eClerx’ growth metrics will continue to be skewed towards cable business (lower margin) and digital business (smaller-sized projects) as the financial vertical is expected to constrict growth, impacted by higher in-sourcing and automation. High revenue concentration in the financial business (top-10 contributes 74% of 1Q total revenue) and volatility in project cycles is expected to be offset by higher mix of shorter duration projects and faster growth in the emerging accounts (26% YoY growth in 1Q).

Valuation: With mid-single digit revenue growth (vs 19% organic growth in FY16) and decelerating margin in FY17E leading to protracted recovery, we believe that valuations (almost 16x FY18e EPS) are ample. We expect US$ revenue/EPS to grow at 9/8% CAGR over FY16-18E. Maintain NEUTRAL with a TP of Rs 1,465 based on 14x FY18E earnings.