'Buy' Eclerx Services Shares Maintains Dolat Capital Post Solid Q1; Positive On Favorable Outlook

Eclerx' management is confident in growth continuity led by a robust pipeline and no significant changes in roll-offs, and expects sustained deal win momentum. FY26 Ebitda margin guidance of 24%-28% unchanged and is expected to improve sequentially hereon.

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Dolat Capital Report

Eclerx Services Ltd.'s constant currency revenue grew 3.3% QoQ (our estimate: 2.5%; $ growth was 4.1%), driven by broad-based momentum across verticals. Operating profit margin declined by 12 bps QoQ to 19.6% (our estimate:18.9%) as higher offshoring of revenues (up 4.9% on USD basis) offset the impact of wage hikes (-250bps) and the operationalization of a new delivery center (-20bps).

Management is confident in growth continuity led by a robust pipeline and no significant changes in roll-offs, and expects sustained deal win momentum. FY26 Ebitda margin guidance of 24%-28% unchanged and is expected to improve sequentially hereon.

Based on Eclerx' steady revenue growth, annual contract value momentum and positive management commentary, we slightly increase $ revenue estimates by 0.7%/0.8%, while earnings per share remains unchanged for FY26/27E.

With growth accelerating, we see it poised for re-rating; thus, we maintain our rating to ‘Buy’ with target price to Rs 4,500, valuing at 30x FY27E EPS.

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