Thus, overall revenue fell 12.6 per cent over a year to Rs 342 crore. However, the decline was anticipated, as revenue came in line with the Bloomberg consensus estimate of Rs 341.4 crore.
Nevertheless, with orders reaching completion in the turnkey projects segment couple with a write-back of provision and increased contribution from the high margin consultancy division, overall operating performance got a significant boost. Ebitda (earnings before interest, taxes, depreciation, and amortisation) rose to Rs 73.3 crore, from Rs 35.5 crore a year ago and was way ahead of the Bloomberg consensus estimate of Rs 44.5 crore. Analysts say consultancy division’s margins improved 300 basis points (bps) over a year, while provision write-backs at Rs 27 crore were in the turnkey projects segment as orders moved closer to completion.
Thus, net profit at Rs 80.3 crore (up 49 per cent over a year) was also ahead of estimates of Rs 65 crore.
Profitability is set to improve further. Analysts at Religare Institutional Equities say further write-backs are expected during FY17 as well and the consulting segment margins are set to improve, as execution picks up towards FY17-end. The management has guided to Ebitda margins of 20 per cent-plus in FY17; the same stood at 10.7 per cent in FY16.
Analysts also highlight improved order inflows during the quarter, which will drive growth. Earnings, thus, are estimated to grow by an average 30 per cent during FY16-18. Analysts at Kotak Securities say the management shared encouraging outlook for the domestic business and expects significant pickup in order inflows over remaining FY17 and FY18, and has revised its FY17 order flows forecast to Rs 3,500 crore from Rs 2,000 crore earlier. Thus, better order flow, execution and improving profitability are keeping analysts positive. While consensus price target of analysts is Rs 280, those at Kotak have revised it upwards to Rs 335.