Alldigi Tech Limited (ALLDIGI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '21 Earnings Conference Call of Allsec Technologies Limited, hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Hardik Sangani from ICICI Securities. Thank you, and over to you, sir.

Thank you, Ritu. Good afternoon, everyone. On behalf of ICICI Securities, a very warm welcome to you all for the Q2 FY '21 earnings call of Allsec Technologies Limited. The management is represented by Mr. Ashish Johri, CEO; and Mr. Raghunath, CFO. I shall hand over the floor to Mr. Ashish for management's opening remarks, post which we will open the floor for Q&A. Thank you, and over to you, sir.

Hi, good morning, folks. This is Ashish. A very good afternoon to all of you and a warm welcome on this earnings call. Post the Quess acquisition, we are delighted to recommence our half yearly earnings call to engage with all the stakeholders and vendors, and update you on the business performance. The results have -- and our presentations have been uploaded on our website. Anything in previous records to our outlook for the future is forward-looking statements, must be read in conjunction with the risks that the company faces. All of those uncertainties and risks have been included, and not limited to what we've already published in the annual report. Post the disclaimers, let me jump into our business performance. I'll kick it off with a very brief overview of our financials, post which I'll give you business updates, and then we'll be happy to take questions from all of you. From a financial perspective, we achieved revenues of INR 67.6 crores during the quarter, which is a growth of about 6% over quarter 1. And our operating margins came in at around INR 12.3 crores, which is a growth of 16% quarter-on-quarter. Our EBIT post our adjustments for its mark-to-market came in at around INR 8.14 crores, which is flat over Q1. Our net profit stood at INR 6.4 crores, which is also a 7% growth over the previous quarter. On business updates, let me kick things off by summarizing a few key themes. And then, I'll get into more deeper dives on each of the business lines. Let's start with the strategic themes first. I think the first theme that we should talk about is improving top line. I think in this challenging environment, we continue to focus on growing the top line, both in HRO and DBS businesses. Our HRO businesses -- and I'll expand on this a little bit later, but in our HRO business, our pipeline and our win rates, both are at historical highs. We've seen some stellar wins over the last quarter in spite of the uncertainties that we have. I'll give you more details in a bit. On the DBS side as well, the volumes are improving. And we expect to be at pre-COVID levels by the end of this quarter, Q3 financial year. We have also augmented our North America sales team in this quarter coming out of COVID and are already beginning to see traction in our sales pipeline. Our sales pipeline is building up and is moving already. The second theme that I want to talk about is the cross-sell initiatives across Allsec and Quess. In the last quarter, we've added roughly INR 1 crore in annual contract value, cross-selling to our existing HRO and Compliance customers. We have added about INR 1.5 crores in ACV, cross-selling to Quess customers. These deals start producing revenues in Q3 and Q4 of this year -- this financial year. We are also working to start tracking and we're getting traction on cross-sell initiatives, more systematically across the Quess customer base. Those initiatives continue to be systematic and are getting matured over the Quess -- continue to get maturer over the Quess business lines. Our cash positions and collections have been focused through the entire COVID, both Q1 and Q2, and we see substantial improvements in our DSOs in the last quarter. Our cash positions and collections have improved. Our historical DSOs have always been robust, but we have improved upon them further in this quarter. Our current DSO, at 50 days, is significantly better than the 56 days in March 2020 and almost 61 days about 1 year ago. Cash flow from operations stood at around INR 13.6 crores for the quarter and INR 27 crores for first half, representing very strong cash generations in what has been a tough year, and certainly an extremely tough first half of this financial year. EBITDA to OCF conversion has been at 102% for the first half as compared to 78% in H1 FY '20. This again reiterates the strong collection focus that we have and the focus on working capital management that the company has done in the first half. On cost optimizations, there is an enduring focus on managing our costs, especially in this environment. We have driven initiatives that have reduced our indirect costs by almost 10% over Q1, which roughly translates into savings of INR 80 lakhs to INR 90 lakhs per quarter. You will also notice, in our earnings, an improvement in our HRO EBIT margins, almost a 30% year-on-year improvement. This is driven by emphasis on digital innovation and automation. Again, I will cover that in more details in just a moment. This improvement in the HRO EBIT margins reflects the platform, the nature of this business and synergies that are coming off non-linearity in this business. The contributions improvement translate into another INR 80 lakhs per quarter. And we believe this trend will not only continue, but it will get stronger over the coming quarters. The final strategic theme that I want to talk about is our substantial investments that we are making in enhancing our HRMS and HRO platforms and products. We are making very significant investments in modernizing our payroll and enterprise-grade platforms. The enterprise HRO market has always been a strong suit. We are market leaders in that segment. And we're investing in strengthening our position. So we will be enhancing and modernizing our enterprise platforms. This initiative will go over about the next 12 to 18 months. We are also very excited to be launching an initiative in creating a market-leading