The brokerage expects the company's US dollar revenues to grow 1 per cent quarter-on-quarter (QoQ) to $1,367 million, mainly driven by the partial contribution of its Born group acquisition, the AT&T deal, and the Jackson National Life Insurance deal. Rupee revenues may grow 2.6 per cent QoQ and 11.4 per cent year-on-year (YoY) to Rs 9,903 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) is seen at Rs 1,554.8 crore, down 0.5 per cent QoQ and 5.1 per cent YoY. Profit after tax (PAT) is estimated at Rs 1,040.4 crore, down 8.1 per cent YoY and 9.2 per cent QoQ. "Ebitda margins could decline 50 bps QoQ to 15.7 per cent on account of the continuity of large deal transition cost in the quarter partially offset by rupee depreciation," the brokerage said.
It expects a revenue decline, despite the contribution of $10 million of incremental revenues from Born acquisition ($15 mn quarterly revenue run rate) and Prudential deal ramp-up due to the revenue decline in Italy-based Pininfarina, shutdown in Wuhan impacting China revenues, lower revenues from AT&T contract, and the cancellation of a few network ramp programmes. After strong September and December 2019 quarters, the brokerage expects new order wins to move back to $300-400 million range.
It expects Ebitda to slip 7.4 per cent YoY and 2.9 per cent QoQ to Rs 1,517.4 crore. PAT is expected to decline 21.9 per cent YoY and 22.8 per cent QoQ to Rs 884.0 crore. A steep decline in profit is expected due to forex losses versus forex gains of Rs 1,430 crore in December 2019 quarter and a decline in margins.
Investor focus: A strategy to improve work from home (WFH) coverage for BPO work, measures taken to ensure that profitability is higher than FY2020E levels, impact on 5G rollouts from the recent chain of events, demand outlook from the impacted auto vertical, a large deal pipeline, and drivers of revenue in FY2021E.
Analysts at this brokerage firm expect a decline of about 1.2 per cent in revenues (constant currency, or CC, terms) QoQ, even after incorporating inorganic contribution (cross-currency impact of 40 basis points for the quarter). The revenue decline is due to a ramp-down in the AT&T contract and loss of billing due to lockdown
It expects sales (revenue) in rupee terms to rise 7.8 per cent QoQ to Rs 9,586.1 crore and Ebit at Rs 1,150.3 crore (down 15.9 per cent). Ebit margin is expected to drop 339 bps to 12 per cent, while PAT (profit ater tax) or net profit is seen at Rs 1,046.8 crore, down 7.6 per cent QoQ.