is to co create frictionless intelligent experiences where we will help businesses reinvent themselves for the AI centered future by reimagining their processes and operations through intelligent experience rich workflows backed by deep understanding of client processes, optimizing workflows and embracing complexity.
Our reimagined customer journeys empower clients to confidentially and confidently achieve productivity gains while minimizing risks in their AI investments. Today’s buyers are looking for partners with clear AI roadmaps and credible ecosystem partnerships. Our strategy focuses on these outcome driven and empathetic intelligent experiences with solutions tailored to specific industry verticals rather than generic outsourcing models. In line with this, we aspire to be the most trusted partner for our clients driving business transformation. Basically, we’ll partner with businesses to co create frictionless experiences that position our clients and us for long term success in an AI centric world.
As part of this business plan that has been presented to the Board and approved, the Road ahead has six pillars of focus. The tenants of our business transformation plan are in these areas an infused strategic focus an intensified strategic focus to change the revenue mix towards more digital and applied AI enabled operations. This strategic focus will also drive higher margins through enhanced automation, improved efficiency and value added services positioning us for sustainable profitability. Our sector focus will be sharpened to target banking, financial services and insurance vertical retail and consumer products in goods vertical healthcare vertical and as we have a significant presence in public sector in uk, we’ll continue to maintain that with a special emphasis on mid market enterprises and this targeted approach leverages our expertise with growth potential and client impact are the strongest.
We do have a significant presence already in BFSI retail and consumer products and boots and UK public sector. We have historically had presence in healthcare and we will continue to grow that. We are evolving our sales model into a consultative client centric sales approach. This will enable a diversified nonlinear growth engine fostering deeper relationships and unlocking new revenue streams beyond traditional service contracts. We are investing in vertical processes or service solutions in key priorities areas by building tailored task offerings. We can deliver scalable industry specific solutions that drive client digital transformation and differentiators in the marketplace primarily centered around AI agents.
We remain committed to strategic acquisitions and partnerships that enhance our capabilities in AI domain expertise and sectoral expertise and new market entry, accelerating a growth trajectory and competitive position. Our people are our greatest asset. We are aggressively reskilling talent to build deep AI proficiency where we believe the domain knowledge, vertical expertise and knowledge of processes becomes very important as we mix it with technology ensuring we stay ahead in the rapidly evolving industry landscape. These initiatives combined position combined position us strongly for sustainable growth and long term value creation. Now as part of this as I mentioned before, we have created an agentic AI enterprise platform called Agentex.
We have invested in this over the last few years and we are starting to see the results out of it. As you are all aware, the traditional voice and non voice services are undergoing a change with advancements in technology and AI in the market. We anticipate revenues from this segment to reduce gradually with higher contribution from digital and applied AI enabled operations. This shift will enable us to optimize our workforce and improve margins through greater efficiency and automation. One of the key investments we have made is this Agentex platform. It’s a great example of how we are recasting our operational model by leveraging technology and human expertise.
The platform includes around 12 plus modules such as knowledge assistant, voice biometrics, speech, AI, AI interactive chat etc that can positively impact outcomes in three areas especially in consumer experience, employee experience and business process automation. All through the use of AI technology, Agentix is doing very well. Several of our key clients are using IT and are happy with it. Currently we have deployed it across 20 BPM clients across North America covering approximately 5,000 active users. We have seen a 12% growth quarter on quarter in number of active users of AgentX. We are in the process of deploying it globally across the UK and Philippines markets or Asia PAC markets as well.
On the average, Agentex users see around 40% training optimization, 25% productivity gains and 30% reduced costs and an 89% reduction in employee attrition which as we all know is one of the largest factors in managing profitability in the operating model that we are at, while businesses see at least 8% CSAT or NPS improvement and an 87% cross selling gains in lifetime value for their consumers. So this is pretty exciting as we look to the future and we are going to see significant ROI and benefits both for our customers and for our own business. I’ll now hand over to Vince to Take us through the highlights of the media business.
Thank you.
Vynsley Fernandes — Whole-Time Director
Thank you Venk. And good afternoon everyone and thank you for joining us on this Friday afternoon. Shilpa, others, I’m assuming you all can hear my voice clearly before I proceed.
operator
Yes sir, you’re audible.