MSME SaaS product that will help drive the company forward over the next decades to come. Work on creating this new SaaS product for the MSME market has already started. We're early stages, and you should start seeing solutions getting released to the market as early as next quarter, and I'll give you more details on that in a moment. Those are the 5 strategic themes. I'll now jump into the business-wise updates. I'll start with the HRO business. The HRO business continues to perform well to end the quarter at revenues of around INR 24.5 crores, which is a growth of 6% over the previous quarter. We added 32 new customers in this quarter and more than 90,000 payslips during this quarter. Some notable wins in this quarter, for instance, we won a deal with a digital team and giant in India, a very large e-commerce retailer in India, and expansion of our business -- a substantial expansion of our business within international e-commerce side. Our EBIT in this business grew by 8% faster than the growth of revenue, indicating improvement in operating efficiency. This goes back to the strategic theme I had outlined earlier, which was investments in our technology platforms and automations. So this improvement in EBIT is a direct result of that, and that -- this trend will strengthen further. We continue to also invest significantly in digital innovation in this business to drive both revenue and margin improvements, more on that in a few moments. The business currently -- coming back to the sales, the business currently has the highest pipeline it's ever had. And our win rates are also at a historical high for us. In spite of the environment that we are in, these are the highest pipelines and win rates that we have seen. And we also feel COVID has had an impact in terms of growth. But in spite of COVID impact, we are seeing extremely good win rates. We also believe, as we come in out of COVID and in this quarter, all our pipelines and our win rates are only improving at this point. I'm also excited to talk a little more details of the key initiatives -- the product initiatives I mentioned earlier. The first one is, we have embarked on a product modernization initiative for both our SmartPay and Smart HR platforms. Both of these platforms have developed over the last 10 years and have the best of functionalities. These are meant for the enterprise segment, and we are the market leaders in that segment. However, we have taken an initiative to upgrade it substantially to bring down our cost of ownership of this platform and also to provide best-in-class user experience to our customers and their employees. This modernization project is expected to last over the next 15 to 18 months at this point. But much before those 18 months, you will continue to see some of these functionalities being brought to market much sooner. The second initiative, we are very excited to be launching an initiative to create a market-leading SaaS-based HRMS platform for the MSME segment. We believe that our expertise in the payroll domain, our existing customer connects and the brand strength that we have in the enterprise market will translate into great product in the MSME segment as well. We will be releasing -- while the initiative itself will last about 12 to 18 months, but we will start releasing modular solutions every 3 to 4 months, starting as early as next quarter. So you should see some functionality and solutions start coming to market by next quarter. And by the end of 18 months or so, we will have a completely differentiated solution in the market. We continue to be -- on these initiatives, we continue to be in building the organization up to drive this platform and also figuring out our digital sales strategy. I will now move on to the digital business services, which formerly was called CLM, our Customer Lifecycle Management. We have renamed, rebranded this business to better reflect the use of digital solutions and layering of digital solutions in our current offerings. The DBS business was the most affected by COVID, with our revenues in Q1 dropping by 14% over Q4, primarily driven by the Domestic DBS business, which dropped in revenues by 39% over Q4 of last financial year. I'm happy to share that this business has bounced back with a revenue of INR 43 crores and a 6% growth over Q1, driven by a 39% quarter-on-quarter growth in the Domestic DBS business. Our North America business experienced volume drops of 10% in Q1 due to COVID. And in late Q2 and this quarter, Q3, we are seeing growth and recovery in the volumes in this business as well. During this period, we've also improved the wallet share across all our customers in the international business. And we expect volumes to return to pre-COVID levels in the international business by early Q4 of this financial year. So by the end of this quarter, Q3, we are expecting DBS, both international, domestic put together, to recover to pre-COVID levels, and international business to also be at pre-COVID levels towards the end of this quarter and early next quarter. In spite of the tough environment, we have seen some wins in this quarter. For instance, we won an AR/AP business of an international e-commerce giant that will start generating revenues in this quarter in Q3. Starting late Q2 and early Q3 this quarter, we've also seen good traction in our new business pipeline coming from North America. So we've also augmented our sales team in this quarter in North America, and we continue to actually go and augment the sales team. Given that we are entering the festive season, both domestic India and North America, we are expecting volume recoveries to happen in Q3, which is why we think the volumes will get back to pre-COVID levels and overall DBS levels by the end of this quarter. And our increasing -- increase in wallet share also lends itself to the strategic improvements in this business -- in the DBS business. I would like to close now by thanking all of you for your support and for joining us here today. And we are happy to take any questions at this point.

