eClerx Services Ltd. share price target

Maintain SELL on eClerx with TP of Rs 1,145, at 13x Dec-19E EPS eClerx posted in-line revenue, while operating performance was sub-par. Revenue came at USD 48.9mn, 1.1% CC QoQ. Growth was led by Top-6 to 10 and Non-top-10 accounts which grew 3.9% QoQ each, while Top-5 (60.5% of rev) accounts declined 0.6% QoQ. EBITDA% stood at 22.9%, -233bps QoQ with lower gross margin (-50bps impact with investments onsite) and higher SG&A; (-175bps impact with increase in business development staff). APAT came lower at Rs 0.57bn, -21.3% QoQ impacted by lower profitability and lower other income.

Eclerx' revenue de-grew 1% QoQ (our estimate: 2% QoQ decline) in Q2 on loss of business from one of the top clients in US. Operating margin (~25%) decreased ~160 bps QoQ owing to lower offshore utilization coupled with increase in onsite delivery cost.

We expect revenue/EPS growth at 7/2.5% CAGR over FY17-20E, factoring USD revenue growth of 1.0/9.9/10.2% and EBIT% at 26.9/27.6/27.7% for FY18/19/20E, respectively. Our negative view on eClerx is substantiated by sub-par industry growth (EPS CAGR of 2.5% vs ~12%) and premium valuations (>10%). Maintain SELL with a TP of Rs 1,085, 12x Sep-19E EPS. eClerx Services posted muted numbers, largely in-line with our estimates. Revenue came in at USD 48.4mn, -1.8% QoQ CC (USD 47.8mn est.), as growth in the emerging accounts (USD 1.4mn QoQ) was offset by a decline in Top-10 accounts (USD 1.8mn QoQ). Top accounts growth was impacted by revenue decline in a large US client (within top-6 and at >USD 5mn annual rev rate). EBIT% was lower by 163bps QoQ at 25.2%, impacted by an increase in onshore delivery and lower offshore utilisation (-230bps impact).

ICICI Securities Ltd | Retail Equity Research eClerx reported Q2FY18 earnings, where US$ revenues were above our estimates while margins were way below our expectations US$ revenue fell 0.8% QoQ to $48.4 million and was above our $47.1 million estimate. Constant currency revenues declined 1.8% QoQ Revenues in rupees declined 0.7% QoQ at | 330.9 crore and was above our | 319.2 crore estimate At 28.8%, EBITDA margins declined ~130 bps QoQ and were much...

Subdued Quarter, But Bottom Seems To Have Been Hit eClerx Services (eClerx) has reported another underwhelming performance in 2QFY18 with revenue declining by 0.8% QoQ in USD terms to US$48.4mn (-1.8% QoQ in CC terms). In INR terms, revenue dipped by 0.7% QoQ to Rs3.3bn. On the other hand, EBIT margin contracted by 103bps QoQ to its lowest-ever level of 25.4% owing to poor revenue growth and higher employee cost. However, the company has guided for better performance in 2HFY18E, with revenue growth likely to be achieved on strong pipeline growth (late stage pipeline up 2x YoY) and a toning down of the impact of the ramp downs in some of its top clients, a factor that has...

Eclerx delivered in-line revenue growth (2% QoQ) in Q1, driven by strong deal wins in financial services in FY17. Operating margin (~27%) decreased ~260 bps QoQ owing to annual salary hikes and increase in delivery headcount.

US$ revenues grew 1.9% QoQ to $48.8 million in line with our $48.6 million estimate. In constant currency, revenues grew 1.4% QoQ Revenues in rupees grew 0.5% QoQ at | 333.2 crore and were above our 3.2% decline and | 320.9 crore estimates (average rupee realised: 68.3 vs. 65.5 assumed) At 30.1%, EBITDA margins declined 350 bps QoQ and were below our estimate of 31.7% and 200 bps decline. The EBITDA margin decline was led by an increase in employee expenses (8.8% QoQ)...

We expect revenue/EPS growth at 5.9/3.0% CAGR over FY17-19E, factoring USD revenue growth of 1.0/11.0% and EBIT% at 27.9/30.3% for FY18/19E, respectively. Maintain SELL with TP of Rs1,115, 12x FY19E. eClerx posted revenue of USD 48.8mn, 1.9% QoQ (1.4% CC) and -2.8% YoY, supported by growth in the Top-5 accounts, while the Top 6 to 10 accounts dented performance (-2% QoQ). EBIT% came in at 26.9%, -267bps QoQ, impacted by wage increase (-240bps impact), INR appreciation (-150bps impact) and higher S&D; expenses (-20bps impact), mitigated by lower G&A; (lower CSR) and lower depreciation expenses (lower CAPEX). APAT came in at Rs792mn, 5.9% QoQ and -17.4% YoY.

Eclerx delivered 1.5% QoQ growth in Q4, as the impact of project roll-offs got pushed out to Q2FY18 (earlier it was expected to impact till Q1FY18).

eClerx Services (eClerx) reported its Q4FY17 earnings where US dollar revenue and EBITDA margin were above our estimates US$ revenues grew 1.5% QoQ to $47.9 million, above our 0.3% QoQ...