Allied Digital Services Maintains Buy Rating with ₹225 Target Amid Smart City Focus

Allied Digital Services Ltd (ALDS) continues to prioritize IT infrastructure and security services, leveraging its strong execution record in government and enterprise projects. The company's involvement in smart city initiatives remains a key growth driver, with expansion plans into critical infrastructure like metro surveillance and airport security.

While US enterprise deals contribute significantly to revenue, margin pressures persist despite consistent large contract wins. ALDS is strategically acquiring cloud and AI capabilities while integrating cybersecurity solutions across IT and OT layers—a differentiated approach in the market.

Analysts maintain a 15x PE multiple, anticipating potential upward revision upon margin improvement. Projections show robust FY25-FY28 growth trajectories: 19.5% revenue CAGR, 46.3% EBITDA CAGR, and 48.2% PAT CAGR. Risks include dependency on smart city projects and client concentration.