[Operator Instructions] The first question is from the line of Shrey Loonker from Motilal Oswal Portfolio Management.

I just wanted to check on a few things. One is, if you can just give us some sense on what kind of modernization that we are trying to do from tech-enablement? So after 18 months, once you are done through this modernization phase, is it all about expanding margins or do you think this can actually result into higher revenue growth? How should one really think about the ramification? That is point one. And on the modernization front, if you can just give us some sense of how do you think about investments in it? So how do you size the investments in the entire modernization program? And how do you account for it? That's my first question.

Shrey, nice to hear from you again. Shrey, on the -- how should you think about the modernization program, so there are -- the modernization program is multidimensional. On our enterprise products, the intent is to reduce the cost of operations and improve the scalability of these products. Because our current platforms are functionally complete, so it is not about completing functionality. It is about bringing this functionality to market much faster and improve the cost of operations. So on enterprise products, there will be a margin improvement. On the mid-market and MSME segments, there it is all about revenue and bringing a differentiated product into the market. While we have presence in that market, but we are not the leaders, but this initiative is meant to solidify our positions, drive revenue growth in that business. On the investment side, these -- while the journey is going to be 12 to 18 months for both enterprise and the MSME product, but we will be -- this is agile development. So you will continue to see -- we will continue to release functionality and modules must before the end of this period. Probably every 2 to 3 months, we will have product releases that will happen. On these investment figures, we will release those figures as we mature in this quarter and get a better handle on some of these costs.

This, I would believe, will be expense accounting rather than CapEx accounting. Would that understanding be correct?

Yes. I think that is something that we will work on from an accounting incentive perspective. The current messaging is on the investment in the product development, the accounting is something that will follow it.

Sure. No problem. All right. And the second question is on the platformization and making business -- making even more SaaS and EBIT. Is there any plan in the horizon to go beyond HRO?

There are plans to work on adjacencies. So we are already working to HRO, for instance, in PF Trust management, et cetera. We are also working on initiatives to integrate with upstream solutions, for instance, the MSME or SME enterprise, ERP, et cetera. So those conversations and those alliances we are already putting into place to strengthen our brand positioning. Now if your question is, are we going to build solutions like that? I'm not going to say no, but that situation is evolved. Right now, we see a very large market in front of us in the HRO space. And we are fair in square going after that market. And the product solution suites will evolve as we get deeper into that market. But our focus for now is absolutely on this MSME, HRO market.

