- 25 May 2022
- ICICIdirect Research
Eclerx sees business impact of US recession
ECLERX - 2904 Change: 67.55 (2.38 %)News: The company reported 5.8% QoQ growth in revenues to Rs 591.7 crore while in dollar terms , revenues were up 5.2% QoQ to US$77.2 ( 5.5% CC growth). Geography wise, North America (69% of mix) reported growth of 3.7% while Europe/RoW reported growth of 5.2%/20.2% QoQ respectively. EBITDA margins were down 100bps to 30.8% for the quarter due to sharp rise of 9.4% QoQ increase in employee expenses. For FY22, it reported US$284.6mn revenues which was 35.3% growth ( 20% organic growth, while rest is aided by personiv). EBITDA margins for FY22, improved by 90bps to 30.6%. The company added 869 people in Q4, taking its total headcount to 14,910. Offshore attrition remained high at 43%.
Views: The company does not see any major roll-offs in the near term and is confident of the strong revenue growth due to strong demand for its services in FY23, however it says that growth won’t be as high as that of FY22. Attrition continued to be high and it may impact near term growth in our view. The company indicated that in case of recession in US (70% of the revenue mix) , it would have an impact on its performance in FY23. Despite higher salary hikes to retain key talents in FY23, the company maintained its EBITDA margin guidance range of 28-32%. The company is actively looking at M&A opportunities ( Cash Rs680 crore) and didn’t rule out buyback in the future.
Impact: Negative