eClerx Services Ltd's Q3FY19 consolidated net profit declines 44.3% qoq to Rs39cr : Misses Estimates

The company’s consolidated revenue stood at Rs358cr, up 0.5% qoq and 5.2% yoy.

Jan 31, 2019 02:01 IST India Infoline Research Team

eClerx Services Ltd Q3FY19

Consolidated Results Q3FY19: (Rs in cr)

Q3FY19 QoQ (%)
Revenue 357.63 0.5
EBIT 54.37 [25.4]
EBIT Margin (%) 15.2 [529]
Net Profit (adjusted) 38.96 [44.3]
***EBIA margin change is bps
eClerx Services reported numbers for Q3FY19 came in below consensus estimates on all fronts. Top-line grew by 0.5% qoq to Rs358cr, against median consensus estimates of Rs368cr. Revenue in USD terms grew by 0.3% qoq to USD50.2mn. EBIT came in at Rs54cr, down 25.4% qoq against median consensus estimate of Rs77cr. EBIT margin contracted by 529bps qoq to 15.2%. Reported PAT declined by 44.3% qoq to Rs39cr against consensus estimate of Rs67cr.
  • Revenue in constant currency (CC) terms grew by 0.7% qoq.
  • The revenue was under pressure as two of 1mm+ emerging clients had change of control.
  • Margins were impacted on account of further investments in onshore delivery and on one-time impact of Pune consolidation.
  • The impact on gross margins was ~260bps qoq (decline in utilisations and higher onshore revenues). G&A expenses were higher by ~220bps qoq on account of higher facility related expenses (overlapping Pune facility cost, which is likely to decrease  in Q1FY20).
  • Depreciation was higher by 50bps qoq on account of Pune consolidation. This is likely to increase till Q1FY20.
  • PAT was impacted on account of nil other income vs. other income of Rs19cr in Q2FY19. This was on negative exchange rate movement resulting in loss of Rs11cr vs. gain of Rs11cr in Q2FY19.
  • Strategic (Top 10) clients grew by 2.1% yoy in USD terms and 2.2% yoy cc. Emerging clients grew by 4% yoy in USD terms and 7% yoy cc.
  • DSO improved from 89 days in Q2FY19 to 85days in Q3FY19.

Technical View:

eClerx Services Ltd is currently trading at Rs. 1,055, up by 3.5 points or 0.33% from its previous closing of Rs. 1,051.50 on the BSE.
The scrip opened at Rs. 1,050.85 and has touched a high and low of Rs. 1,094.95 and Rs. 991 respectively. So far 57,081 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.

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