Upgrades

Reported revenues stood at Rs. 605 crore, down 1.2% q-o-q/up 8.8% y-o-y on a like to like basis, missing our estimates of Rs. 625 crore, impacted by postponement of a Rs. 30 crore deal.

Intellect Design Arena Ltd (Intellect) reported revenues of Rs. 613.7 crore, down 3.3%/0.3% on
q-o-q and y-o-y respectively, missing our estimates of Rs. 63.7.3 crore owing to weakness in platform revenues due to absence of GeM revenue

Improving deal wins in IGCB, IGTB and iSEEC, increased penetration in the US & Europe market, digital-ready product portfolio, healthy pipeline, huge addressable & underpenetrated market and improved annuity revenues bode well for revenue growth. In addition, healthy margins prompt us to revise our EPS estimates upwards by ~10% and ~13% for FY22E & FY23E, respectively. This, coupled with improving cash flows, prompts us to upgrade the stock from HOLD to BUY with a revised target price of | 875 (6x...

The company registered healthy revenues in Q3FY21. Intellect also won six large deals in the quarter representing improving revenue visibility in coming quarters. In addition, the company has a healthy order backlog of | 1203 crore, a strong deal funnel (~| 4162 core) and a digital-ready product portfolio that provides confidence on improved revenue trajectory in coming years. This, coupled with penetration in the US market, traction in iGCB (retail banking focused software product) revenues, improving quality of revenues (licence + AMC as percentage of revenues has increased from...

Intellect's investment in sales effort and R&D is yielding results. Deal wins have been robust led by higher acceptance of Intellect products (iGTB and IDC). The company won 12 large transformational deals in FY19. The deal funnel stands at healthy USD 508mn with 122 opportunities. Cloud partnerships with global cloud leaders will help scale SaaS revenue, which is of annuity nature and higher margin. We maintain our positive stance based on (1) Huge addressable market opportunity (2) Highly-rated and digital-ready product portfolio, (3) Healthy order book, and (4) Traction in large deal wins (iGTB). We estimate USD revenue growth of 15.8/16.2% for FY20/21E. Risk to our thesis includes slowdown in deal wins, increase in R&D and SG&A investments, and global slowdown. We maintain BUY on Intellect on inline 4QFY19. The order backlog remains impressive (+38% YoY), large deal wins in advanced market is reflecting product acceptance. Our TP is Rs 313, assigning 2.0x EV/rev multiple to FY21E rev.

Maintain BUY with a TP of Rs 300, based on 2.2x FY20E EV/revenue multiple. Intellect Design Arena (INDA) posted strong numbers both on the revenue and margin front. Revenue stood at USD 54.3mn (vs our est. of USD 48mn), up 21.7% QoQ and 30% YoY. Revenue out-performance was due to large deal wins leading to strong Licence growth (+137% QoQ). Order backlog remains healthy at Rs 12.50bn (+5.0% QoQ), which provides growth visibility.

Maintain BUY with a TP of Rs 285, based on 2.2x FY20E EV/rev multiple. Intellect Design Arena (INDA) posted weak numbers both on the revenue and margin front. Revenue stood at USD 44.6mn (lower than our est. of USD 47.4mn), down 6.5% QoQ but up 19.2% YoY. Revenue miss was due to shift of two large deal closures to next quarter with licence component of USD 2.6mn. Strong order backlog growth of 14.4% QoQ to Rs 11.90bn (excluding GeM project) provides revenue visibility.

Maintain BUY with a TP of Rs 275, based on 2.2x FY20E EV/rev multiple (2.0x earlier). Intellect Design Arena (INDA) posted robust 4QFY18 both on the revenue and margin front. Revenue stood at USD 47.7mn (higher than our est. of USD 43.6mn), up 14.1% QoQ and 27.6% YoY. Growth was driven by higher license component (+42.3% YoY). The company has a strong order backlog of Rs 10.40bn (excluding GeM project) which is ~79% of FY19E revenue.

Quick Heal Technologies (QHTL), after four quarters of consistent negative performance, has reported a strong recovery both in terms of topline growth and margin improvement. Overall net...

Maintain BUY with a TP of Rs 230, based on 2.0x Dec-19 EV/rev multiple (~75% discount to Temenos multiple). Intellect Design Arena (INDA) posted flat revenue and stable margin performance. Revenue stood at USD 41.8mn (in-line with our est. of USD 41.7mn), up 0.2% QoQ and 24.6% YoY. Growth was flat this quarter due to high licence component present last quarter. The company has a strong order backlog of Rs 9.51bn (excluding GeM project) which is ~77% of FY19E revenue. Adjusting for one time SG&A; expenses of Rs 50mn, EBITDA margin stood at 7.8% (-34bps QoQ). There is non-linearity in the business and margins will expand with growth in licence revenue.

Maintain BUY with a TP of Rs 190, based on 2.0x Sep-19 EV/rev multiple (~70% discount to Temenos multiple). Intellect Design Arena (INDA) posted robust top-line growth in 2QFY18, with margins expanding for the third consecutive quarter. Revenue stood at USD 41.8mn (vs our est. of USD 38mn), up 11.6% QoQ and 21.0% YoY. This was led by 16 go-lives and contribution of new deal wins (Bangkok Bank, LIC and Utkarsh). EBITDA margin stood at 8.1%, +144bps QoQ, led by revenue growth, stable SG&A; and higher margin licence revenue.

Intellect Design Arena (INDA) posted strong Q4 numbers, with a 11.3% QoQ jump ( 11.9% CC) in USD revenues (USD 37.4mn vs est of USD 35.0mn). The growth in revenue was owing to deal wins, higher licence fees and 16 go-lives in the quarter.