Earnings Call Transcript Analysis Report #
Financial Performance #
Key Financial Metrics (Q3 FY25) #
- Revenue: ₹279 crores.
- Quote: “The revenue numbers were around 279 crores for this quarter…”
- EBITDA: ₹34.4 crores.
- Quote: “The EBITDA was around 34.4 crores…”
- Net Profit: ₹21 crores.
- Quote: “…and the net profit is close to 21 crores.”
- EBITDA Margin: 12.3%.
- Quote: “The EBITDA margin is around 12.3%…”
- PAT Margin: 7.5%.
- Quote: “…the PAT margin of 7.5%…”
- EPS: ₹2.2.
- Quote: “…the EPS that we have announced is 2.2 for this quarter.”
Key Financial Metrics (9M FY25) #
- Revenue: ₹812 crores.
- Quote: “…the nine month number is around 812 crores…”
- EBITDA: ₹99.5 crores.
- Quote: “…with the 99.5 crores as EBITDA…”
- Net Profit: ₹60.5 crores.
- Quote: “…and a net profit of 60.5 crores.”
- EBITDA Margin: 12.2%.
- Quote: “EBITDA margin is around 12.2%…”
- PAT Margin: 7.4%.
- Quote: “…with a PAT margin of 7.4% for the nine months…”
- EPS: ₹6.3.
- Quote: “…and the EPS of 6.3 for the nine months up to date.”
Comparison with Previous Periods #
- Q3 FY25 Revenue Growth (YoY): 13.7%.
- Quote: “…which is a close to about 13.7% year-on-year increase…”
- Q3 FY25 Revenue Growth (QoQ): 3%.
- Quote: “…and 3% quarter-on-quarter.”
- Management noted Q3 is typically a slower quarter due to US holidays and fewer billable hours.
- Quote: “…this third quarter typically is not a great quarter because of the US holidays and the number of billable hours that are available there. Hence, it’s always been a slightly lower growth that we normally have and which is in line with this quarter also.”
Revised Guidance or Forecasts #
- EBITDA Margin Target: Aiming for 17% within the next two years (up from current ~12.3-12.5%).
- Quote: “See our goal is to get to 17% within the next two years. That’s the target that we are setting ourselves internally, to achieve a 17% EBITDA margin…”
- Revenue Target: Aiming for $200 million in the next two years.
- Quote: “Our target is the 200 million that we want to achieve in the next two years, is where the target that we have setup.”
Areas of Growth or Decline #
- Growth: Consistent revenue growth YoY and QoQ. Management highlighted that margin improvement is driven by operational efficiencies and productivity increases from AI tools.
- Quote: “Okay, so the margin improvement is primarily driven by efficiencies that we are able to squeeze out of the system itself…The second thing…is, we are able to get more performance improvement using some of these AI tools that we are actively using in our day-to-day outrange.”
- Net Debt: Specific current net debt position was not provided immediately during the call; management stated it would be shared later.
- Quote: “Talking about the debt, I’ll get the numbers, I’ll pull it up and get the number back to you.”
Strategic Initiatives & Business Updates #
Major Strategic Announcements #
- Fundraising: Two ongoing fundraising activities:
- Promoters and management via preferential route.
- FCCB (Foreign Currency Convertible Bond) route.
- Quote: “So there are two fundraisers going on now. One is promoters, and management is taking around via a preferential route…the second one is the FCCB route.”
- Timeline: Expected to close within one to two weeks, with funds anticipated before the end of March, possibly by end of February.
- Quote: “I am thinking like one week, maybe max two weeks is when we will be able to close the FCCP round and similar timelines for the preferential bonds too…the idea is before March ends all the money would come in…”
New Products, Services, or Markets Discussed #
- Focus on AI and AI-enabled services as a key growth area.
- Quote: “We are targeting growth in the AI and AI enabled services. That is one area of target that we are going after, and we are seeing a lot of traction in that.”
- Account Mining: Strategy to increase revenue from existing customers.
- Quote: “…we are doing a lot of account mining, so I have given a target to our senior management team that we need to start getting more revenue from existing customers.”
- Partnerships: Building and working with large entities, though revenue realization might take time.
- Quote: “And also we have some partnerships that we are building and working with…they might take a little bit longer to see some revenues, but we are in there, actively engaged with the partnership thing of these large entities…”
Significant Operational Changes & Client Wins #
Client Wins (Q3) #
- Developing an advanced intelligence platform for tracking funding, geospatial insights, and operational workflows for a client in sustainable landscape management.
- Quote: “…we are working with the client to revolutionize and build an advanced intelligence platform that enables them to seamlessly track funding and geospatial insights and marry that with their operational workflows.”
- Redefining a digital ecosystem for a large customer using a FinOps-driven approach for automation, scalability, and operational intelligence.
- Quote: “We have also worked with another large customer to redefine the digital ecosystem, and we are helping them to build a cutting edge, finops driven approach that will help them elevate automation, scalability and operational intelligence.”
