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Allied Digital Services Ltd
Earnings Call Analysis
Q2-2025 Analysis
Allied Digital Services Ltd
Allied Digital Services Limited reported a strong performance in Q2 FY '25, achieving revenue growth and improved profitability, driven primarily by a robust demand in the Indian market. Despite challenges posed by geopolitical tensions and a tough global economic landscape, the company managed to secure orders totaling INR 675 crore this quarter, marking a notable recovery in order wins compared to prior quarters.
Among the highlighted contracts, the INR 430 crore Pune Safe City project stands out as the largest order for Allied Digital's smart city initiatives. This order is significant not only for its size but also for its potential to enhance the safety infrastructure of the region. Additionally, the company achieved its first order in the UAE from a banking and financial services institution, signaling its expansion into the Middle Eastern market. These wins demonstrate the company's appeal to both public and private sector clients across various industries including banking, energy, and packaging.
Management remains optimistic about future growth, with ongoing discussions with several new customers across diverse geographies. In the call, it was noted that Allied Digital continues to expand its leadership team and global office footprint to support anticipated growth, illustrating their proactive approach to capitalizing on emerging opportunities.
As for financial performance, the company reported an EBITDA margin of 11%, despite a slight dip from previous quarters. This margin was affected by non-recurring expenses related to the company's anniversary celebrations and previous loan provisions, which are not expected to recur. The company's revenue guidance for FY '26 was affirmed at INR 1,000 crore, expected to be achieved within the next 6 to 7 quarters. Management expressed confidence in exceeding current bottom-line performance, suggesting a focus on improving operational efficiency and profitability going forward.
As of September 30, 2024, Allied Digital boasts a healthy cash balance of INR 170 crore, up from INR 99 crore a year earlier. This financial flexibility is critical for fulfilling increasing working capital requirements as project executions rise. The company has also improved its debtor days from 87 to 72 days, indicating better cash flow management, which is vital for sustaining operations.
Cybersecurity emerged prominently in the company's growth narrative, with management indicating an ongoing focus on securing contracts within this domain. Allied Digital aims to integrate cybersecurity services into its managed services offerings, responding to the rising demand for comprehensive security solutions amid increasing digitization. The company has secured several recent deals in cybersecurity, confirming the sector's potential as a revenue driver.
In closing, Allied Digital is well-positioned for sustainable future growth. With a strong order book, a clear revenue forecast, and strategic expansion into new regions, the company is focused not just on immediate financial performance but on building long-term value through service diversification and expanding its global reach. Investors can look forward to the company executing on its ambitious plans while navigating the complexities of the current economic environment.
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Ladies and gentlemen, good day, and welcome to the Allied Digital Services Limited Q2 and H1 FY '25 Earnings Conference Call. [Operator Instructions] 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.
Thank you, Dorwin. Good afternoon, and thank you for joining us on Allied Digital Services Limited Earnings Call for the second quarter of financial year 2024, '25. We have with us on the call today Mr. Nitin Shah, Founder and CMD; Mr. Ramanan Ramanathan, Global Head of Strategy for Growth, Innovation and Partnerships; Mr. Nehal Shah, Whole-time Director; Mr. Paresh Shah, Global CEO; and Mr. Gopal Tiwari, Chief Financial Officer.
We will begin with Mr. Nehal Shah, who will cover recent developments across the business. Mr. Paresh Shah will then cover the operational performance and order wins, followed by Mr. Gopal Tiwari, who will walk us through the financial highlights. Thereafter, we shall open the call for the Q&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 document that has been shared with all of you earlier. I would now like to hand the call over to Mr. Nehal Shah for his opening remarks. Over to you.
Thank you, Mayank. Good afternoon, everyone, and thank you for joining us for our earnings call today. I hope you have had a chance to review the earnings document we shared earlier. I'm pleased to report that despite ongoing geopolitical uncertainties and a challenging global economic environment, we have delivered a strong set of results this quarter. We achieved growth in both revenue and profitability compared to the same period last year, driven by the strong momentum in the Indian market. A key highlight this quarter is the pickup of order wins. In prior quarters we had indicated that discussions with customers were positive, but there were delays and deferments while finalizing orders. We are pleased to share that we have booked multiple orders this quarter aggregating INR 675 crore representing strong accretion to our order backlog.