Vynsley Fernandes — Whole-Time Director
Okay, great. Thank you so much. I’m on slide 14 which is the environment and industry and like always I thought I’d provide some context to one of the key pillars of the media business of the Hinduja Group, which is our broadband business. As I’ve shared with you all in the last several quarters, our company and our organization is focusing more and more on the broadband which is clearly a sunrise sector for the country and where there’s tremendous growth opportunities. If you recall in the last investor call it mentioned how the subscriber base, which is today about 40 million in India is expected to more than double in the next three to five years.
And that is reflected in fact on the graphic on the left hand side on slide 14 where the Wired and wireless home Internet market is expected to touch 16.5 billion in just five years. So that is really something else. And we believe that we are right at the cusp of that growth trajectory across India. And as I walk you through it, you will get a better sense. And similarly the other story that is doing the rounds and is something again that is very close to our heart at the Hinduja Group. And of course the media business is the six lakh villages to get high speed fiber based broadband in the next three years.
If you’ll recall way back in 2015, it was nearly a decade, exactly a decade ago. It was the vision of the Hinduja Group that India needs to provide. We need to provide connectivity and need to provide digital television to the underconnected and underserved markets. And that’s why we launched our Head End in the sky or Hits platform in 2015, which today covers over 4,500 pin codes. And you know, our services available in places like the Andaman and Nicobar Islands, far east corners of Arunachal Pradesh, all the way up north to the fringes of the country as well.
And that’s been something which we hope to duplicate and replicate in our broadband business over the next couple of years going to the next slide. This reflects exactly the philosophy that I was sharing with you. And this is again not just AGS’s philosophy, but this is the entire Hinduja Group. We look at opportunities literally across the country and the state of Uttar Pradesh is one such state that lends itself and that has the passion to be able to take the vision further. And the media business is looking at the state of Uttar Pradesh not just for digital television, but more to look at providing connectivity to connect the underserved and unconnected territories or regions or districts in the state.
We hope to have a plan in place shortly and we will be rolling out a proof of concept just to share a bit with you in terms of what is it that we’re doing so that you’ll get a better sense. Our focus is not just on providing wired broadband. It’s not just providing a wire to people zoom and they get access to connectivity. The idea is how do we leverage that connectivity to actually take forward the vision of the country in being digitally inclusive, in delivering the digital inclusion mission of the government of India. And we plan to layer on top of that services like OTT is already available, as you know from us.
We have just launched our IPTV service which is Internet protocol television. To simplify it, it is nothing but television using a simple broadband connection. You have the entire experience, the entire user experience like you had a normal television set or a normal cable television service, but through the Internet service. And on top of that we’re looking to layer high quality education or edutech and of course other services like fintech and access to E governance as well. We are definitely looking to roll out a proof of concept shortly and we will definitely look to give you a better update in the next quarter.
Investor call as well. Moving on to slide 16. This is a reflection of what we’ve done in this quarter. I want to start with the right hand side, lower quadrant because this is again something that I mentioned that we were working on in the last investor call. We are really pleased to let you know that we’ve hired key personnel across a multitude of functions in broadband, right from business development and regional sales to of course developing the product, business intelligence and analytics. And all of that has really helped us build an organization not just for today but for the future.
Because with the government and everyone, with the industry recognizing broadband as a sunrise sector, emerging technologies, we want to be right at the at the helm of that. And our focus has been building a performance driven team right across the country. In terms of our growth, which is the upper left quadrant on slide 16, we have been focusing on growing our base in key markets wherever there are better arpus, as I mentioned. And as you know our philosophy, we look to connect markets that are in tier 2 and tier 3 and rural markets because those are aspirational markets which have lower entry barriers, have much higher aspirations towards quality of service and those are the markets that we’ve been looking at.
Equally important, we’ve signed on some very prestigious logos at the enterprise business that we have Celeretics just over a year ago. Well, a little more than that. I shared with the investor call that Celeritics was going to be a flagship brand or division of our business. We’re very happy that Quarter one has seen a rapid trajectory where Celeritics has delivered over 1000 links, a thousand connectivity points and some of these are in the most difficult, challenging geographical terrains. I’m talking about the Andaman and Nicobar Islands, I’m talking about Sikkim and Celerityx has done it without and has been recognized by those partners, by those customers for the quality of service and we’re looking to accelerate that going forward.
