MoneyWorks4Me

Check Before You Invest : Allied Digital Services Ltd

BSE: 532875 NSE: ADSL ISIN: INE102I01027
  |   Sector:  IT & ITES   |   Industry:  IT - Software

Snapshot

Q.1 Which industry/sub-sector does Allied Digital Services Ltd belong to?
Allied Digital Services Ltd belongs to the IT & ITES sector, operating specifically within the IT - Software segment.
Q.2 Is Allied Digital Services Ltd a good quality company?
Allied Digital Services Ltd is a weak quality company, based on a inconsistent multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Allied Digital Services Ltd undervalued or overvalued?
Allied Digital Services Ltd appears Somewhat Undervalued, as its key valuation ratios are lower than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings - 54.54
Price to Book 1.29 1.52
Price to Sales 1.58 3.17
EV to EBITDA 30.59 24.75
Q.4 Is Allied Digital Services Ltd a good buy now?
Allied Digital Services Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Allied Digital Services Ltd?
Allied Digital Services Ltd revenue growth is 5.9% for FY-2026, which is below its 5-year CAGR of 32.16%, indicating slower growth.

Q.2 Gross Profit margin of Allied Digital Services Ltd?
Allied Digital Services Ltd Gross profit margin which is the profit after deduction of direct costs, is 2% for FY-2026, which is below its 5-year median of 13%, indicating decreasing margins.

Q.3 Operating Profit Margin of Allied Digital Services Ltd?
Allied Digital Services Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 1.02% for FY-2026, which is below its 5-year median of 9.64% indicating decreasing margins.

Q.4 Net Profit Margin of Allied Digital Services Ltd?
Allied Digital Services Ltd Net Profit Margin is -0.21% for FY-2026, is below its 5-year median of 4.43%, indicating decreasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 2 13
Operating Profit Margin (%) 1.02 9.64
Net Profit Margin (%) -0.21 4.43

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Allied Digital Services Ltd?
Allied Digital Services Ltd Return on Asset is -0.11%, which is below its 5-year historical median of 1.63%, indicating deteriorated asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Allied Digital Services Ltd?
Allied Digital Services Ltd Return on capital employed is 1.05% for FY-2026, which is below its 5-year historical median of 3.16%. The current ROCE is below its estimated weighted average cost of capital (WACC) of 14%, indicating value preservation.

Q.7 Return on Equity (ROE) of Allied Digital Services Ltd?
Allied Digital Services Ltd Return on equity is -0.17% for FY-2026, which is below its 5-year historical median of 2.01%, indicating the business is making worse use of its shareholders capital.

Q.8 Cash conversion cycle of Allied Digital Services Ltd?
Allied Digital Services Ltd Cash conversion cycle is -10 days, below its 5-year historical median of 119 days, indicating improved working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 0.52 0.5
ROE (%) -0.17 2.01
ROCE (%) 1.05 3.16
Cash Conversion Cycle -10 days 119 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Allied Digital Services Ltd?
Allied Digital Services Ltd Debt-to-Equity ratio is 0.24, which is above the industry average of 0.01, indicating higher debt levels in the industry.

Q.10 Debt to cash flow from operations of Allied Digital Services Ltd?
Allied Digital Services Ltd Debt to cash flow from operations is -2.82, which is at a unhealthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Allied Digital Services Ltd?

Q.1 Promoter shareholding and pledge status of Allied Digital Services Ltd?
Promoters hold 51.02% of the Allied Digital Services Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Allied Digital Services Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Allied Digital Services Ltd vs industry peers?
Allied Digital Services Ltd revenue CAGR is 32.16%, compared to the industry median CAGR of 2.68%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 5.9 2.7
Gross Profit Growth (%) -83.3 14.9
Operating Profit Growth (%) -75 15.3
Net Profit Growth (%) -109.1 15.1
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 0.52 0.46
ROE (%) -0.17 4.67
ROCE (%) 1.05 6.64
Cash Conversion Cycle (days) -10.1 37

Valuation & price assessment

Q.1 Stock return of Allied Digital Services Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 13.1% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR
13.1% 10.4% -5.5% -32.5%
Q.2 Valuation ratios of Allied Digital Services Ltd vs historical?
The current P/E ratio of 0 is lower than its historical median of 54.54, indicating that the stock is trading below its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median
5-year
Industry Median
Price to Earnings - 54.54 47.38
Price to Book 1.29 1.52 2.64
Price to Sales 1.58 3.17 4.79
EV to EBITDA 30.59 24.75 16.75

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