Okay. And if you can just give us some overlay of the land, as you mentioned, that you opened in North America sales team as well. What is the right to win there? And how should one really think about it that market is large, and we are just a start-up there. So if you can just give us an idea of how should we want to think about it over the longer run?

Yes. On the North America market, we are focused on -- there is a -- because of COVID, there's changes in strategy that we have done. Earlier, we were focused on the large enterprise market, and there was substantial focus on the retail segment. Because a lot of our existing customer base is in the retail. So we are strong in the retail business in DBS. Because of COVID, that segment has taken a beating. So we have changed the strategy a little bit, we've adapted. We are now saving square-focused on the mid-market segments with a very heavy emphasis on digital solutions. Digital solutions, both in the contact center space and in the back-office operations. So this that I mentioned is a function of the strength of our digital solutions and leading our offering through digital solutions. It's an outcome of that. So from a market segmentation perspective, we are going after mid-market segments, especially with heavy digital emphasis.

And so how -- what would be the size of this space team that you deploy them?

Sorry, size of the what again?

Sales team that you would have deployed there.

Sales team, we are currently at around 3 people, and we are augmenting it further. This is also supplemented by -- in an inside sales team, which is almost 10-odd folks who are driving the -- this inside sales team is driving our sale campaigns and is also doing our account-based research and marketing.

Great. And I have more questions. Should I continue or should I fallback in the queue, if the queue is long?

We move on to -- Shrey, I would suggest that if there any questions, you hold them for later. Let's move to others for now.

The next question is from the line of [indiscernible] from [ Camio Capital ].

Glad to know about the healthy sales pipeline that you guys spoke about. In that context, one could imagine that there would be of low-hanging fruit with the synergy with...

I'm sorry to interrupt you, Mr. [indiscernible], but your voice is breaking. Can you please check?

Okay. I will hope I'm more audible now. My question is in the direction of the sales synergy with Quess, one would imagine that after the merger, there would be a sufficient amount of low-hanging fruit on the Quess side. And obviously, we had COVID storm coming along. But can you help understand that have you kind of consumed some of it or most of the low-hanging fruit or where are we in that sense? And would we have expected a jump, I would imagine, especially on the HRO business, a onetime jump in sales revenue, so...

Mr. [indiscernible], I'm really sorry to interrupt you again, but the audio, it's still not clear, sir. It's still breaking. May I request to join the queue -- join -- like disconnect your line and join back?

Yes.

Moderator, while Mr. [indiscernible] gist of the question I get, so I can respond to it now. And Mr. [indiscernible], once you have a better line, then you can come back. So the question is on Quess -- cross-sell with Quess. See, the cross-sell with Quess has been solidified over the last 6 months. We have almost 9 -- 10 deals that we have finalized in the last quarter, which have come directly as a result of our cross-sell efforts along with Quess. Because of COVID, we didn't see too much traction in Q1. But towards the end of Q1 and Q2, we have seen some early traction on these cross-sell initiatives. There are almost 9 to 10 deals that we've already closed through this cross collaboration with wet Quess sales. I mentioned the INR 1.5 crores in ACV that we've added. And you'll see a lot of these deals starting to produce revenue in late Q3 and early Q4. So all of these deals are in transition stages. That's one. Second is, in terms of the size of this cross-sell opportunity, I will say we've only started yet. This is -- the initiatives have only started. The sky is the limit, to be honest, given the customer base that Quess has. So this is not even the low-hanging fruit yet for us. We are working very systematically increasing the cross-sell channels with Quess. Both Quess and Allsec, we put in processes in place to make this more systematic. The collaboration, both at Quess corporate level and with the individual entities of Quess, there are very structured mechanisms in place to attract the opportunities and bring them to closure.

The next question is from the line of Vijay Kumar Subramanyam from Trustline PMS.

I just would like to know more about the TCS partnership and how you are planning to scale up this partnership to your HRMS platform?

Sorry, we didn't catch that. What partnership are you talking about?

TCS, sir. You have a partnership with TCS, some kind of a partnership, right?