In terms of process improvements and controls, we have put in a stronger project team as it is to support the Solaritics growth. As you can see. And from a profitability perspective, we are continuing to focus on cost reductions because we believe any focus on cost reductions will help us be able to be more competitive in future. We may not need it today in broadband, but we definitely will need it in the future and we will then use it as a leverage tool to fight off competition. When pricing becomes a parameter for competition. We also looking to continue to focus on profitable businesses.
So that is something that we’ve never shied away from of either upgrading partners that are low ARPU as an average revenue per user or unprofitable. And we’ve looked to ensure that we build value and that is reflected in fact on the next slide, if you go to slide 17, we maintained a very strong ARPU of 177 rupees in the broadband business, using the quality of service as a differentiator. And that’s exactly what I was saying. Tier 2 and Tier 3 markets and rural markets are very happy to pay a better price as long as the quality of service is assured.
And that is something that we’ve continued to leverage. Digital Television, which has been our flagship business and will continue to remain. A. Strong product in our portfolio, is facing challenge and we’re seeing some level of erosion. And that is mainly because, as you know, a lot of people are moving towards online services and digital services. But the good thing is next Digital has maintained its ARPUs. In fact it’s taken it up from 117 rupees last year at this time to 123. And that’s a direct result of the innovative packaging and pricing that we’ve been working on. Very interestingly, the digital television business, we’ve been able to augment it one step as customers look to move to pure play broadband and move to online services, we aren’t actually losing a digital television customer, we’re gaining an IPTV customer.
So the customer experiences the same number of television channels. In fact we have about 600 plus television channels on IPTV. So we’re converting customers that would normally cut the cord. We’re converting them into an online broadband customer and giving them the same television experience through IPTV that they would have had on our hits or cable TV service. So that is something that we continue to push and we will see traction happening in this quarter and going forward. Slide 18 is something that I thought is very relevant to sharing with you in terms of the contribution of building a value sustainable business which is not just value creation but also value accretion segments.
So if you look at the contribution of our organic business which drives the value creation over the last four quarters, we’ve been able to or if you look at the previous year, literally we’ve been able to take it up to 32% contribution in this quarter itself. And that becomes important as we look to build value for the organization and value for our shareholders. This becomes a very, very critical aspect. So this is something that we continue to do and I thought is important. At the same time, Celeritics, which when we just launched probably in the last quarter of FY24 contributed about 1% to the revenues.
Celeritics on its own contributes about 5% today and that we’re looking to accelerate that at an exponential growth level. So we hope by the end of this fiscal the contribution will be well into double digit as we look to grow the business in celeritics as well. Overall, one critical thing as the Hinduja Group philosophy, we continue to build strong partnership models. I think that is a very important thing. We don’t look at cutting costs, we don’t look at cutting corners. I apologize. We look at cutting costs. But we also look at profitability through partnerships. Our partners have been with us for decades and the idea is to have a sustainable model where our partners work with us to grow the broadband segment like we grew the digital television segment over the last couple of decades.
We now are looking forward to growing broadband and being a serious player, continuing to be a serious player in the market in the top five players across the country. With that, thank you very much for listening patiently. I’m going to hand over to Mahesh, my senior colleague for the financial update. Mahesh, over to you please.
Mahesh Nutalapati — Global Chief Financial Officer
Thanks Vince. Hope I’m loud and clear.
Vynsley Fernandes — Whole-Time Director
Loud and clear Mahesh.
Mahesh Nutalapati — Global Chief Financial Officer
Thank you. Good afternoon everyone. Hope all of you are doing great. Ram. Thanks to all of you for taking time and joining us today. Let me walk you through the financial highlights for the quarter and I’m moving on to slide number 20. As mentioned by Venk earlier, revenue growth was motivated by seasonal softness in Q verticals and customer ramp down. Consequently, on a sequential basis revenue has dropped to 1056 crores in the current quarter from 1161 crores as of Q4FY25 and also as we have outlined in our segment analysis of of our publication page, there is drop in both of our BPM and media businesses sequentially and on year on year basis.
However, our underlying fundamentals remain strong and we continue to see healthy traction across our service line offerings. In the current quarter depreciation expenses are at 128 crores as compared to 121 crores in EU4FY25 on year on year basis depreciation has dropped from 131.2 crores to 128.3 crores. PBT for the quarter is at minus 26.5 crores as compared to a positive 103.5 crores in Q4FY25 and on a year on year basis it was minus 44.2 crores in Q1FY25 which again aligns to what we have been indicated earlier which is the impact of the cyclicity and the customer ramp downs which is showing up on the trend as well and moving on back from continuing operations to that -46.3 crores as compared to -1.74 in Q4.25 and negative 44.2 crores in FY25.
