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Dolat Capital Report
eClerx Services Ltd.constant currency revenue grew 1.6% QoQ our estimate -0.7% led primarily by financial markets business. Operating profit margin declined by 390 basis points QoQ to 17.2% our estimate 18.1% due to wage hike impact 304 bps and full impact of senior hiring undertaken in Q4.
Management reiterated Ebitda margin band of 24%-28% for FY25 and aspires to achieve double-digit revenue growth. Strategies are mainly focused on getting top quadrant growth and industry leading OPM over FY24-28E. Expect OPM to improve through the rest of FY25.
eClerx Services reported mixed results, but was able to secure robust deal wins which boosted Off-shore revenue share and headcount additions.
Noting OPM miss and company’s focus on pursuing growth over profitability, we lower our earnings estimate by 2.7%/3.2% for FY25E/ FY26E.
Maintain ‘Accumulate’ rating with target price of Rs. 2,680 valuing at 21 times FY26E (implies 2 times on price-to-earnings growth basis).
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