Yes, yes, yes. So the partnership -- can you hear me? The partnership with TCS is in our HRO space. That is TCS is leveraging our suite of HRO solutions. They drive the sales while we deliver the technology and the operational solutions in the HRO space. That offering is directed towards both the India and their international markets. At this point, there has not been traction on that yet in terms of signing the customer. We have joined GTM arrangement in place with them. But at this point, there is no deal that has come to fruition. We are reworking on joint sales with them at this point.

Because of the COVID-related stuff or is generally, it's slow -- it's moving at the slow pace?

It is -- I would say a function of both. Since they are the ones who are driving sales on them, we have the technology solution. So it is a function of their sales effectiveness to some degree. But yes, there is -- we've had deals from the tables, and then they have slowed down because of COVID. So there is a COVID impact as well.

The next question is from the line of Ankita Mehta from EV Capital Advisor.

I, first of all, would like to congratulate you. And I really appreciate the initiatives taken to hold this call and you continue this practice going forward. I wanted to ask a question related to the overhead costs. And it has come down this time. And I was wondering if we're going to continue on the cost savings? And are there any more levers in place? Or should we assume that basically the second half is going to have -- sorry, I'm sorry. What I'm trying to say is, like are there more levers in place? Or should we assume that this is the base -- for the next few quarters or will things change accordingly after the normalcy?

Ankita, thanks for that question. I think the cost save initiatives that Ashish had mentioned earlier is here to stay. So we will see the reduction in our overhead costs, which is a permanent reduction. And the journey is not over. We continue to review our internal processes and expenses close to make sure that any non-value-added activities are taken off and costs are controlled. So that's for -- we are very clear that the costs are not going to go up. There will be some cost increase once things return back to normal in terms of the utility costs, when the office gets, more employees back in. But that will be offset by a reduction in the COVID-related costs. So I think our are likely to be similar lesser than what we had in H1.

The next question is from the line of Deepak from Sapphire Capital.

Sir, just wanted to understand, have you shared any kind of outlook for growth in terms of this year and next year? So any comment on that would be helpful.

Deepak, we've not shared any outlook as it as we are evolving from our investor engagement process. We will see how we can engage better. But at this time, we're not sharing any outlook. I think Ashish will this cover in general, the teams that we are looking at from a business perspective, but we're not looking at a guidance at this stage.

The next question is from the line of Saurabh Ginodia from SMIFS Limited.

I have a couple of questions. First is on HROs business. What is the total size of opportunity we are targeting on the HRO side? And can you also share your 3-year vision for the HRO business? What kind of margin aspiration do you have on HRO side over the longer period?

Right. See, the unaddressed -- so your first question is on the market sizing. See the unaddressed market, we think is in the order of about INR 1,000 crores revenue the market size. The SME segment, MSME segment is a component of that at this point, and that market is very, very fragmented. There are players who have some trend, but it is still very fragmented. So it's -- that market is very right for someone with a differentiated offering to go and attack and get market share. No one is in a leading position in that market. Over the 3 years, there are 2 distinct strategy or rather a little more than 2 strategies. So the first is, I've spoken about strengthening our enterprise solutions. And there, it is about reducing our cost of operations and getting aggressive on our enterprise sales. That market, we're already market leader, but it's about strengthening our position there. On the MSME and SME segment, that is about creating a SaaS product. Today, we operate in that space. We have customers in that space, but we operate in a managed service environment, not in a SaaS. So we will create a new SaaS product direct to this market. Components of that solution will start coming to market as soon as in the next 3 to 4 months. The complete built will take perhaps 12 to 18 months. Our 3-year vision for that segment is the next 1 year is, of course, about building our solutions set and getting our product management and our sales engine in place. This is largely going to be digital sales and partnerships alignment that we'll go after. So the next 1-year really is about getting that engine in place, the product and the sales engine, product management engine in place. Post that, we intend to be extremely aggressive in terms of market share for that market. And you should start seeing traction and visible action on that front from a marketing perspective as soon as perhaps within the next 6 to 9 months is my guess. There are some interesting players in that segment, which are at the cusp of enterprise and SMEs, which are very industry-specific solutions. And we are working on those solutions as well. I'm not -- I can't talk more details of that yet. But perhaps in the next quarter, we can give you more details as we get results. So there are some unique vertical solutions as well, which are part -- which are in the cusp of the enterprise and the MSME segment. So that's strategy 2. Strategy 3 is our international expansion. We are becoming at scale in Southeast Asia and Manila. Manila is the second geography that we're focused on, and we are augmenting sales. Our pipeline and growth in that region is looking extremely good. So that's the second, and we are hoping to expand our geographic sales presence beyond Manila in the next 6 months. Depending on how the Middle East shapes up and the economy shapes up, that may be another region that we'll take a decision on towards the end of this 6 months.