So let me just correct that platform. Continuing operations for the current quarter is at 46.3 crores and taxes for the quarter are at INR 19.9 crores as against 103.5 crores in Q4FY25 Q4 taxes were higher on account of increase in deferred taxes which were taken on prudent basis and this was explained in the last quarter call and on year on year basis we are fairly consistent. So during the quarter we have profits from discontinued operations of around INR 57.5 crores net of taxes and as mentioned in our notes to publication page through transfer and Assignment Agreement Group has assigned a portion of its third party liability with three course for a consideration of USD 10 million which is approximately 85.73 crores and recognized a gain of USD 7.93 million which is approximately 67.7 crores.
This assigned liability relates to a period prior to the sale of healthcare services business which was consummated on January 5th, 2022 and it is being clearly identifiable to the businesses being discontinued and in line with that it’s disclosed as discontinued operations including net of taxes taking both discontinued and continuing operations. Total VAT for the quarter is at 11.2 crores positive as against 1.7 crore for the prior quarter. Just as a point of highlight, operating margins EBITDA though on a sequential basis are moderated. However we have expansion of 169 basis points on year on year basis as mentioned by VANGTA as well which reflects our continued focus on driving operational efficiencies.
Moving on to balance sheet overview which is on slide 21 we are maintaining a strong balance sheet with a total net worth of around INR 7980 crores and with a debt of around 1186 crores which again reflects healthy gearing ratios. Net cash and treasury surplus is around 5140 crores. And moving on to slide number 22 which talks about revenue composition. The chart on the left side shows the revenue split by source which says that which shows that CX operations constitutes of 54% of our total revenue, whereas the digital and media services accounts for 46%. If you look at the chart on the right side which gives the split by vertical which shows that tech, media and telecom continues to be our largest vertical accounting for around 53% of total revenue with BFSI and Consumer Goods and retail accounting for 19% each.
Public sector revenue remains stable primarily from UK and Canada which are mainly consistent with prior quarters as well. Moving on to the next slide, slide number 23 which shows the revenue split by origination and revenue split by delivery locations. The chart on the left side talks about revenue split by origination. For the quarter India accounted for around 38% of the total revenue following the US with 31%, UK at 11% and between Canada, Australia and others adding up to 20%. And the chart on the right side gives revenue Split by delivery location, 43% of the total delivery was accounted from India.
Between US and Canada it’s at 30%, Philippines accounting for 13% while UK and others accounts for 14%. And as mentioned earlier with increased focus on offshoring delivery share of India and Philippines have increased by approximately 5% as we look at compared to prior quarters and will be continuing the same momentum and moving on to slide number 24. The left side bar graph shows the client concentration and which shows a well diversified portfolio of our customer base to minimize any single customer risk. So top customer accounts are nearly 8% of the total revenue and whereas the top 5 customer accounts were 22% with top 10 customers representing around 30% DSO for Q1FY26 is at 69 days goes by 9 days on a year on year basis and I think this was more of a timing issue as of date.
I think there are no past few collections from our customers and we have collected them. Looking ahead, we remain confident in our growth strategy and are actively investing in Digital Transformations Automations and client centric innovation to drive long term value as mentioned by WE Campaigns earlier in their presentations. With that I am going to hand it over back to the moderator.
Questions and Answers:
operator
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 Touchstone telephone. If you wish to remove yourself 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. The first question is from the line of Nakul Dev from ND Investments. Please go ahead.
Unidentified Participant
Yeah, hi. Am I audible?
operator
Yes sir.
Unidentified Participant
Yeah. Okay. Thank you for the opportunity. I just have a couple of questions. Firstly, given the increasing importance of AI across your offerings, how do you evaluate Build versus Partner versus Acquire when expanding your AI capabilities? The second question is Media segment. I had a look and I think it was a loss of around 38.8 crore in Q1 versus profit of 30.5 in the previous quarter. What caused this drop and what is the outlook for this vertical? And lastly the BPM segment also saw witnessed a drop off in the revenue and ebitda. Was this one by client time downs, macro softness or seasonality? Because the Q1 performance and macro environment.