To begin with the INR 430 crore Pune Safe City order is our largest ever order win for our smart city offerings. The first ever order win in UAE is heartening too from a BFSI customer. I am sure that all of you have noted the multiple order wins with a diverse set of customers and geographies this quarter.
We take confidence that a rich profile of customers chooses to depend on Allied Digital for their critical requirements. The outlook remains positive. We are in advanced discussions with several new customers. We have also strengthened our leadership team and expanded our global office network to support future growth. Now I would like to hand over to our Global CEO Mr. Paresh Shah, who will provide further insights into our operational performance and key developments this quarter.
Thank you, Nehal. Good afternoon, everyone. Here is a quick summary of operational highlights for this quarter. As Nehal pointed out, it has been a great quarter. Allied Digital secured over INR 675 crores in new orders and contract renewals this quarter. So that's wonderful news. Key wins include -- let me just walk you through some key wins, a leading life insurance company in India with 46 million customers across 148 cities where we will provide them complete infrastructure management services.
The world's foremost specialty packaging company serving major FMCG brands globally has chosen Allied Digital for a complete transformational infrastructure management services, which includes NOC, SOC, digital desk Platform and our workplace services. A global leader in the energy sector specialized in oil, gas and petrochemicals has selected us to deliver the infrastructure services comprehensively, an Indian public sector enterprise under the Ministry of Power, where we will provide infrastructure and cloud solutions.
India Central Bank responsible for regulating the bank system has engaged us for application support services. A regulatory authority in Maharashtra dedicated to promoting healthy growth in the real estate sector has engaged us for infrastructure and services opportunities.
A prominent aluminum refinery in where Odisha, where we will be providing digital desk and digital workplace services. And as Nehal pointed out, let me talk about other opportunities outside India, the largest bank in the UAE, a leading financial institution has selected us as their total IT outsourcing provider, encouraging and encompassing digital workplace services, end user support, data center support and critical infrastructure management service.
I would like to highlight one of the large U.S. offerings also a global leader in silicon carbide and gallium nitride technologies in the chemical industry, serving sectors like electric vehicles and renewable energy, where we are delivering 24/7 global service desk end user support and command center operations, including cybersecurity services.
So that's another win. These contracts reflect our continued growth and expanding capabilities across diverse sectors as well as encompassing all sectors of our offering. Now I will hand over to Mr. Gopal Tiwari, who will share the financial update during the period under review. Over to you, Gopal.
Thank you, Paresh. Good afternoon, everybody. I'm sure all of you must have gone through the financial performance of the company for Q2 FY. Hence, I would like to highlight some of the key developments regarding the financials and governance. I'll start with other expenses, from the financials it can be seen that other expenses have increased from INR 14.2 crores in Q1 FY '25 to INR 17.5 crores. This increase is mainly on account of an extra provision for ECL of around INR 2 crores based on our ECL policy and expenditure of around INR 1 crores incurred towards pan-India celebration of our company's 40th anniversary.
As is evident both these expenses are nonrecurring in nature. Despite this increase in other expenses, we have reported an EBITDA margin of 11 plus percentage in this quarter. Now moving on our cash balance as of September 30, 2024 has increased to INR 170 crores from INR 99 crores in September 2023. Against this gross borrowing is to the tune of INR 55 crores only higher from INR 43 crores in the same period last year, primarily due to increase in working capital requirements for project execution.
Hence on a net basis, our net cash balance has risen meaningfully to INR 115 crores. Another important metric that I would like to cover is the improvements in debtor days. Our DSOs continue to improve further and were at 72 days as of September 30, 2024 compared to 87 days at the same time last year. We will continue to make efforts to further improve on this.