Okay. And on the margin side, if you can share?

See the margin side, at this point, the HRO business is close to -- so about a year back, the margins in -- the EBIT margins in the HRO space were around 35%. We've already expanded those margins by almost 30% in this 1 year. So there is a 30% improvement in EBIT. And EBIT margins, you see coming from our digital solutions and the automation that we are driving. The end game, I think, if we are successful in what we're doing, et cetera, I expect the margins to be north of 40% for this business. For SaaS businesses, you will continue to see in the market, you tend to see margins like 50%. But we will always remain a mix of SaaS and managed service. Our enterprise, large enterprise market,will continue to be managed service. That is our strength. So you will see a mix of SaaS and a mix of managed service there. I expect around 40% to be -- 40%, north of 40% to be our EBIT margin profile for this business.

Okay. On the MSME part, on the HRO, what we believe is that this segment is competitive in nature. So what differentiation are we bringing on the table? And will this be a margin dilutive business?

So on the differentiation strategy, we are working on that. I can't disclose more details than that at this point. We are very deeply studying the players in this market, we understand. And please remember that in this market, we come from a position of strength. So we are not new entrants. We know this space extremely well. In the past, we have chosen not to play in this space. And so we are not coming from a vision of weakness. We already have the relationships. We have deep domain expertise. It is about creating the right solution. On the differentiated position from a product perspective, we are -- we have some early thoughts. Obviously, payroll is one component and how to simplify payroll is one component of that. But at this point, I can't discuss more on that. In the -- from a margin perspective, in the next 1 year, as we build this, there will, of course, be cost that we take on to build this business up. And it could have a -- will have an EBITDA impact. But at this point, we're still in early stages of sizing it. So as we size the impact, we will issue guidance as we go along. By and large, in steady state, I don't expect this business to be margin dilutive.

Okay. That was quite useful. In your opening comments, you highlighted some big deal wins, both on the digital and on the HRO side. Will it be possible for you to share some names of the clients from whom we have got this business? And will there be any concentration risk going forward?

No, we can't give our clients' names. My apologies on that.

Okay. And do you see any concentration there going forward?

No, not really. See, we -- there is concentration risk that we are working on right now as we speak, right? The more customers that we get in the new -- as a new deal pipeline picks up space post-COVID, that concentration risk is only going to go down.

And just to add, I think in the HRO business, our concentration risk is actually very minimal. We have 4 customers, and the concentration risk is very low. So any additional customer will only improve the -- will dilute the competition risk.

Understood, quite clear. Sir, another question. In your opening comments, I heard you saying that we are also working on some Smart platform. So can you elaborate on this?

Yes. So Smart HR, SmartPay are our current solutions in market. Smart HR is our suite of HRMS solutions, and SmartPay pay is our payroll platform. And I touched upon the modernization and augmentation of those 2 platforms.

The next question is from the line of Keshav Garg from CCIPL.