When you look at that, what is your outlook for the FY26 revenue growth and margins? These are my questions.
Venkatesh Korla
Okay, I’ll take the first question. You. You have three questions in there so we’ll take one by one. I’ll take the first question related to the partnership versus Build Build versus Buy for the AI related investments. So we’re going to be very strategic about it. So there are core components of AI which will orchestrate Actual experience itself where we will build our own intellectual property. And we have been building that. In addition, what we’re doing is we’re building the orchestration capability which brings orchestration across multiple platforms that could be either built internally or partnered with externally.
There will be non core capabilities in the AI which is more around for example voice biometrics where we would partner with external organizations and then bring them together. That is the basic philosophy we are following around this area. Because the speed to market is important. That’s why we are taking a strategic approach in a very careful view of what can be built, where it gives us a competitive advantage in the long run versus things that can add an immediate advantage where we will partner with an ecosystem player. The second one related to the BPM was around changes in revenue profile between Q4 and Q1.
It was because of number one we have. We typically see Q1, there is a change in the revenue profile and it builds up to the end of the financial year. If you compare our numbers to Q1 of FY25 to the current quarter Q1 of FY26, it’s almost similar. Yes, there has been a slight drop and that is due to. There are few customers who have had a ramp down because they were trying to. They had too much vendor concentration on their end and they were trying to distribute the business to other vendors and they wanted to improve their vendor mix to mitigate risk on their own end.
We have not lost those customers, we have in fact gained business in the technology services space with those customers and we’ll continue to see that and that you start seeing that impact in the improved margin profile itself. Vince, I’ll hand it off to you, Rajiv. Actually, Rajiv, to answer the question related to the media business.
Vynsley Fernandes
Yeah. Rajiv, you want to talk about the financials first before I talk about the outlook?
Rajiv Bhargava
Sure, sure.
Vynsley Fernandes
Yeah..
Rajiv Bhargava
Thank you. Yeah. So the revenues, the drop which you see is mainly on account of two, three things. See what has happened. We have the marketing deals with the broadcasters. So deals were 30 crore, could not be closed in Q1. So the work has been completed. However, because of the lack of confirmation from the broadcaster side, we could not build them. So that’s where the biggest piece of this drop in the revenue is 30 crore. And then in Q4 we had excess provision of around 15 crore. So because of which the revenues drop higher in Q4. So that’s where these are the two big ones.
And there is a slight drop in the revenue around 7,8 crore rupees in our Cable sector as Vince mentioned that we are facing headwinds there and there is a challenging environment. So these were basically the two key factors in the revenue and in terms of cost. The broadcaster cost. Typically in the month of April and May, by virtue of the TRA regulations the broadcasters increase the cost. However there is a lag when we increase the price on the ground. So the price increase is likely to happen in September. We have already made the plans so the it will get compensated when we increase the price.
So that’s a sort of a timing issue. And then there is a little bit of 7,7 crore worth of expenses which are like inflation, like driven which are like HR cost and other administrative expenses. So that’s how this number is looking both EBITDA and revenue down versus last quarter. And in terms of like Vince will narrate it but however I can say like we are focusing on the organic growth, the enterprise business where there are higher margins. So definitely the outlook looks bright for us and typically it happens in Q1 and therefore we expect a better performance in the coming quarter.
Vince?
Vynsley Fernandes
Yes, sure. So Nakul, I think your question was spot on. So I’ll just add a bit to what Rajiv Bhargava mentioned. The marketing deals with the broadcasters, these are essentially seasonal. So the marketing work has been carried out but the billing could not be done because the confirmation. So it’s seasonal and it gets addressed in the upcoming quarters. And this is something we’ve even seen in last fiscal, if you look at it last fiscal it started from 307 crores and kind of went up to 357 crores in Q4. I’m talking about revenue from operations. Similarly you’ll see that kind of similar trend happening in this fiscal as well.
Coming to the media business which has taken a drop, that is the fundamental issue which is an 8 crore drop in revenues. That is something that is a tailwind, sorry is a headwind that we are facing on the digital television side of the business. As Rajiv pointed out, content costs have gone up but the revenue has been exactly what it was last year. So therefore our costs are, therefore our costs have increased. That correction again will be adjusted as Rajiv pointed out as we go in for the price hike. But from your relevant perspective of what is the outlook, the outlook is specifically focused on broadband we believe and we’re completely.
