Any current/future new fundraising through debt or equity?

There is no direct mention of any current or future fundraising through debt or equity in the transcript. The promoter, who owns 60% of the company at the group level (a private equity firm), is contemplating an exit depending on valuation and timing but no immediate fundraising plans were discussed. The focus is more on operational growth, cost management, and increasing business from group and direct clients rather than on raising capital. No details about new debt or equity issuance were provided during the call.

Any current/future capex/capital investment/strategic investment?

There is no explicit mention of current or planned capital expenditure (capex) or strategic investments in the transcript. The focus appears to be on hiring and capability building, especially in digital assurance and digital transformation. Hiring of trainees and skilled workforce is ongoing to prepare for future growth. No specific investments in infrastructure or capital assets were discussed. Efforts are concentrated on ramping up digital capabilities, partnerships, and expanding business, rather than capital-intensive investments. The company also focuses on growing group business and dir

Future growth expectations in sales/revenue/volumes?

The group business is expected to grow significantly, with current contribution around 33% and anticipated to reach 40% by year-end. Growth in group business is driven primarily by aerospace, automotive, and transportation segments. Direct business growth is currently sluggish and is the focus area for improvement. Management anticipates a market turnaround and improved growth starting either at the beginning of FY 2024-25 or calendar Q2 of 2024. The aspiration remains to ramp up workforce to 10,000 by March 2026, although the timeline may delay by 6-9 months due to current market conditions.

Future growth expectations in earnings/operating earnings/profits/EPS?

Management expects a turnaround in financial year 2024-2025, with a recovery likely starting either early 2024 or by Q2 2024. EBITDA margin guidance is maintained at 16%-18%, despite short-term margin pressures due to one-time items and cost increases. Group business, which is more stable and less volatile, is growing steadily and expected to contribute 35%-40% of revenue by year-end, aiding stable profitability. Direct business growth is challenging currently but targets around 3%-5% quarterly growth; focus remains on cost management and improving profitability in this segment. Continued hiri

Current/ Expected Orderbook/ Pending Orders?

While the transcript does not provide explicit current or expected order book figures, it offers insights into business trends and outlook. Large deal sizes ($2 million to $5 million and above) are decreasing, with decision-making cycles lengthening, causing postponement of large engagements until next year. The company anticipates a temporary pause in customer spending for about two to three quarters due to inflation and cost pressures. Existing customers mostly show growth, and the company is excited about transformation projects once spending resumes. There is a focus on growing the digital

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Expleo Solutions LtdQ2 FY23IT - Services

Expleo Solutions Ltd Q2 FY23 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹826P/E: 10.2Market Cap: ₹1.4K CrSector: IT - Services

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

N/A

Capex

Yes

1 of 3 growth signals are positive — mixed outlook.

Full analysis

Revenue guidance

Category 3

→The group business is expected to grow significantly, with current contribution around 33% and anticipated to reach 40% by year-end.
→Growth in group business is driven primarily by aerospace, automotive, and transportation segments.
→Direct business growth is currently sluggish and is the focus area for improvement.
→Management anticipates a market turnaround and improved growth starting either at the beginning of FY 2024-25 or calendar Q2 of 2024.
→The aspiration remains to ramp up workforce to 10,000 by March 2026, although the timeline may delay by 6-9 months due to current market conditions.
→Group business offers stable, less volatile revenue, while direct business may fluctuate more with market conditions.
→Long-term double-digit growth expected for group business; direct business will grow but possibly at a slower pace.
→Management remains cautiously optimistic, expecting better numbers in coming quarters despite macro headwinds.

Margin guidance

Category 3

→Management expects a turnaround in financial year 2024-2025, with a recovery likely starting either early 2024 or by Q2 2024.
→EBITDA margin guidance is maintained at 16%-18%, despite short-term margin pressures due to one-time items and cost increases.
→Group business, which is more stable and less volatile, is growing steadily and expected to contribute 35%-40% of revenue by year-end, aiding stable profitability.
→Direct business growth is challenging currently but targets around 3%-5% quarterly growth; focus remains on cost management and improving profitability in this segment.
→Continued hiring and skill development is planned to be ready for future growth demand when macroeconomic conditions improve.
→Promoter exit considerations would not affect business model or growth strategy; expectations remain to deliver better performance.
→Overall, management is cautiously optimistic about better numbers and improved earnings in upcoming quarters after bearing current macro pressures.

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Fundraise plans

→There is no direct mention of any current or future fundraising through debt or equity in the transcript.
→The promoter, who owns 60% of the company at the group level (a private equity firm), is contemplating an exit depending on valuation and timing but no immediate fundraising plans were discussed.
→The focus is more on operational growth, cost management, and increasing business from group and direct clients rather than on raising capital.
→No details about new debt or equity issuance were provided during the call.

Order book

→While the transcript does not provide explicit current or expected order book figures, it offers insights into business trends and outlook.
→Large deal sizes ($2 million to $5 million and above) are decreasing, with decision-making cycles lengthening, causing postponement of large engagements until next year.
→The company anticipates a temporary pause in customer spending for about two to three quarters due to inflation and cost pressures.
→Existing customers mostly show growth, and the company is excited about transformation projects once spending resumes.
→There is a focus on growing the digital footprint and competencies, which would positively affect order book quality and size.
→Growth in the group business, especially in aerospace and automotive sectors, is expected to continue, potentially increasing order intake.
→The company is working on expanding direct business, but growth challenges remain due to macroeconomic uncertainties.

Capex plans

Yes

→There is no explicit mention of current or planned capital expenditure (capex) or strategic investments in the transcript.
→The focus appears to be on hiring and capability building, especially in digital assurance and digital transformation.
→Hiring of trainees and skilled workforce is ongoing to prepare for future growth.
→No specific investments in infrastructure or capital assets were discussed.
→Efforts are concentrated on ramping up digital capabilities, partnerships, and expanding business, rather than capital-intensive investments.
→The company also focuses on growing group business and direct business without indicating large capital outlays.
→Overall, strategic emphasis is on talent acquisition and delivery capacity rather than on capital investments.

How does Expleo Solutions Ltd rank vs peers in IT - Services?

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1Expleo Solutions Ltd

Rev 3Mar 3

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