Sir, my concern is that we are sitting on INR 170 crores of cash. And by the year-end, it will probably exceed INR 200 crores and our market capitalization is INR 400 crores. And last year, we did an EBITDA of INR 75 crores. So basically, the company is trading at EV of EBITDA of 2.6x. Sir -- and now in the AGM, the management told us that you are preserving the cash to do acquisitions. Now sir, we know how the acquisitions of our parent company has turned out. So value-destructive acquisition is the primary correct to the shareholders of this company. And sir, I don't think you will get an acquisition target at 2.6x EBITDA. So since our stock is trading so cheap, doesn't it make sense to do a share buyback, extenuate some share, reduce the share capital and increase earnings per share permanently? Sir, what do you have to say about it?

Yes. Yes. So we touched upon this in the AGM as well. See, at this point, there are multiple reasons to conserve cash. One is, of course, we are -- let's not forget, we are in tough times right now. And the order of the day is to conserve cash. That is one. Second is both on the acquisition, while we continue to look for opportunities, we are not going to do a value destructive. It will be a strategic acquisition if and when that happens. We are willing to take our time and make the right acquisitions. We are in no rush to do an acquisition. The right opportunity has to come. There are several opportunities that have come up in the last few quarters, and we've chosen not to do any of them proceed with any of them, simply because we didn't see strategic fits. So rest assured that there will be ROE-driven decisions that we take behind the cash that we are working on. I'll also ask Raghu to add comments on cash each.

So I think the buyback and dividend, these are things that we've been consistently monitoring what is the to replace this cash and also As we come out of this pandemic, this is an area that we will look at and see what is this for all shareholders concern. And obviously, with and no connect having 78% of the shares, any cash that goes on is actually going to the parent company, right? But the intention here is to keep the cash inside the business we can replace it in the business. So I think that is the current thought question. But we take to a point, we will continue to monitor this and see what is interest in terms of return for our shareholders.

Okay, sir, that is I hope what you are saying turns out to be true. And sir, lastly, I wanted to just understand that when will we hit our pre-COVID quarterly run rate of around INR 80 crores top line and around INR 20 crores EBITDA?

Yes. I think we believe that end of Q3, we will start getting into the pre-COVID run rate. So on a quarterly basis, I think, Q4 is when we are hoping we at that kind of a level.

Okay, sir, best of luck. And sir, please consider at least a small buyback. You don't have to do a buyback of INR 200 crores, maybe INR 50 crores you can do.

[Operator Instructions] The next question is from the line of Tanya Sinha from CPS Capital.

Can you please talk about the rebranding of CLM to DBS? Is this more than a name change? And fundamentally, how does it make Allsec's stronger?

Yes. So the rebranding is more than a name change. It is a reflection of the work we have put in over the last 6 months in making our -- all our offerings digital and led by digital rather than led by conventional contact center, back office kind of offerings. So there are solutions that we have digital solutions and kind of solutions, we have woven into all the industry offerings that we have, whether it is contact centers or back office. So as you look at our offerings even on a website and our sales collaterals, you will see a lot of intelligent solutions move in. So it's a reflection -- simply a reflection of the work we've done and also a reflection of where the industry and our customers are going and what they are looking for.

The next question is from the line of [indiscernible] from IIFL.

Sir, my question is regarding the note regarding the code on social security that was this passed but not yet notified. While it may be difficult to quantify the amount of provisions or impact that it can have? I'm just curious to understand where do you see the impact coming from? Or what are the changes that can cause additional provisions to be made?

Okay. So I think for when we've done impact analysis, we believe that there's not going to be a material impact to our financials. At one area where an impact could come is that there's a top of a national level wages being fixed. That happens and this -- frankly, we are already in Chennai the minimum probably higher than most of the other in the country. But if there's any impact that comes from minimum weages, we probably discuss with our customers and sort on. This note is only information to the shareholders at this point of time that as and when that happens, that will be a delta in terms of policies -- some because we still don't know what is going to be the national level minimum wages. Other than that, on the social security, mostly it relates to contract employees and fixed-term employees. Those are not something that impacts Allsec's financials.

Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to Mr. Ashish Johri for closing comments.

Gentlemen and ladies on the call, thank you for the pleasure in talking to you. We will maintain this practice of updating all of you over the call on our earnings and performance, probably every 6 months or so. Thank you so much for your time.

Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.