Recently, we have added Bank of Baroda as our third banking partner to meet our enhanced working capital requirements. While we remain adequately capitalized as indicated by our present net cash balance, we felt it prudent to ensure the necessary financial flexibility to cater to operational requirements. Now as you are aware, M/s. Singhi & Company, one of the leading audit firms in India was appointed by our statutory auditors at our last AGM in place of M/s. Shah & Taparia who had completed their maximums permissible tenure with us.
The limited review report for the quarter 2 FY '25 results have been issued by them only. Further to inform KPMG remains our auditor for transfer pricing reports ensuring that we engage with leading names of both global as well as domestic retail. Thank you. I'll now hand over it to the moderator to open the forum for Q&A.
[Operator Instructions] The first question is from the line of [ Athar Shadab ], an individual investor.
Congratulations on a great set of numbers. I have 2 questions. There has been a slight dip in the margin this quarter year-on-year. What is the management commentary on that? Especially I could see the expense rising in purchase and other direct expenses. What it is about?
Second question is that now we have crossed INR 200 crore revenue mark in this quarter, do you want to revise the guidance of INR 1,000 crores revenue, can we expect it now in FY '26?
So, thank you Athar for the question. I will answer the second question. The first question will be taken by our CFO, Mr. Gopal Tiwari. Regarding our guidance, we have been giving our guidance as INR 1,000 crore for the year ‘'26 and we feel in the next 6 to 7 quarters, we should be able to reach our top line guidance of INR 1,000 crore. In respect to the margin dip which is very periodical only for this quarter. I think Gopal...
As explained in my speech, this is mainly because of certain expenses of non-recurring nature which we incurred in this quarter, mainly on account of, as I mentioned, ECL provision, which is only provision made. It might be getting reversed in the coming quarters. And secondly, onetime expense we have incurred for our celebration of 40th year our organization.
So, because of that margin was a little thin, but still we have achieved our EBITDA margin similar in line with our earlier quarter. So, had those expenses been not there, the EBITDA margin -- our margin would have been a little better.
Last earning calls, we had a guidance of 15% -- of reaching 15% in near future. Is it still on track like we are targeting that?
Yes, that is still on track, but it is going to take some time because right now our focus, we would want to make sure that we are getting the customers, we onboard them. And while we are onboarding new customers, you know, whenever you acquire a new customer, there are upfront costs that you have to pay. And that sometimes reduces your margin a bit, but in our line of business, the best part is that we get customers who stay with us for another 5 years, 7 years.
So, we have got a lot of time to improve our margins once we go in the second year or after 3 or 4 quarters then we start with them. So that margin uphill is our need, and we also would want to achieve that and we hope to do that soon.
Thank you, sir. Congratulations again.
[Operator Instructions] The next question is from the line of [ Piyush Dabra from LT ].
First of all, congratulations to ADSL for the great set of numbers for the quarter 2. And my question is on the front of cybersecurity space. How is ADSL planning to move ahead? What is our business outlook for the next maybe 3 or 4 quarters and what all the revenue and what all funds we are expecting to business to come from, only in the cybersecurity space.
Yes, from the cybersecurity space -- this is Paresh here. We see a lot of exciting opportunities, as you know, this quarter also we closed a couple of deals on cybersecurity, which we see there is a continuing demand and we are also growing in our customers' logos and we see that sector is growing more and more over time. So we are excited about this, and we have a very strong outlook on cybersecurity.
Yes. Just to add to what Paresh is saying, cybersecurity is now becoming an integral part of managed services more and more because that is expected now by almost all the customers, since cybersecurity is so prominent. And the other part is we are into safe city projects and smart city project and safe city and smart city by their very nature include more and more cybersecurity, So not only our competency in this is increasing, but we are also investing appropriately for us to be able to grow in this region and to make a difference to our customers.
So I would like to add the third-party organization like Equitymaster, recently they published their study and research, the have selected and they talked about 3 main companies to be observed in India in cybersecurity space and we are one of them. This is from Equitymaster.
