Eclerx Q4 Results Review: Dolat Capital Upgrades Rating To 'Buy' On Highest-Ever Deal Wins, Sees 33% Upside

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Dolat Capital Report

Eclerx Ltd.’s constant currency revenue grew 4.2% QoQ (our estimate: 2%) driven by growth in communication, media and technology services and BFSI segments. Operating profit margin declined by 34bps QoQ to 19.8% (our estimate:20.7%) impacted by continued investment and one time charges.

Management is confident in delivering further growth led by strong annual contract value wins of $140 million (up 54% YoY) in FY25 with no major changes in roll offs, implying better growth for FY26. It also reiterated FY26 Ebitda margin guidance of 24%-28%, same as previously guided for FY25.

Eclerx’ investment of ~250 bps in sales/capacity has culminated steady revenue growth (FY25:12.5%) and ACV win momentum (achieved the highest deal wins in Q4 at $51 million), boosting our growth confidence, thereby leading to EPS upgrades of 2.1%/4.0% for FY26/27E.

With growth accelerating we see it poised for re-rating; thus, we revise our rating to ‘Buy’ with target price to Rs 4,200 valuing at 28x FY27E EPS.

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