Intellect Design Arena Ltd. share price target

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.

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.

Maintain BUY with TP of Rs 180, based on 2.0x FY19 EV/rev multiple (~75% discount to Temenos multiple). Intellect Design Arena (INDA) posted muted top-line growth in 1QFY18, but efficient cost management in the last two quarters provided some relief to the cash burn. USD revenue stood at USD 37.4mn (vs our estimate of USD 38mn), up 0.1% QoQ and 21.7% YoY. This cannot be termed as bad, considering 1Q is a seasonally weak quarter and 4Qs base was high. EBITDA margin stood at 6.7%, +44bps QoQ, (second quarter of positive EBITDA), led by lower SG&A; and R&D; expenses. Investment in the business has almost reached the threshold, and revenue growth will lead to margin expansion.

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.

Intellect Design Arena (INDA) disappointed this quarter with a 2.7% QoQ (-2.4% CC) drop in US$ revenues (US$ 33.6mn vs est of US$ 37.0mn) and poor cost management. The dip in revenues was largely due to the deferral of two large deals, as banks in the US and Europe are largely keeping their spends on hold. Despite amplified pre-sales efforts, the sales cycle is taking longer to fructify.

Topline Below Expectation EBITDA Negative_Hold

Intellect posted a strong quarter with 12.2% QoQ ( 14.7% CC) US$ revenue growth (US$ 34.5mn vs est of US$ 33.0mn), but cost management has been disappointing. Management also lowered the growth guidance to 16-22% from 22-26% earlier, citing delay in decision making and deferral of deals.