[Operator Instructions] The next question is from the line of [ Pratik Dedhia ], an individual investor.
Congratulations on great set of numbers. So my question is regarding the margins. So what levers do you see going ahead in terms of it improving? What parts would lead you to around 15% margin? And for the current quarter, since the margins came around 11%, any specific factors that you can point out which has resulted in muted year-over-year margin, kind of thing?
Pratik, thanks for the question. I think the current quarter, the margins, Gopalji has already answered about it. Having said that, there is a constant endeavor for us to improve our margins and we are working towards it. If you see, we have improved a lot of our parameters. So parameters like DSO going from 87 coming down to 72. Our ROC has also started going up. We are back to double digit.
Similarly, there are other things also. If you see our cash reserves and all are also growing day by day, quarter by quarter. So, there is a constant endeavor that we have to make sure that we keep on improving our margins.
I personally would, as a promoter, would also want the margins to be as better as possible. We are doing whatever we can, and we will strive harder to make sure that our margins keep on improving with future quarters.
Just to add to what Nehal talked about, we are also engaging more into app support. We have an AI roadmap. So, we see that there are better margins also to be looked into areas where we can flourish more. So these are the areas that we are quickly catching up and looking at those kinds of projects also.
Just to confirm, you mentioned AI, right?
Yes.
Okay. Got it. All right. And I have a second question regarding the data center part. So, I think last quarter I had asked about in terms of how is that business going. So, just during the quarter, how was the traction pertaining to it and what kind of offerings have you or probably what kind of business have you gotten in terms of the data center offering?
So, thank you for the question. the answer to that is, the data center is something which is very close to our heart, and we have been actually getting customers around it. Even the Pune, Safe City Project that we've got, we'll have a data center upgraded, redone for that completely. [indiscernible].
Sorry, there is some disturbance while you're speaking so the answers are not very clear.
Is this horrible or better?
Yes, this is better.
Do you want me to repeat the answers once again? I can do that.
Yes, sir. That will be helpful.
Yes, so, I am saying that the data center business is very close to our hearts. We have been constantly doing things. If you remember, I had spoken in my last call that we have done close about 14 safe cities. In every safe city, there is a data center component in it, which we have built and delivered to the customer.
Even the Pune project that we got, they extended to the phase 2 that we are talking of and has got a data center built in it. So, we will continue doing that. Apart from that, there are a lot of enterprise customers with whom we are talking about data center management as well as helping them to migrate from on grid to cloud. So being in the infra business, this is our core business and core competence which we are very excited about things that are happening in the data center side.
Even the government of India, if you have seen, has also given out a budget of about INR 30,000 crore for making data centers in India to make sure that the data of Indians are kept inside. So, that again opens up an avenue for us. Our core competence once again lies in building a data center, managing data centers and making sure we are running for a period of 3 to 5 years.
So, I would rather like to talk the scenario about data center. It has got 4 different phases. One is ‘own the data center, ‘build the data center, ‘operate the data center and ‘manage the data center ’by providing managed services. And the first, ‘own the data center ’ is highly capital-intensive activity, whereas all the 3 others -- rest others build, operate and manage is completely skill intensive activity, which is where we are there.
And we are very sure that in any case we will be doing, even for third party data center also, we will keep continuing doing that. And recently, we are in the process of getting empanelled with MIT. MIT has come with a very large opportunity, and they are going to shortlist some good companies like who are into AI and cloud. So, while we are talking to you, we are in the process of preparing or responding to that RFP.
[Operator Instructions] The next question is from the line of Manan Vandur from Wallfort PMS.
Congratulations on the numbers. Sir, I just had a few -- I mean, I came late in the call, so someone might have already asked, so please bear with me. On the 28 of your slide of your presentation, I think there is a mistake in the numbers.
