Alldigi Tech Ltd Upgraded to Hold as Financial and Technical Indicators Improve

Financial Performance Drives Upgrade

The primary catalyst for the upgrade was Alldigi Tech’s robust financial results for the quarter ended December 2025. The company’s financial trend rating improved from flat to positive, with its financial score rising from 4 to 6 over the past three months. Key metrics underpinning this improvement include a return on capital employed (ROCE) of 31.02% for the half-year, which is the highest recorded by the company to date. This strong capital efficiency is complemented by a debtors turnover ratio of 7.68 times, indicating effective receivables management.

Net sales for the quarter reached ₹152.68 crores, the highest quarterly figure in recent history, while profit before depreciation, interest, and taxes (PBDIT) surged to ₹45.88 crores. Operating profit margin also improved significantly, with operating profit to net sales at 30.05%, signalling enhanced operational efficiency. Profit before tax (excluding other income) stood at ₹29.48 crores, and net profit after tax (PAT) was ₹23.85 crores, both all-time highs for the company. Earnings per share (EPS) for the quarter rose to ₹13.67, reflecting strong bottom-line growth.

However, some financial challenges remain. Interest expenses for the latest six months increased by 20.23% to ₹4.10 crores, and cash and cash equivalents dropped to ₹51.40 crores, the lowest in recent periods. The debt-to-equity ratio, while still modest at 0.33 times, is the highest recorded, indicating a slight increase in leverage. These factors temper the otherwise positive financial outlook but do not outweigh the overall improvement.

Valuation and Market Position

Alldigi Tech’s valuation remains attractive relative to its peers. The company boasts a return on equity (ROE) of 29.2%, paired with a price-to-book (P/B) ratio of 5.2, suggesting that the stock is trading at a fair value given its earnings power. Despite this, the stock has underperformed the broader market over the past year, delivering a negative return of -7.35% compared to the Sensex’s 8.49% gain. Over longer horizons, however, the company has outpaced the market substantially, with a five-year return of 178.12% versus the Sensex’s 75.67%, and a remarkable ten-year return of 721.44% compared to 236.52% for the benchmark.

Profit growth has been steady but modest, with operating profit growing at an annualised rate of 18.92% over the last five years. The company’s PEG ratio stands at 2.2, indicating that earnings growth is reasonably priced into the stock. Additionally, Alldigi Tech offers a dividend yield of 3.5%, which is attractive for income-focused investors.

One notable concern is the lack of domestic mutual fund ownership, which remains at 0%. Given that mutual funds often conduct thorough due diligence, this absence may reflect some reservations about the company’s price or business model among institutional investors.

Technical Indicators Show Signs of Stabilisation

The technical outlook for Alldigi Tech has also improved, contributing to the upgrade. The technical trend shifted from bearish to mildly bearish, reflecting a more balanced market sentiment. Weekly and monthly Moving Average Convergence Divergence (MACD) indicators remain bearish and mildly bearish respectively, but other indicators show mixed signals. The weekly Know Sure Thing (KST) indicator is mildly bullish, and Dow Theory assessments on both weekly and monthly charts are mildly bullish, suggesting some underlying strength.

Relative Strength Index (RSI) readings on weekly and monthly timeframes show no clear signals, indicating a neutral momentum stance. Bollinger Bands suggest mild bearishness on weekly charts and bearishness on monthly charts, while daily moving averages are mildly bearish. On-balance volume (OBV) readings are mildly bearish on both weekly and monthly scales, signalling cautious investor participation.

Overall, the technical picture is one of cautious optimism, with no strong buy signals but a clear reduction in bearish momentum. This technical stabilisation supports the revised Hold rating, as the stock appears to be consolidating after recent volatility.

Quality Assessment and Market Capitalisation

Alldigi Tech’s quality rating remains steady, with a Mojo Score of 51.0 and a Mojo Grade upgraded from Sell to Hold as of 28 January 2026. The company’s market capitalisation grade is 3, reflecting its mid-tier size within the Commercial Services & Supplies sector. This sector classification aligns with the company’s core business in BPO and ITeS services.

The company’s quality metrics, including return on capital and operational efficiency, underpin the Hold rating. While the company has demonstrated strong quarterly financials and improving technicals, the modest debt increase and limited institutional ownership suggest a cautious stance is warranted.

Stock Price and Market Returns

Alldigi Tech’s stock price closed at ₹848.55 on 29 January 2026, up 4.66% from the previous close of ₹810.75. The stock traded within a range of ₹829.20 to ₹949.95 during the day. Its 52-week high stands at ₹1,090.15, while the 52-week low is ₹702.00, indicating a wide trading band over the past year.

Short-term returns have been positive, with a one-week gain of 10.12% compared to the Sensex’s 0.53%. Over one month, the stock gained 3.86% while the Sensex declined by 3.17%. Year-to-date, the stock is slightly down by 0.67%, marginally outperforming the Sensex’s -3.37%. However, over the last year, the stock underperformed significantly, returning -7.35% against the Sensex’s 8.49% gain.

Longer-term performance remains impressive, with three-year returns of 60.94% versus 38.79% for the Sensex, five-year returns of 178.12% against 75.67%, and a remarkable ten-year return of 721.44% compared to 236.52% for the benchmark. This long-term outperformance highlights the company’s ability to generate substantial shareholder value despite recent volatility.

Conclusion: A Balanced Hold Recommendation

Alldigi Tech Ltd’s upgrade to a Hold rating reflects a nuanced assessment of its current position. The company’s strong quarterly financials, highlighted by record ROCE, net sales, and profitability, provide a solid foundation for future growth. Technical indicators suggest a stabilising trend, reducing previous bearish momentum and supporting a more positive outlook.

Nevertheless, some caution is warranted due to rising interest costs, reduced cash reserves, and a slight increase in leverage. The absence of domestic mutual fund ownership and recent underperformance relative to the market also temper enthusiasm. Valuation metrics remain reasonable, with a fair price-to-book ratio and attractive dividend yield, but the PEG ratio indicates that growth expectations are already factored into the price.

Investors should consider Alldigi Tech as a stable, mid-cap player with strong fundamentals and improving technicals, suitable for those seeking exposure to the Commercial Services & Supplies sector with a moderate risk appetite. The Hold rating suggests monitoring the company’s progress closely, particularly its ability to sustain profit growth and improve institutional interest.

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