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Dolat Capital Report
Eclerx Ltd.'s Q4 FY24 constant currency revenue grew 1.4% QoQ (above street estimates) led by financial markets/customers operations business. Operating profit margin declined by 195 bps QoQ to 21.1% mainly due to investments in sales and delivery capabilities.
Management guided Ebitda margin band of 24%-28% for FY25 (versus 28% in FY24) and aspires to achieve double-digit growth in FY25. Strategies are mainly focused on getting top quadrant growth and industry leading margins over FY24-28E.
We expect revenue/profit after tax compound annual growth rate of 8.5%/12.2% over FY24-26E driven by-
aggressive investments,
increasing offshore revenue share and
ramping up automation through GenAI solutions which will yield long-term benefits.
Accordingly, we resume coverage on eClerx with ‘Accumulate' rating and target price of Rs 2,640 valuing at 20 times FY26E (implies two times on PEG basis).
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