So the EBITDA numbers which are showing is INR 23 crores EBITDA, but actually it is including the other income. So the actual EBITDA is coming to INR 19 crores, if we do INR 203 crores minus INR 184 crores. So it's coming to INR 19 crores. So if you do that, then our margins are coming to 9.35%, but our EBITDA margins are showing as 11%. So this is what I wanted to ask like this is a significant dip in our margins from 10%, 12% to 9%. So can you please help us with this?
Yes, sure. The point is, first of all, EBITDA margin is calculated, in my opinion or everywhere after taking other income also. And EBITDA is -- this is on an operating margin in fact. EBITDA, we have to take other income also in account. But having said that, even if we don't take that other income, I had explained in my speech, I think you were not there, our expenses, if you go through, our other expenses in this quarter have increased by over INR 3 crore.
And that is mainly on account of some expenses which are non-recurring in nature, which is one-time expense which is there in this quarter. And it is not going to be again repeated in the coming quarter.
So, if you take out those expense, so we will land our EBITDA earning more than 11%, which is in line with our earlier quarters. So that is another reason, even if you don't take that other income in account, we have still achieved our EBITDA margin in comparison to earlier period on similar lines.
Okay. So, is it on account of hiring, like getting new employees because we want...
No, no, no. it is mainly on account of 2 counts. One is on account of our extra ECL provision there on account of this EBITDA, receivables. And another one is that we celebrated last, during last quarter, our 40th anniversary. Our company's 40th anniversary was there, we celebrated in a large scale, pan-India basis. So that expense is also there. And that expense is definitely not recurring in nature. It's not going to be repeated again. So if you take out those 2 expenses, then our margin is still better than last quarter.
Okay. And another question is that, even as you've won orders, are we planning to hire new employees so that we can streamline more of our projects? So, any hiring process are we doing, which might incur one-time expense and then later on help us out in our revenue and margins and everything in the later coming years?
So, Manan, so I'll tell you there [indiscernible].
Sir, your voice is barely audible. Is it possible to have like an earphone or something, please?
Should we reconnect?
Now I can hear close to the mic. Just 1 management who is not very clear, sir. I think it's a little too distant.
Is this fine right now?
Yes.
Yes. So, with respect to hiring, I think since we are in the business of IT, manpower is the most important thing for us. We are constantly hiring people. With respect to the recent orders that we've won, there's a lot of time that we'll have to make sure that we are delivering the contracts appropriately.
Apart from that there are also certain senior leadership people that we'll be hiring soon for which you'll be getting to know in a quarter or 2 for enhancing our business in India as well as abroad, maybe in the U.S. anywhere in the European markets. So, there are talks happening with several candidates for that as well from a leadership growth perspective.
And from BAU, that is business as usual, as contracts come in, we'll be hiring people, refilling our current employees and making sure that we are there on our toes to make sure that the delivery happens.
So just to add to what Nehal said, see, our hiring strategy is twofold. Number one, to cater to new projects that we have got. And so, they have become billable very quickly. And that is one hiring strategy. The other is to proactively hire based on anticipatory projects where we are reasonably confident of winning them. And so there you incur an initial expense, but that becomes recoverable very quickly as soon as we win those projects, because we don't want to waste our time trying to hire only after we have won.
So, these 2 things form an important part of our hiring strategy. And of course, the hiring is based upon observable, confirmed pattern of billing.
And the last question will be on the finance cost. Like we have -- we saw that we decreased some of our debt, our long-term debt from INR 12 crores to INR 8 crores. We have gone, but still we see that from INR 1 crore something odd to INR 3 crore odd, we have gone in finance cost. So, what would be the reason for this?
See, I will answer that question. See, as you see our business is growing and we have to -- long-term debt is not there in the company, that is sure, but working capital funding is definitely there. We need a lot of working capital to cater to our working capital requirements. So, borrowings are there definitely, and it is being increased day by day, based on the increasing volume of business. And having said that, in this quarter, the increase of the finance cost is mainly on account of some regrouping of the income and expense.
