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http://content.icicidirect.com/mailimages/ICICIdirect_Eclerx_Q4FY12.pdf
S o f t q u a r t e r …
eClerx reported its Q4FY12 numbers, which were marginally below our
estimate. US$ revenues were flat sequentially at $25.5 million vs. $25.4
million in Q3 while they grew a modest 0.5% in constant currency.
Operating (EBIT) margins declined 950 bps QoQ primarily led by an
increase in sales & marketing (S&M) costs (-3.3%), higher G&A costs led
by M&A transaction costs (-1.9%) and forex (-2.5%). The management
highlighted that a substantial (~6-7 pp) part of Q4 EBIT margin impact
was non-recurring in nature. Though the management commentary on
FY13E growth was overtly cautious, we believe, it could help temper
expectations.
Earning summary
Q4FY12 revenues of | 127.6 crore (up 33.5% YoY and 3.3% QoQ decline)
were marginally below our | 132 crore estimate. EBITDA of | 46.8 crore
was also below our | 58.7 crore estimate. eClerx earned diluted EPS of
| 10.1 below our | 13.9 estimate led by lower revenue growth & EBITDA.
Operating metric highlights
The North America contribution stood at 70% and revenues grew 0.4%
QoQ while Europe (contribution declined 1% QoQ) declined 3.8% QoQ.
RoW grew 17.1% QoQ. Days sales outstanding declined to 30 days vs. 52
days in Q3 led by one-off accelerated realisations. The company added 10
clients in Q4 but the active client base declined by two to 55 in FY12 vs.
57 in FY11. Staff utilisation was at 72% in Q4. The company added 747
employees in FY12 while attrition stood at 30.9% vs. 38.7% in Q4FY11.
V a l u a t i o n
We expect FY13E US$ revenues to grow 15.7% while rupee revenue/EPS
could grow 23%/17%, respectively. We expect FY14E revenue/EPS to
grow 16%/12%, respectively, which translates to a revenue/EPS CAGR of
~25%/20% during FY11-14E. We have now valued eClerx based on
CY13E EPS estimate. We value eClerx at | 820, i.e. at 12.2x our CY13E
EPS estimate of | 67.4. We have arrived at our target multiple applying a
PE/G of 1x on FY14E earnings growth (1.08x earlier). We have reduced
our PE/G to account for lower EPS growth and longer time horizon.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_Eclerx_Q4FY12.pdf
S o f t q u a r t e r …
eClerx reported its Q4FY12 numbers, which were marginally below our
estimate. US$ revenues were flat sequentially at $25.5 million vs. $25.4
million in Q3 while they grew a modest 0.5% in constant currency.
Operating (EBIT) margins declined 950 bps QoQ primarily led by an
increase in sales & marketing (S&M) costs (-3.3%), higher G&A costs led
by M&A transaction costs (-1.9%) and forex (-2.5%). The management
highlighted that a substantial (~6-7 pp) part of Q4 EBIT margin impact
was non-recurring in nature. Though the management commentary on
FY13E growth was overtly cautious, we believe, it could help temper
expectations.
Earning summary
Q4FY12 revenues of | 127.6 crore (up 33.5% YoY and 3.3% QoQ decline)
were marginally below our | 132 crore estimate. EBITDA of | 46.8 crore
was also below our | 58.7 crore estimate. eClerx earned diluted EPS of
| 10.1 below our | 13.9 estimate led by lower revenue growth & EBITDA.
Operating metric highlights
The North America contribution stood at 70% and revenues grew 0.4%
QoQ while Europe (contribution declined 1% QoQ) declined 3.8% QoQ.
RoW grew 17.1% QoQ. Days sales outstanding declined to 30 days vs. 52
days in Q3 led by one-off accelerated realisations. The company added 10
clients in Q4 but the active client base declined by two to 55 in FY12 vs.
57 in FY11. Staff utilisation was at 72% in Q4. The company added 747
employees in FY12 while attrition stood at 30.9% vs. 38.7% in Q4FY11.
V a l u a t i o n
We expect FY13E US$ revenues to grow 15.7% while rupee revenue/EPS
could grow 23%/17%, respectively. We expect FY14E revenue/EPS to
grow 16%/12%, respectively, which translates to a revenue/EPS CAGR of
~25%/20% during FY11-14E. We have now valued eClerx based on
CY13E EPS estimate. We value eClerx at | 820, i.e. at 12.2x our CY13E
EPS estimate of | 67.4. We have arrived at our target multiple applying a
PE/G of 1x on FY14E earnings growth (1.08x earlier). We have reduced
our PE/G to account for lower EPS growth and longer time horizon.
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