Q1FY14 quarter results were mixed wherein revenues were in
line with our expectations which grew by 7% QoQ; however
margins disappointed which witnessed pressure of 320 bps QoQ
due to onsite wage hikes and higher visa costs. The management
has cited better growth in H2FY14 on the back of increased
demand momentum in Product engineering in North America
and uptick in IP led revenues. At CMP the stock is trading at a P/E
of 9.4x/8.6x its FY14E/FY15E earnings and investors can
accumulate the stock on dips since outlook continuous to be
positive.
Quarter highlights:
Revenues in USD terms grew 1.5% QoQ to $ 63.03mn driven by 4.5%
growth in product engineering business. This business witnessed 3%
growth in volume and 1.5% growth in realisation. However, IP
revenues dipped 12.9% QoQ/ 24% growth YoY and contributed
15.1% to total revenues from 17.5% in Q4FY13.
Revenues in INR terms grew by 7% QoQ and 18.8% YoY at Rs.357.3
crore.
EBIDTA margins were down by 320 bps QoQ to 21.7% erasing the
currency gain of 180 bps due to higher visa costs, addition in sales
team in the US and onsite wage hikes. Company is giving salary hikes
to offshore employees of ~ 8-9% in the current quarter which we
believe would keep the margins under pressure in Q2FY14 as well.
Adjusted PAT for the quarter (forex gain of Rs.18.3 cr/Rs.4.2 crore in
Q1FY14 and Q4FY13 respectively) was down by 9.9% QoQ to Rs
44.05 crore.
IP revenues have been subdued for the last 3 quarters and
management is optimum of better Q3 and Q4FY14 on this front.
Concall highlights:
Onsite revenues grew by 14.6% QoQ (Volume +10.5%, +3.9%
realisation) and offshore revenue grew by 1.5% (+2.3% volume ,
-0.8% realization).
IP revenues would pick up in Q3 and Q4FY14, with revenues from
HP’s Radia Client Automation (HPCA) to start flowing in.
During the quarter, company has won 16 new clients (2 multibillion
dollar clients).
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line with our expectations which grew by 7% QoQ; however
margins disappointed which witnessed pressure of 320 bps QoQ
due to onsite wage hikes and higher visa costs. The management
has cited better growth in H2FY14 on the back of increased
demand momentum in Product engineering in North America
and uptick in IP led revenues. At CMP the stock is trading at a P/E
of 9.4x/8.6x its FY14E/FY15E earnings and investors can
accumulate the stock on dips since outlook continuous to be
positive.
Quarter highlights:
Revenues in USD terms grew 1.5% QoQ to $ 63.03mn driven by 4.5%
growth in product engineering business. This business witnessed 3%
growth in volume and 1.5% growth in realisation. However, IP
revenues dipped 12.9% QoQ/ 24% growth YoY and contributed
15.1% to total revenues from 17.5% in Q4FY13.
Revenues in INR terms grew by 7% QoQ and 18.8% YoY at Rs.357.3
crore.
EBIDTA margins were down by 320 bps QoQ to 21.7% erasing the
currency gain of 180 bps due to higher visa costs, addition in sales
team in the US and onsite wage hikes. Company is giving salary hikes
to offshore employees of ~ 8-9% in the current quarter which we
believe would keep the margins under pressure in Q2FY14 as well.
Adjusted PAT for the quarter (forex gain of Rs.18.3 cr/Rs.4.2 crore in
Q1FY14 and Q4FY13 respectively) was down by 9.9% QoQ to Rs
44.05 crore.
IP revenues have been subdued for the last 3 quarters and
management is optimum of better Q3 and Q4FY14 on this front.
Concall highlights:
Onsite revenues grew by 14.6% QoQ (Volume +10.5%, +3.9%
realisation) and offshore revenue grew by 1.5% (+2.3% volume ,
-0.8% realization).
IP revenues would pick up in Q3 and Q4FY14, with revenues from
HP’s Radia Client Automation (HPCA) to start flowing in.
During the quarter, company has won 16 new clients (2 multibillion
dollar clients).
Other Highlights of the Quarter
253 clients were billed in Product Engineering & Platform solutions Vs 279
in Q4FY13.
IP- led clients billed stood at 387 Vs 418 in Q4FY13.
PSL plans to hire around 500 freshers in Q2 and Q3 FY14
Utilisation decreased by 200bps to 70.0%
Attrition stood at 14.2% Vs 14.4% in Q4FY13
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