Updater Services Limited (UDS) has released its financial results for the second quarter of fiscal year 2026, reporting a decline in revenue but an improvement in EBITDA.

Financial Highlights

Revenue Decline Amid Strategic Wins

Updater Services reported consolidated revenue of ₹7,349.00 million for Q2 FY2026, marking a 7.00% decrease from ₹7,869.00 million in the same quarter last year. Despite the revenue decline, the company secured several strategic contracts during the quarter, which are currently in the ramp-up phase.

EBITDA Improvement

Despite the revenue decline, UDS saw a significant improvement in its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). EBITDA increased to ₹506.00 million from ₹371.00 million in the previous year, representing a 36.39% growth. The EBITDA margin expanded notably, rising from 5.00% to 7.40%, an improvement of 240 basis points year-over-year.

Half-Year Performance

For the first half of FY2026, Updater Services reported a 7.00% decline in revenue to ₹14,402.00 million. EBITDA for H1FY26 fell by 17.00% to ₹815.00 million compared to the same period last year.

Business Segment Performance

The company's BSS companies, Denave and Athena, experienced impacts from global industry headwinds. However, UDS Group added 28 marquee clients across its business segments during the quarter.

Operational Highlights

• UDS received Great Place to Work accreditation for the third consecutive year.
• The company anticipates full-year FY2026 revenue growth in the 0-10% range.
• An internal review of the Avon subsidiary identified certain instances where thorough due diligence processes for customers were not adequately completed.

Looking Ahead

While Updater Services faces challenges in revenue growth, the improvement in EBITDA and margins suggests effective cost management. The strategic contract wins and new client additions provide potential for future growth. However, the company will need to address the identified due diligence issues in its Avon subsidiary and navigate the global headwinds affecting its BSS companies.

Investors and market observers will likely keep a close watch on how Updater Services leverages its strategic wins and manages the ramp-up costs of new contracts to drive sustainable growth and profitability in the coming quarters.

Updater Services Limited (UDS) has reported potential financial irregularities in its subsidiary, Avon Solutions & Logistics Private Limited (Avon), involving significant trade receivables and payables. The company has initiated an investigation into the matter, which could have implications for its financial results.

Key Findings

UDS has identified the following issues in Avon's financial records:

Details of the Irregularities

The irregularities involve transactions related to:

• Sales to certain customers
• Services procured from specific vendors

These discrepancies were discovered in Avon's financial records as of September 30, 2025. In response, UDS has recorded a provision for doubtful recovery of INR 30.00 million against the questionable trade receivables in its unaudited consolidated financial results.

Company's Response

UDS management has taken the following steps:

1. Initiated an investigation into the irregularities
2. Evaluating necessary actions to address the situation
3. Made a preliminary assessment leading to the provision for doubtful recovery

Potential Impact

The company has stated that it is currently unable to evaluate the likely outcome or consequential impact on its financial results. This uncertainty stems from the ongoing nature of the investigation.

Regulatory Compliance

In compliance with Regulation 30(9) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, UDS has informed the stock exchanges about this development. The company has committed to keeping the exchanges informed of any material developments as they occur.

Investor Considerations

While the full extent of the impact remains unclear, investors should note that:

• The irregularities are confined to a subsidiary (Avon)
• UDS has taken proactive steps by initiating an investigation and making a provision
• The situation may evolve as the investigation progresses

Stakeholders should stay alert for further updates from Updater Services Limited regarding this matter and its potential impact on the company's financial position.