Earlier, we used to do some interest income, getting netted off against our expenses, which we have to change because of the new auditor coming into the picture now from this quarter. They guided us and they said, you cannot net off the income part from the expense. So, you have to take the interest income in other income and entire interest expense has to be shown in the expenses.
So, because of that regrouping, our finance cost is increased in this quarter and other income got also increased with the same amount. So, that is the reason of showing the increase in finance cost.
Okay. Which is like -- okay, because of this other income has also increased and interest also.
Yes, absolutely.
The next question comes from the line of Shweta from Arihant Capital Market Ltd.
First of all, congratulations, sir, and best wishes for the Festive season. And my question is, can we see more quarters with order wins of INR 500 crore?
Shweta, I would like to have more quarters wins, who wouldn't want that, right? But the reality of life is that I cannot give you a number, but there are larger deals that we are talking with customers, and we are hoping to close with them. As and when we have a concrete go ahead from our customer for delivering projects, we will start, and we will come back and give you announcements.
But all I can say right now is that the traction is very good. And you would have seen that this quarter we saw about INR 675 crore. This are the same quarter, first time we have gone with a top line of INR 200 crore plus. And we would want to continue to maintain this trend going forward as well, so that this will reach our INR 1,000 crore top line mark.
We are very, very excited and I think this is a good time to do business and acquire more and more customers.
And when will revenue from Pune Smart City start accruing?
Some of it will start from this quarter, that is the third quarter. Majority would -- I said would come in the fourth and the first quarter next year.
From third quarter?
From third quarter we will have some billing done for transition. From fourth quarter we will have the implementation done. And first quarter, next year we will have the final implementation billing done. So, it will take about 2 to 3 quarters before we have the complete implementation done, before we move to the O&M.
Okay. Got it, sir. Can you give some light on cash flow and return on capital employed?
See, return on capital employed we have reached around 2 digit number, 10% we have achieved, so but -- as earlier also we have pointed out our denominator, the net worth figure is almost INR 600 crore. So, that includes almost INR 200 plus crore of our real estate properties in the company. So, if we net it out from our net worth figure, then return on capital will increase -- shoot up by another 3%, 4% definitely. So, that is the reason -- I mean, the more we will grow in our numbers in income and our ratio will keep on increasing.
[Operator Instructions] We have the next question from the line of [ Pratik Dedhia ], an individual investor.
Yes. In terms of -- I just wanted to check in terms of the order bids that you put if you can just give us some broad ballpark number in terms of what range of orders you put in or probably number of orders that you bid, so that just gives us some idea in terms of the future possibility in terms of the order wins.
And also in terms of -- so, this is more from the government sector part and second question is, are there any specific orders or proposals that you put in for the private sector as well? So, that would also be helpful?
So, I couldn't get your first question, Pratik, but I'll answer your second question first and then you can repeat your first question. With regard to specific private customers we have been working closely with a lot of private customers here in India as well as global. If you look at our numbers, most of our revenues from outside India are non-government. They are all private enterprise that we are working with.
There are certain large deals that are there in the pipeline which are on very advanced stages of negotiation and closures. In the coming quarters we will -- in the next quarter, I would rather say if everything goes fine, we'll be able to give out the names and the details about the orders, but the traction is very, very strong. We are constantly getting good traction, good number of bids are going in. For me to come up and give up a number on the bids would become a little challenging here. But having said that, the traction is fantastic and there are a lot of customers that we are right now negotiating for these divisions.
If I can add, you have to understand the nature of our business. Our nature of business is large projects in the Indian sector, particularly in the government, in smart cities and so on. And they're typically of the -- anywhere greater than INR 30 crore, INR 40 crore at a minimum, but it can go as much as how the Pune city project went for INR 430 crore.
The second is enterprise customers. So, our enterprise customers are typically, in the international sector, they are multi-million-dollar projects. They are not small projects. And even in India, the enterprise customers are in the larger range because they are large customers. So, it would be a pan-India sort of setting. So, you get an understanding of the flavor of the business that we go after.