- Engineering an AI-powered solution for a large power group for end-to-end coal tracking, replacing manual systems.
- Quote: “…we are basically engineering an advanced AI powered solution that helps them revolutionize their whole end-to-end coal tracking from the mines all the way to the actual power station.”
Operational Highlights #
- Successful SAP HANA system implementation across 21 countries for a global leader in high-performance computing and AI infrastructure.
- Quote: “…the successful implementation of a SAP HANA system, which is helping them drive seamless business integration and operational efficiency across 21 countries.”
- Launched an OTT content management system for a global platform serving 33 million users, recognized by MongoDB as a standout use case.
- Quote: “…we have helped a customer launch their OTT content management system for their global…platform that serves about 33 million users worldwide…recognized by MongoDB as a standout use case…”
- Recognized for streamlining financial aid delivery through advanced digital solutions for a United Nations body (highlighted by Forbes).
- Quote: “…Forbes spotlighted campaign for the work that it is doing with the United Nations body, and we have recognized our role in streamlining financial aid being delivered through advanced digital solutions.”
Ongoing or Completed Projects #
- LIC Contract: It’s a 7-year milestone-based payment contract. Some payments received upon meeting milestones. Next significant payment expected within the next three months. Initial investment outflow is higher, with recoupment expected within approximately three years.
- Quote: “We did get some payment in a way or once we met the milestone, the next milestone is probably within the next three months we should get a large chunk of the money coming in…it’s a seven year contract…we recoup that probably within three years.”
Market & Competitive Landscape #
Industry Trends #
- AI adoption and AI-enabled services are key growth drivers.
- Quote: “We are targeting growth in the AI and AI enabled services.”
- Deregulation on the AI and cloud side in the US could improve IT services business.
- Quote: “…the outlook is that there will be deregulation, specifically on the AI side and the cloud side and so on and so forth. Which will improve IT services business in the US.”
- Cloud-native platforms and digital transformation remain significant.
- Quote (Karnjit Singh on OTT project): “…we have built a completely cloud native platform and moved them away from a platform built by one of the big four…”
Competitive Positioning Statements #
- Differentiates from larger IT service firms through nimbleness, agility, speed, and flexibility.
- Quote (Niranjan Chintam): “…from a larger company perspective, the nimbleness is not there, they are much more aggressive, we are a little bit more accommodative…”
- Quote (Karnjit Singh): “…there are some things which have to be done at a certain speed, done in a more agile way, in a nimble way, and that is where our differentiation lies.”
- Positions itself as a “born digital IT services company” with a strong heritage in product engineering.
- Quote (Karnjit Singh): “…we like to call ourselves as the born digital IT services company, because the traditional IT was already taken.”
- Successfully recovers projects where larger IT companies have failed.
- Quote (Niranjan Chintam): “…larger IT companies are unable to provide the services, and the customers have called us basically and said…Can you now recover from it and we have done that successfully.”
Market Challenges or Opportunities Mentioned #
- US Market (Trump Administration): No immediate negative impact anticipated on the IT services sector from tariffs. Potential opportunities from deregulation and open competition in the government sector.
- Quote (Srinivas Potluri): “…from a services side, there is no impact so far…On the government side obviously, in the US there is going to be deregulation and open competition is going to be projected. So we might see…a lot more potential or possibilities, working with the government sector…”
- Employee Retention & Attraction: Attracting talent with challenging, cutting-edge projects, end-to-end solution involvement, and stock options.
- Quote (Niranjan Chintam): “Our one way is giving them challenging work…they get to do the whole end-to-end kind of a solution…we also give stock options…”
- Opportunity in OTT and FinOps driven approaches.
Comments about Market Share or Positioning #
- Focuses on areas where speed and agility are valued, sometimes taking over from larger competitors.
- Employee count is around 1750 globally.
- Quote: “I was corrected by the number of employees; it’s actually 1750, little over 1750.”
Risk Factors & Challenges #
Concerns or Challenges Acknowledged by Management #
- Q3 Seasonality: Recognized that Q3 is typically a slower quarter due to US holidays.
- Quote: “…this third quarter typically is not a great quarter because of the US holidays…”
- Fundraising Process: Described as a “long, drawn out process” with procedural requirements involving SEBI, NSE, BSE, and banking regulations for foreign currency.
- Quote: “It’s a long, drawn out process, not just limiting to what approvals we need…it is also the banking requirements…”
- Working Capital Fluctuations: Acknowledged that working capital can go up, impacting debt levels month-to-month.
- Quote: “…there will be some slight fluctuations there and the working capital will go up, whereas the long term debt is going to be lower.”
- Challenges in some existing geographies (though not elaborated upon).
- Quote: “…there are some challenges with some of the geographies that we are facing, and we have been addressing that…”
Regulatory Issues Mentioned #
- Approvals needed from SEBI, NSE, BSE for the ongoing fundraising (preferential issue and FCCB).
- Quote: “…not just limiting to what approvals we need from the