Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NTL reported buoyant 4Q11 revenues (up 8.9% ex-pass-throughs), but margins were impacted
by incentive payouts. We move into FY12 with more confidence, given strong order build-up and
hiring guidance. We raise our revenue forecasts by 3-5%, although FY12 earnings upside is
capped by wage hikes. Buy reiterated
4Q11 results: top-line traction intact, incentive payouts dragged margins
NTL’s 4Q11 US dollar revenues (ex-hedging loss) were up 4.8% to US$70.9m (RBS est:
US$70.2m). Ex pass-through revenues, US dollar revenues were up 8.9% qoq, driven by
seasonal 28.3% qoq growth in GIS and 20% qoq growth in ROOM Solutions, while core IT/BPO
revenues grew 5.7% qoq. The EBITDA margin (ex-hedging) was down 19bp to 21.9% (RBS est
22.4%) despite lower pass-throughs and strong GIS revenues, due to higher-than-expected
variable incentives paid out to staff and a 200bp revenue shift to onsite. Depreciation was up
29.6% qoq to Rs92m due to year-end asset write-offs. The tax rate fell to 11.5% (15.5% in 3Q11)
due to deferred tax credits. Consequently, PAT was up 4.4% qoq to Rs500m (RBS est: Rs516m).
Revenue momentum is strong going into FY12; margin management is the key
Core IT revenues (ex-ROOM, GIS and pass-through) is up 28.2% yoy in 4Q11. Order intake (expass-
through) of US$116m in 4Q11 was up 18% yoy. These include two deals in the US$10m-
15m range. Management spoke of significant client mining opportunities in the travel vertical
(34% of revenues), where revenues were up 17% qoq. A soft spot was manufacturing (-10%
qoq), as a large project was completed. Net headcount increase of 8.4% qoq and a quarterly
hiring guidance of 300 give comfort on continued growth momentum.
Despite consistent performance, valuations remain cheap; reiterate Buy
NTL showed steady progress in FY11 with revenues up 23.1% ex-pass-throughs. We expect
revenue traction given order visibility and strong hiring guidance, and up our FY12/13F revenues
3-5%. Our FY11F EPS upgrade is capped by announced wage increases of 13% offshore and
3% onsite. Our FY13F EPS increases 4%. We do not believe the stock’s 39% discount to similarsized
mid-cap peers is warranted and we reiterate Buy with a PT of Rs274.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NTL reported buoyant 4Q11 revenues (up 8.9% ex-pass-throughs), but margins were impacted
by incentive payouts. We move into FY12 with more confidence, given strong order build-up and
hiring guidance. We raise our revenue forecasts by 3-5%, although FY12 earnings upside is
capped by wage hikes. Buy reiterated
4Q11 results: top-line traction intact, incentive payouts dragged margins
NTL’s 4Q11 US dollar revenues (ex-hedging loss) were up 4.8% to US$70.9m (RBS est:
US$70.2m). Ex pass-through revenues, US dollar revenues were up 8.9% qoq, driven by
seasonal 28.3% qoq growth in GIS and 20% qoq growth in ROOM Solutions, while core IT/BPO
revenues grew 5.7% qoq. The EBITDA margin (ex-hedging) was down 19bp to 21.9% (RBS est
22.4%) despite lower pass-throughs and strong GIS revenues, due to higher-than-expected
variable incentives paid out to staff and a 200bp revenue shift to onsite. Depreciation was up
29.6% qoq to Rs92m due to year-end asset write-offs. The tax rate fell to 11.5% (15.5% in 3Q11)
due to deferred tax credits. Consequently, PAT was up 4.4% qoq to Rs500m (RBS est: Rs516m).
Revenue momentum is strong going into FY12; margin management is the key
Core IT revenues (ex-ROOM, GIS and pass-through) is up 28.2% yoy in 4Q11. Order intake (expass-
through) of US$116m in 4Q11 was up 18% yoy. These include two deals in the US$10m-
15m range. Management spoke of significant client mining opportunities in the travel vertical
(34% of revenues), where revenues were up 17% qoq. A soft spot was manufacturing (-10%
qoq), as a large project was completed. Net headcount increase of 8.4% qoq and a quarterly
hiring guidance of 300 give comfort on continued growth momentum.
Despite consistent performance, valuations remain cheap; reiterate Buy
NTL showed steady progress in FY11 with revenues up 23.1% ex-pass-throughs. We expect
revenue traction given order visibility and strong hiring guidance, and up our FY12/13F revenues
3-5%. Our FY11F EPS upgrade is capped by announced wage increases of 13% offshore and
3% onsite. Our FY13F EPS increases 4%. We do not believe the stock’s 39% discount to similarsized
mid-cap peers is warranted and we reiterate Buy with a PT of Rs274.
No comments:
Post a Comment