And therefore, by its very nature the projects are significant in size, though they are of different sizes, and some are very large indeed and some of them are not as large. But all of them are significant projects from many perspectives. So that is the nature of the business that we are after.
So, I would like to add. There will be business of services that we are doing. What you see current year is only 20% or maybe 15%, depending upon the tenure of the contract, 5 years or 6 years, but you may see that every such contract would start yielding us that kind of profitability or the revenue for all subsequent years.
So, we are very happy with this recurring revenue kind of project. So, we don't have to worry and get frustrated to sign or get any business that whichever comes our way. So sometimes if the margins are not good, we refuse also. We don't take them. And that's how our strategy is, but in every approval net profit that you have seen, all the revenues that you have seen, most of the revenues are repeatable for the subsequent year also.
Fair enough. I think that gives me a lot more clarity, so thanks. I'll just repeat my first question. So, I understand you cannot divulge the value, but for government orders, if you can just give a broad ballpark number of orders of what you said you bid or waiting for and -- sorry, what do you say, waiting for the bid to be open?
So, there are a couple of orders that they've already bid for, for which we are waiting for the technical evaluation happening. On the pipeline front, there are about 5 or 6 large tenders that are up for bidding. We are evaluating them. We will soon be figuring out which are the ones that you want to go after and bid for it. So, if you want, what I can do is I can give you a little more detail on an e-mail. So, if you could share your email with our team here, I would be able to give you a little bit more detailed answer on that.
[Operator Instructions] The next question comes from the line of [ Samira Mitha ] an individual investor.
I have a question regarding the recent acquisition done by the company. So, can you please elaborate upon that?
So, Samira, we haven't done any recent acquisition. What we have done is opened up our office in Middle East that is in Dubai for expanding our business there. And we are glad to share that we've got our first customer for which service delivery has already started and we have hired close to about 65 people there. So, it's opening up our branch office rather than a subsidiary there in the Middle East in Dubai.
Okay. And this is just to increase our presence in that particular location.
Correct. So, we've got a customer which is local there. It’s a BFSI customer in Dubai and Abu Dhabi. So, to cater to them we have to have some local presence, in terms of hiring people, employing them and also giving purposes. So, this gives us a good opportunity for us to expand ourselves in that region.
The next question is from the line of [ Kartik Bhatt ], from [indiscernible] services limited.
Yes. I have 2 questions. Can you provide the top line and bottom-line guidance for your FY '26 and when it comes to smart cities, what will be the revenue percentage coming this year?
Are you from [indiscernible].
[indiscernible]
So, our revenue guidance, I've already said and I'll repeat once again. Our revenue guidance is INR 1,000 crores [indiscernible].
Sir, your volume has gone low and it's not audible clearly.
Am I audible? This is better?
Yes, this is better, sir, please go ahead.
So our revenue guidance, once again, I'm giving, it's going to be INR 1,000 crores sometime in 7 quarters, we should be able to do it. I'm not saying a year because that confuses. So 7 quarter from -- or rather 6 to 7 quarters, we should be able to have our top line of INR 1,000 crore done. With respect to bottom line, I would want to say that we would be doing better than what we are doing today.
[Operator Instructions] Thank you. Ladies and gentlemen, we have no further questions. I would now like to hand the conference over to the management for closing comments. Over to you, sirs.
Thank you for your participation and engagement during this call. In closing, I would like to state that given the traction and order wins, we remain well positioned to reach the INR 1,000 crore annual revenue in the near future. A comprehensive transformation program has been undertaken over the last couple of years, encompassing governance transparency, human resource management, leadership and sales and marketing.
This will ensure that our growth and progress is multidimensional and not restricted to financial parameters alone. If you have any additional questions or require further information about our company, please reach out to our team or contact CDR India. On behalf of ADSL family, we wish all of you a Happy Diwali and a prosperous New Year. We look forward to interacting again in the next quarter. Thank you.
Thank you. On behalf of Allied Digital Services Limited. That concludes this conference. Thank you all for joining us, you may now disconnect your lines.