eClerx Services Ltd. share price target

Maintain NEUTRAL with TP of Rs 1,140, 13x Sep-FY20E-EPS as valuation support on payout yield (~4%) and >6% FCF yield. eClerx posted in-line set of numbers, both at revenue and operating level. Revenue came at USD 50mn, 1.6% QoQ and 3.4% YoY (USD 50mn est) with 2.2% QoQ in CC terms. EBIT margin came at 20.5%, +87bps QoQ (25.7% est) as lower delivery cost and sales & development expenses (lower travelling cost) offset G&A; increase. APAT was higher at Rs 0.70bn supported by lower ETR.

Maintain NEUTRAL with TP of Rs 1,190, 14x FY20E-EPS as valuation support on payout yield (~4%) and >5% FCF yield. eClerx posted muted 1Q with revenue at USD 49.2mn, -6.4/+0.8 QoQ/YoY impacted by volatility in digital segment (Europe-CLX). EBIT% came at 19.6%, +87bps QoQ impacted by wage increase. APAT was lower at Rs 0.60bn also impacted by higher ETR at 31.3% (24.3% in 4Q).

ICICI Securities Ltd | Retail Equity Research US$ revenues declined 6.3% QoQ to $49.2 million, below our 1.7% de-growth and $51.6 million estimate. Constant currency revenues fell 5.7% QoQ. Revenue decline was mainly on account of tapering of exceptional revenue from short-term specific projects in Q4FY18...

Project Roll-offs, Lack of Backfill Pressurise Revenue eClerx Services (eClerx) has reported a poor performance in 1QFY19 with its revenue declining by a steep 6.3% QoQ (-6.5% QoQ in CC terms) to US$49.2mn (7.2% below our estimate) led by lack of backfill for short-term projects that winded down during the quarter and project roll-offs. In INR terms, revenue declined by 2.5% QoQ to Rs3.52bn (2.5% below our estimate). Despite multiple headwinds on margin front i.e. poor top-line performance, wage hike, higher SG&A; cost and lower utilisation, its EBIT margin expanded by 25bps QoQ to 19.2% owing to cost optimisation efforts and lower depreciation led by annual WDV reinstatement impact. Notwithstanding higher...

At 22.3%, EBITDA margins declined ~430 bps QoQ, much below our estimate of 26.9%, expansion of 30 bps. The EBITDA margin decline was on the back of increasing contribution of onshore revenues (23% to revenues in Q4FY18 vs. 4% in Q4FY17) and higher expenses Reported PAT of | 64.4 crore was below our expectation of | 66.1 crore mainly on account of lower-than-expected EBITDA margin partly offset by higher-than-expected other income Strong growth of 7% QoQ due to specific projects, Q1FY19E to be soft...

Maintain NEUTRAL on eClerx with TP of Rs 1,285, 14x FY20E. eClerx posted strong revenue and sub-par operating performance. Revenue came at USD 53mn, 7.4% QoQ (6.5% CC) and FY18 revenue stood at USD 199mn, 2.3% YoY (vs. 2.5% decline in FY17). EBIT% came at 18.7%, -417bps QoQ (impacted by non-recurring items -270bps impact). FY18 EBIT% stood at 23.3%, -800bps YoY impacted by increase in delivery cost with onshore expansion (-560bps YoY impact) and S&M; impact of -240bps (increase in senior management hires and higher travel expense). 4Q APAT stood at Rs 0.64bn, 11.5% QoQ.

eClerx's business outlook on the revenue front has improved, and we expect double digit revenue growth from FY19E onward. However, owing to margin pressures, EPS growth has been poor (-18.1% in FY18). Nonetheless, we expect margin stability from FY19E onward, which along with 12.3% USD revenue CAGR, is expected to drive >14% adjusted EPS CAGR over FY18FY20E. Thus, given an improving outlook, we upgrade eClerx from REDUCE to HOLD, with...

eClerx' Q3 revenue grew 1% QoQ, in line with our estimate. However, EBIT margin declined 230 bps QoQ to ~23% (vs. our estimate of 25%) on higher business development expenses, increase in onsite delivery staff and higher G&A; expenses.

ICICI Securities Ltd | Retail Equity Research eClerx reported Q3FY18 earnings, where US$ revenues were largely in line with our expectations while EBITDA margin and net profit were way below our expectations US$ revenues grew 1.0% QoQ to $48.9 million and were largely in...

eClerx Services (eClerx) has reported another underwhelming performance in 3QFY18, with its USD revenue rising by just 1% QoQ (1.1% QoQ in CC terms) to US$48.9mn, missing our estimate by 1.9%. However, eClerx's INR revenue grew by 2.7% QoQ to Rs3.34bn, beating our estimate by 5.3%, owing to higher currency realisation. The company reported a major underperformance on operating margin front, with its EBIT margin crashing by a steep 264bps QoQ to the lowest-ever 22.8%, missing our estimate by a substantial 268bps owing to low revenue growth, and higher employee and SG&A; cost. Notably, new business in areas like Managed Services, Robotic Process Automation (RPA) and Analytics having lower initial...