Rather than putting up our hands and saying things are difficult on the media side. Absolutely things are difficult on the DTV side. But broadband is the sunrise sector and the losses of DTV that we may face as a result of headwinds is where we’re looking to compensate it from the broadband side of the business. So much so you may have noticed that there is a slight change in fact increase in manpower expenses in the business. That manpower expenses is directly linked to hiring an entire universe of people across the broadband business as we look to expand.
Celeritics, as I mentioned in my presentation, is a great example. They’ve delivered a thousand links in just 45 days. We’re looking to accelerate that as well. And obviously we need a strong back end to support a strong sales front end. So the strong sales front end which started firing the engine in the first quarter, you’ll start to see major traction happening in these quarters. And any challenges that we face from the DTV business will get compensated significantly by the broadband business because we’re looking to penetrate markets where entry barriers are much lower, tier 2, tier 3 and tier 4 markets and the corporate segment where deals have much better arpus.
I hope that was we were able to answer you Nakul on that question.
Unidentified Participant
Yeah, I’ve got answers for the question that I’ve asked.
Venkatesh Korla
Thank you. If there’s anything else.
Vynsley Fernandes
Sure. Thank you Nakul.
operator
Thank you. The next question is from the line of Herschel Patel, an individual investor. Please go ahead.
Unidentified Participant
Yeah, hi. thanks for the opportunity. So I have two questions. Generally since the company operates in digital ops and derives the 60 percentage pipeline from the Americas, how are the pricing trend and deal velocity going to evolve in that region?
Venkatesh Korla
So I can take the question. So the area of digital operations, especially with the advent of agent AI is evolving. The market is still not, at least the consumers are still not settled yet where we can give a clear guidance of how pricing is going to evolve. At this point we are seeing more and more transaction based pricing or outcome based pricing wherein you develop software, you combine it with both software, process management and talent and charge as a single price per transaction or outcome that you deliver to the customer. The demand for it is starting to grow, the expectations are there, but not all enterprises have yet figured out.
So what we are seeing is the initial project sizes or smaller because mostly they’re being in pilot space right now. But as we finish the pilots and we’re showing success for the customers, we’re starting to see higher demand and they turn into larger deals. In general, the revenue footprint of an automation based solution is typically smaller with a much higher margin compared to a completely manpower driven solution which is higher revenue footprint with a lower margin profile. I hope I answered your Question.
Unidentified Participant
Yeah. And what is the share of a. Recent BS can be attributed to the. Agent X or the AI LED verticals offering? Are there any client testimon testimonials or case studies? Could you share that please?
Venkatesh Korla
So we have had multiple case studies and they’re probably visible on our website. I would refer you to go look at the case study. But as a high level across multiple customers, we have been able to use AgentX as a way to for example manage fraud detection and anomaly detection for anti money laundering for a banking customer. We’ve been able to use AgentX as a base underlying agent AI platform to essentially read, read out disclosures and meet compliance needs of a major credit card organization across over 1500 agents. So when the agent and the consumer have a conversation they cross sell a new service or a new product.
You need to provide a lot of financial disclosures. And we’ve been able to use the agent AI to listen into the conversation, figure out what disclosures have to be made and deliver those disclosures to the consumer. We’ve been able to use AgentX to support a set of agents across a major telecom organization where the cross selling was suggested to the human agent and the next best action to take so that it helped them deliver a higher quality of cross selling. These are all case studies that will be available on our website. You should be able to take a look at it.
But these are at a high level. These are some examples.
Unidentified Participant
Sure. Thank you. I’ll get back in the queue. Thank you.
Venkatesh Korla
Yeah.
operator
Thank you. The next question is from the line of Prisha Shah, an individual investor, please. Sorry, please go ahead.
Venkatesh Korla
Maybe you want to circle back to Preesha, but we’ve lost her problem.
operator
Can we move to the next question? Before we take the next question, we would like to remind participants, you may press Star and one to ask a question. The next question is from the line of Isaac, an individual investor. Please go ahead.
Unidentified Participant
Hi sir, I had a few questions in the financials. So the EBITDA includes the interest income, right? From our Treasury. Hello. Yes, I say hello.
Vynsley Fernandes
Yeah, yeah, we can hear you. Mahesh, would you like to.
