India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
WNS (Holdings) Ltd. (WNS) $11.85
Equity Research
First Take: 3Q operating results weaker, FY11 outlook intact; Sell
News
WNS reported 3QFY11 net revenue of $92.7 mn (-4% yoy; -0.4% qoq),
below our and consensus estimate of $94.5 mn and $93.2 mn respectively.
GAAP EPS finished at $0.13 vs. our estimate of $0.09; excluding stock
comp and amortization, adjusted EPS was 0.33, $0.03 above our and
consensus estimate of $0.30, with variance from lower revenue and
margins offset by lower SG&A costs, higher “other” income, and a lower
tax rate.
For FY2011, management revised its net revenue guidance to $367-$370
mn (from $363-$378 mn); adjusted net income guidance to $44-$47 mn
(from $43-$46 mn). These compare to our and consensus estimates of $372
mn and $371 mn for net revenue, and $43 mn for adjusted net income.
Analysis
Adjusted gross margin finished at 33.9%, 320 bp below our estimate of
37.1%, and adjusted operating margin was 13.0%, 210 bp below our
estimate of 15.1%; the lower gross margin was attributed to change in
pricing terms with a large travel client, wage inflation and a stronger INR.
3QFY11 headcount was 21,213 (-1% yoy; -1 qoq), 3% below our estimate of
21,910. Employee attrition was 42%, flat qoq. Billed DSO finished at 47
days, up from 41 days last quarter. FCF was $8.5 mn, below our $11.9 mn
estimate.
Implications
Weaker-than-expected operating results and downward revision of the
higher end of FY11 revenue guidance are consistent with our view that
WNS’ earnings growth prospects remain muted through FY11, as
operating metrics (headcount growth and attrition) remain weak and
significantly trail industry peers. In addition, while the company delivered
EPS upside, operating results including revenue, margins, and FCF all
finished below our forecast. Our price target remains unchanged, and we
expect more details following management’s conference call this morning.
INVESTMENT LIST MEMBERSHIP
Americas Sell List
No comments:
Post a Comment