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Dolat Capital Report
Intellect Design Arena Ltd. reported 3.7% QoQ growth in revenues at Rs 5.47 billion (our estimate: 5.52 billion) led by 9% QoQ growth in AMC and 11% QoQ growth in license revenues. Software-as-a-service revenues declined 7% QoQ at Rs 1.1 billion as its realisation get lowered on achieving scale milestone on Government eMarketplace contract.
Operating profit margin expanded by 166 bps QoQ at 12% (our estimate: 11.1%) owing to strong revenue recognition, favorable mix offset by reinvestments in focus areas. Management expects margin to improve gradually in Q4.
Intellect's management did not shared any specific growth outlook but remain confident of its offerings, large funnel ($855 million up 28% YoY) and mindshare of the clients that makes it confident on improving the growth traction hereon.
Result miss, slower deal decision making would mean that growth and margin recovery would be gradual and thus factoring the same we have curtailed our earnings estimates by 5%/6% for FY24/FY25E.
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