Unidentified Participant
I’ll just repeat myself. The EBITDA includes the interest income from treasury, right?
Mahesh Nutalapati
It includes the other income portion. That’s right.
Unidentified Participant
So what are the operating profit then? And can you give the segment wise operating margins?
Mahesh Nutalapati
So it is published in the publication page. If you can go to the publication page. We have given segment wise results showing the breakup of.
Unidentified Participant
Segment wise result includes the interest income actually. And that’s why It’s, I mean I’m not able to find out like what are the operating margins segment wise actually and what is the operating profit actually.
Mahesh Nutalapati
Understood. So we can share the information to you or an email. If you can just email us then we will provide those information that you’re looking at.
Unidentified Participant
Okay. And regarding the cash that treasury we have that is with the promoters, like the treasury the whole cash balance is lying with the promoters. So do you think that this is the right corporate governance practice that we are following? That we are having the cash balance with the promoters?
Mahesh Nutalapati
Okay, let me first correct the factual information. The cash balances are not lying with promoters.
Unidentified Participant
Okay.
Mahesh Nutalapati
This cash balance are invested in various companies and these have been done after careful study of the risk and everything. And there is no risk from a capital perspective neither from an interest rate perspective. All the interest rates that are being charged on the deposits with the various companies are at arm’s length basis which generates around 6 to 600% in the current interest scenarios. And these are all deployed which is a healthy return. And from a principal perspective these are callable investments. So any point of time with our acquisition strategies in place, whenever we want to call these monies are callable, no risk from whatsoever.
And not with promoters.
Unidentified Participant
Sure, sir. So in the annual report it’s also mentioned that Indifference Finance and Hinduja Capital you have categorized a non promoter. So is that right? They both are non promoters. They are not related to single job.
Mahesh Nutalapati
No. See there are two things to look at it. One is whether they’re an associated company. The second whether they are related parties. These are not related parties and as I mentioned they are associated companies but without any risk. This risk assessment has been completely done and we have been having these deposits with these companies from almost three years now and not even single quarter we have any issues on the interest payments, receipt of interest payments and whenever there was needs of funds they were called and we have received the funds. So no risk at all.
Unidentified Participant
I asked this question because like we have a cash balance of 5000 crores but our market cap is 2500 crores only. So the street is like, like not liking something about the company. You know, I mean the funds lying or invested in the promoter entities is usually taken negative by the Street. And that’s my worry point. Sir.
Mahesh Nutalapati
We understand the point that you’re bringing in. As mentioned earlier by Venk, we are actively pursuing acquisitions and partnerships to expand the capabilities. So we are in the market, we are sourcing and active partnerships and acquisitions potential. So as and when a relevant Opportunity comes in, we will definitely be investing it. Till the time not to keep the funds idle, we have deployed them.
Unidentified Participant
Please take into consideration the things because I mean the cash balance is 5000 crores and the market cap is 2500 crores. The investors have really been let down. So I just, just wanted to bring this point. Thank you, thank you.
operator
Thank you. The next question is from the line of Neha Verma, an individual investor. Please go ahead.
Unidentified Participant
Hello. Yeah, thank you for the opportunity. Sir, I had two questions. One was on the broadband ARPU which is currently at 177rupees, which is flat on a quarter on quarter basis. So what are your expectations for ARPU trends and subscriber growth in especially in tier 2 and tier 3 cities?
Vynsley Fernandes
Okay Neha, thank you. Good connecting with you again Neha. You’re absolutely right. In terms of ARPU, if you recall a couple of years ago our ARPUs were skating closer to 140. What we did in the last year was churn out the lower ARPU customers and build what is called what we term as a launch ARPU. For us, 170 plus is a very strong ARPU. When you look at the cost of operation, the cost of bandwidth, etc. What will drive the ARPUs upwards, Neha, is the layer that you build on top of it. And what do I mean by that? I mean by OTT IPTV.
So the idea is essentially you’re saying oh pay 175 for your broadband, no worries. But where you have to really pay for is your OTT services, your iptv. Pretty much it’s a toll model. If an edutech service wants to use your platform and your closed user group, you will earn a margin from that. So I think the growth you’ll see and the other thing is the markets that we’ve looked at have been sustainable. I’m sure you would have experienced living in a city like Mumbai or Delhi or Ahmedabad anywhere because of the number of players there is a price war and ARPUs tend to take a dent or a beating.
