Any current/future new fundraising through debt or equity?

As per the available transcript on pages 1-17 of the Q4 FY24 earnings call, there is no mention of any current or planned fundraising through debt or equity. Jigar Mehta mentioned having strong cash reserves (INR 93 crores as of March 2024) and a strong PE partner, Convergent, indicating no immediate need for fundraising. On the M&A front, they are open to acquisitions but have no concrete plans or active discussions currently. Overall, the company seems focused on organic growth, execution, and strengthening customer relationships rather than new fundraising at this stage.

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

Onward Technologies is investing in strengthening its offshore infrastructure, notably in Pune, Chennai, and a new office opening in Bangalore (Whitefield) in July. These investments are aimed at supporting the company’s shift from an onsite-driven to a balanced offshore-driven delivery model. The office upgrades are focused on A-grade buildings and tech parks offering necessary data security, amenities, and services. The company is building global presence and account management capabilities by transferring experienced India-based talent to USA and UK and hiring local resources there. Capex i

Future growth expectations in sales/revenue/volumes?

Onward Technologies has grown from INR 300 crores to INR 470 crores over the last 2 years, showing 50%+ growth. The company expects the next 2 years to outperform the previous 2 years in revenue and EBITDA. They target 10 customers generating USD 10 million each annually, focusing on deepening strategic client relationships. FY '25 is seen as a pivotal year for increasing global billing versus India billing, aided by better global mobility (e.g., US and Canada). They aim for double-digit EBITDA margins and improved profitability. Headcount is expected to stabilize around 2,700-2,800, with more

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

Management aims for double-digit EBITDA and plans to improve EBITDA margin next year, expecting to surpass previous levels despite one-off expenses. The goal is consistent quarterly growth, with a focus on beating the prior quarter's performance. Earnings growth is anticipated to be strong over the next 2-3 years, expected to outperform the last 3 years' 50%+ growth (from INR 300 crores to INR 470 crores). Profit After Tax (PAT) saw a 194% increase last year, indicating improving profitability trends. EPS performance is expected to improve alongside EBITDA growth and revenue expansion,

Current/ Expected Orderbook/ Pending Orders?

The company has a strong deal pipeline and opportunities from existing customers, described as "better and bigger than ever before" starting April 1, 2024. Focus is on expanding within existing strategic clients by opening offices in new geographies like UK, Canada, and US. Re-signed three major old customers who were lost pre-pandemic, indicating renewed confidence. The goal is to secure 10 customers with revenues of USD 10 million each annually, which would drive significant growth. Pipeline strength has improved compared to last year, driven by mature, strategic client relationships. The co

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Onward Technologies LtdQ1 FY24IT - Services

Onward Technologies Ltd Q1 FY24 Earnings Call Analysis

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

Price: ₹248P/E: 13.5Market Cap: ₹629 CrSector: IT - Services

Management growth scorecard

Revenue

Category 3

Margin

Category 1

Fundraise

N/A

Order

N/A

Capex

Yes

2 of 3 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Onward Technologies has grown from INR 300 crores to INR 470 crores over the last 2 years, showing 50%+ growth.
→The company expects the next 2 years to outperform the previous 2 years in revenue and EBITDA.
→They target 10 customers generating USD 10 million each annually, focusing on deepening strategic client relationships.
→FY '25 is seen as a pivotal year for increasing global billing versus India billing, aided by better global mobility (e.g., US and Canada).
→They aim for double-digit EBITDA margins and improved profitability.
→Headcount is expected to stabilize around 2,700-2,800, with more resources outside India.
→Growth is driven mainly by USA, Canada, and Europe markets with continued focus on execution and winning large deals early in the fiscal year.
→Digital, mechanical, and embedded segments are all growing and expected to contribute to future revenue expansion.

Margin guidance

Category 1

→Management aims for double-digit EBITDA and plans to improve EBITDA margin next year, expecting to surpass previous levels despite one-off expenses.
→The goal is consistent quarterly growth, with a focus on beating the prior quarter's performance.
→Earnings growth is anticipated to be strong over the next 2-3 years, expected to outperform the last 3 years' 50%+ growth (from INR 300 crores to INR 470 crores).
→Profit After Tax (PAT) saw a 194% increase last year, indicating improving profitability trends.
→EPS performance is expected to improve alongside EBITDA growth and revenue expansion, supported by a strong client base and operational efficiencies.
→Growth drivers include higher-value client engagements, focus on three verticals with large potential, and global expansion with better billing rates.
→No formal guidance given, but management is optimistic on both top-line and operating earnings improvement in the near future.

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Fundraise plans

→As per the available transcript on pages 1-17 of the Q4 FY24 earnings call, there is no mention of any current or planned fundraising through debt or equity.
→Jigar Mehta mentioned having strong cash reserves (INR 93 crores as of March 2024) and a strong PE partner, Convergent, indicating no immediate need for fundraising.
→On the M&A front, they are open to acquisitions but have no concrete plans or active discussions currently.
→Overall, the company seems focused on organic growth, execution, and strengthening customer relationships rather than new fundraising at this stage.

Order book

→The company has a strong deal pipeline and opportunities from existing customers, described as "better and bigger than ever before" starting April 1, 2024.
→Focus is on expanding within existing strategic clients by opening offices in new geographies like UK, Canada, and US.
→Re-signed three major old customers who were lost pre-pandemic, indicating renewed confidence.
→The goal is to secure 10 customers with revenues of USD 10 million each annually, which would drive significant growth.
→Pipeline strength has improved compared to last year, driven by mature, strategic client relationships.
→The company is emphasizing execution with a massive focus on winning and scaling deals rather than just expanding headcount.
→No specific orderbook value disclosed, but confidence is expressed about substantial movement from India to global billing and better top-line and EBITDA performance in near term.

Capex plans

Yes

→Onward Technologies is investing in strengthening its offshore infrastructure, notably in Pune, Chennai, and a new office opening in Bangalore (Whitefield) in July.
→These investments are aimed at supporting the company’s shift from an onsite-driven to a balanced offshore-driven delivery model.
→The office upgrades are focused on A-grade buildings and tech parks offering necessary data security, amenities, and services.
→The company is building global presence and account management capabilities by transferring experienced India-based talent to USA and UK and hiring local resources there.
→Capex is supported by a strong cash flow and management team with a supportive Board enabling quick decision-making.
→No concrete current plans for M&A or strategic investments, but the company remains open for appropriate acquisition opportunities especially in the high-end digital or embedded space to support existing clients rather than adding unrelated clients.

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