Current/ Expected Orderbook/ Pending Orders?

Current confirmed order book is approximately INR 850-860 crores. Total projected revenue for the financial year is around INR 910-920 crores, compared to INR 900 crores last year. Typically, 90-92% of the revenue every quarter comes from the confirmed order book. The remaining 7-8% revenue is accrued organically during the quarter. At the start of the year, approx. 50-55% of revenue comes from the order book, with the rest added during the year. Pipeline is expected to be slow in the next quarter due to market softness and customer caution. Customers are hesitating on big investments, impacti

Any current/future new fundraising through debt or equity?

No specific mention of any current or planned fundraising through debt or equity in the call transcript. The company focused on organic growth with no confirmed inorganic opportunities or acquisitions in the near term. No indications were given regarding raising capital via equity or debt to fund operations or expansion. Discussions centered more on managing costs, headcount, and business growth rather than raising funds. The CFO transition and financial performance updates did not include any mention of fundraising plans.

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

The company is making some capital investments and expanding into new premises. They are looking at increasing physical presence to aid in talent building, retraining, and reskilling. Hiring plans are being taken on a quarter-by-quarter basis without long-term commitments currently. They aim to see clearer customer spending trends by the first quarter of the next fiscal to firm up future hiring and investment plans. Investments in training and upskilling are ongoing to support growth in digital and engineering capabilities. No specific mention of inorganic acquisitions planned within the curre

Future growth expectations in sales/revenue/volumes?

Group business is expected to grow around 10% to 11% this year despite a subdued market, aiding predictability and future growth. Direct business shows marginal growth of 2-3% per quarter, translating to under 10% annually, with plans to improve in 2024. Engineering services from the Group show significant growth (20-25%), while direct engineering services are flat or declining slightly. Digital revenue is growing but currently incurs higher costs due to training and upskilling; margins expected to improve once scale is achieved in 3-4 quarters. Hiring slowed down due to demand; campus hiring

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

Company aims to achieve EBITDA margins in the 16% to 18% range going forward, with confidence in reaching this target (Page 6). Revenue growth for FY24 projected around INR 910-920 crores, slightly above INR 900 crores of last year, with confirmed order book for about INR 850-860 crores (Page 8). Group business is expected to grow around 10-11% despite a subdued market, which should support predictability in revenue (Page 15). Direct business growth is slower, with marginal 2-3% QoQ growth leading to about 10% growth for the full year (Page 15). Hiring and revenue growth plans have been modera

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Expleo Solutions LtdQ3 FY23IT - Services

Expleo Solutions Ltd Q3 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 4

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 4

→Group business is expected to grow around 10% to 11% this year despite a subdued market, aiding predictability and future growth.
→Direct business shows marginal growth of 2-3% per quarter, translating to under 10% annually, with plans to improve in 2024.
→Engineering services from the Group show significant growth (20-25%), while direct engineering services are flat or declining slightly.
→Digital revenue is growing but currently incurs higher costs due to training and upskilling; margins expected to improve once scale is achieved in 3-4 quarters.
→Hiring slowed down due to demand; campus hiring cut from planned 500 to 270, with quarter-by-quarter hiring approach to balance growth and costs.
→Pipeline softness expected to continue next quarter but anticipated to improve in the new calendar year (Jan-Mar).
→Order book confirmed at ~INR 850-860 crores for the year, with balance to build in upcoming quarters.
→Expect overall revenue for FY close to INR 910-920 crores vs INR 900 crores last year, indicating modest growth.

Margin guidance

Category 3

→Company aims to achieve EBITDA margins in the 16% to 18% range going forward, with confidence in reaching this target (Page 6).
→Revenue growth for FY24 projected around INR 910-920 crores, slightly above INR 900 crores of last year, with confirmed order book for about INR 850-860 crores (Page 8).
→Group business is expected to grow around 10-11% despite a subdued market, which should support predictability in revenue (Page 15).
→Direct business growth is slower, with marginal 2-3% QoQ growth leading to about 10% growth for the full year (Page 15).
→Hiring and revenue growth plans have been moderated due to softer demand; careful quarter-on-quarter hiring to balance costs and future growth (Page 16).
→Digital business is growing and expected to enhance margins over 3-4 quarters after initial higher costs of training and bench (Page 10).
→FY25 and beyond growth linked to clearer market trends expected after Q1 next fiscal (Page 6).

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Fundraise plans

→No specific mention of any current or planned fundraising through debt or equity in the call transcript.
→The company focused on organic growth with no confirmed inorganic opportunities or acquisitions in the near term.
→No indications were given regarding raising capital via equity or debt to fund operations or expansion.
→Discussions centered more on managing costs, headcount, and business growth rather than raising funds.
→The CFO transition and financial performance updates did not include any mention of fundraising plans.

Order book

Yes

→Current confirmed order book is approximately INR 850-860 crores.
→Total projected revenue for the financial year is around INR 910-920 crores, compared to INR 900 crores last year.
→Typically, 90-92% of the revenue every quarter comes from the confirmed order book.
→The remaining 7-8% revenue is accrued organically during the quarter.
→At the start of the year, approx. 50-55% of revenue comes from the order book, with the rest added during the year.
→Pipeline is expected to be slow in the next quarter due to market softness and customer caution.
→Customers are hesitating on big investments, impacting pipeline growth.
→Expectation of increased order book and revenue starting January to March, aligned with new budget cycles in the US and Europe.

Capex plans

Yes

→The company is making some capital investments and expanding into new premises.
→They are looking at increasing physical presence to aid in talent building, retraining, and reskilling.
→Hiring plans are being taken on a quarter-by-quarter basis without long-term commitments currently.
→They aim to see clearer customer spending trends by the first quarter of the next fiscal to firm up future hiring and investment plans.
→Investments in training and upskilling are ongoing to support growth in digital and engineering capabilities.
→No specific mention of inorganic acquisitions planned within the current fiscal, but options are being considered aligning with strategy and size expectations.

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

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1Expleo Solutions Ltd

Rev 4Mar 3

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