And I’m sure you must be getting if so and so is offering you 100, we are ready to do it for 99 rupees. Right. While as in our case we focused on stabilizing the ARPUs in tier 2 and 3 markets where essentially the quality of service becomes a driver and all the other layers as we load on top will add that sweet spot. So that is the strategy. Does that help give you a sense?
Unidentified Participant
Yes, yes, I understood that was quite helpful and so my other question is coming again on the point of the number amount of cash the company is holding. So is there anything in terms of increasing the dividend amount or like a buyback that the board is planning that will help improve the return for the shareholders?
Vynsley Fernandes
Okay, Maesh, would you like to. Or would you like to probably. Maish.
Mahesh Nutalapati
Yes, yes, I’ll take that question.
Vynsley Fernandes
Yeah, please.
Mahesh Nutalapati
So I think when we did the last acquisition. Last. Sorry, let me just rephrase the answer. I think last time when we have the proceeds that we have received from sale of healthcare division, we have done a buyback of shares amounting around 10, 20 crores and which was more of a tax efficient strategy at that point of time and consequently also what we have explored now, but currently with the current tax scenarios, Baibach doesn’t seem to be a proper strategy to give it back to the shareholders. So. And apart from that, we have also looked at certain acquisitions which we have done with that money that we have received.
Techlink was one of the acquisitions that we have done. We have also done acquisitions in staffing solutions in Australia market and also we have developed certain delivery locations in Colombia and South Africa. So with that, what we are looking at, what are the tax efficient ways with which we can pass on better returns to the shareholders is what we are exploring. So current focus is definitely on acquisitions as we have mentioned. So that is the way that we are looking at deployment of the funds to give a better return to the shareholders.
Unidentified Participant
Understood.
Venkatesh Korla
Let me jump in. Given where the future outlook is, we think that there is. We need to make sure that we have the cash available for the company to invest in the transformation that we need to go through. Both in the AI space are also acquiring capabilities and investing in employees, reskilling and growth. As an example, the South Africa location that we opened a year ago or less than a year ago actually is now expanding. We’ve already filled up the facilities and we need to expand that space. We’re expanding in Bangalore. Our techlink acquisition is growing and we continue to look forward to make such investments to drive growth for the future and establish in such a way that we are a more sustained, AI driven company.
And that is where the cash is. Cash will be needed. That’s why to some degree we are making sure it’s available for the growth.
Unidentified Participant
Understood, sir. Both answers were quite helpful. Thank you so much and all the best.
Vynsley Fernandes
Thank you, Neha. Thank you so much.
operator
Thank you. Ladies and gentlemen, that was the last question for today. As there are no further questions, I now hand over the conference to management for closing comments.
Vynsley Fernandes
Venk, would you like to go first?
Venkatesh Korla
Yes.
Vynsley Fernandes
please.
Venkatesh Korla
So again, thanks everybody for joining. As we look at the future, we see that there is a lot of hope and excitement and there’s a potential for significant transformation and a higher quality of revenue that we will have within the company and we will continue to see growth over the next couple of years. We will be investing into building capabilities through employee reskilling, through potential acquisitions that we are looking for opportunistically as well as improving our margins as we go through this transformation. I think there’s lots of excitement both within the organization and in the market.
So thanks for your time. Vince, any closing comments from you?
Vynsley Fernandes
Yeah, sure. Everyone, thank you so much for making the time. I know how difficult it’s always on a Friday evening, but we truly appreciate it. I can only reflect what Venk has said, that as an organization with a clear vision for the future, we’re looking to build the quality of revenue and that is going to come from the quality and portfolio of products and solutions that we roll out all across ags. Because it’s a very strong, integrated, synergistic business where we develop solutions that are productive and build synergies all across the industry. So I think that is something that we look to keep on doing successfully.
And yeah, I’d just like to end with the fact that we have Rakshabandhan around the corner as well as Narel Purnima as well. Wishing everyone happy festivities and yes, signing off. Mesh, would you like to sign off?
Mahesh Nutalapati
Thanks Vince and Venk and thanks everyone for your time in joining the call. As Vince mentioned, it’s festivities. Happy festivities to all and have a great evening.
Vynsley Fernandes
Great. Thank you everyone.
operator
Thank you. On behalf of Hinduja Global Solutions limited concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.