May 15, 2015
CRISIL Research has come out with its report on Infinite Computer Solutions (India) . According to the research firm, the company continued to witness strong business momentum and bagged key deals with existing and new clients.
Infinite's results were in line with CRISIL Research's expectations. Revenues grew 6.6% q-o-q to US$67.1 mn from US$63 in Q2FY13 driven by robust growth in Infinite's top client account. Revenues from this US-based client grew 43.4% q-o-q to US$28.5 mn due to expansion of offerings. In rupee terms, revenues increased 4.4% q-o-q to Rs 3,634 mn. Infinite continued to witness strong business momentum and bagged key deals with existing and new clients. We maintain the fundamental grade of 3/5.
EBITDA margin contracted 24 bps; higher PAT margin due to lower forex loss
EBITDA margin contracted by 24 bps q-o-q (down 360 bps y-o-y) to 16.4%. The 711 bps q-o-q increase in employee costs was to some extent offset by the 46.5% q-o-q decrease in other expenses. Employee cost increased due to higher proportion of onsite revenues. PAT margin increased 46 bps q-o-q (down 514 bps y-o-y) to 9.4% due to lower forex loss of Rs 67 mn in Q3FY13 compared to a forex loss of Rs 83 mn in the previous quarter. Of the Rs 67 mn forex loss, Rs 55 mn was on account of losses on forward contracts while the rest was due to translation losses. PAT increased 9.8% q-o-q to Rs 343 mn.
Bagged 10 new deals; net addition of 311 employees
Infinite continued to build on the strong deal flow from the past quarter and bagged 10 new deals in Q3FY13. During the quarter, it launched an enterprise messaging product and signed its first client in India for its enterprise messaging product. Infinite also signed a product engineering (higher-margin) deal - its first deal in the industrial control sector apart from telecom clients. In view of the strong deal flow, the company added 311 employees this quarter (net addition of 978 employees in 9MFY13). Attrition was 16.5% against 16.8% in Q2FY13.
Debtor days up
Debtor days increased to 110 days in Q3FY13 from 102 days in Q2FY13 because payments from two clients expected in December 2012 got deferred to January 2013. Maintain earnings estimates, fair value revised to Rs 204 We maintain our earnings estimates for FY13 and FY14. We have rolled forward our discounted cash flow-based valuation for Infinite to FY15. We now value the company at Rs 204 per share. At the current market price of Rs 107, the valuation grade is 5/5.
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