Revenue grew 20% YoY (+11.4% QoQ) to INR6.1b (in-line), led by robust growth in the Creative business. Yet, EBITDA (pre-ESOP) grew by a meager 4% YoY (+6% QoQ) to INR1.3b (8% miss) due to a 25% YoY rise in operating expenses. EBITDA margin contracted 320bp YoY (-120bp QoQ) to 20.9% (180bp). However, adjusted for one-offs (INR100m of forex translation accounting, and INR100m of Montreal set-up cost), EBITDA margin stood at 24.2%. Higher finance cost and depreciation led to a loss of INR87m (est. of profit of INR258m; INR227m profit in the year-ago period).

Creative business drives growth: Segment-wise, Creative remains the key growth driver, with 26% YoY revenue growth and an 800bp YoY EBITDA margin improvement. Tech/Tech Enabled services revenue declined 4% YoY, with a 50bp margin contraction, which is attributed to longer gestation in the international market. India FMS business remained flat, with 2% YoY revenue growth and 360bp EBTDA margin contraction. Healthy outlook on robust order book: We expect consolidated revenue/EBITDA CAGR of 15%/18% over FY17-20E, led by 22% EBITDA CAGR...

Aliasgar Shakir - Research analyst (Aliasgar.Shakir@motilaloswal.com); +91 022 6129 1565 Hafeez Patel - Research analyst (Hafeez.Patel@motilaloswal.com); +91 22 6129 1568 Investors are advised to refer through important disclosures made at the last page of the Research Report....