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  • 31 Oct 2022
  • ICICIdirect Research

INTELLECT REVISES DOWNWARD REVENUE, EBITDA MARGIN GUIDANCE FOR FY23

INTELLECT - 794 Change: 14.35 (1.84 %)

News:

 Intellect reported weak result with a revenue of Rs 527.5 Crore for Q2FY23, down 2.5% QoQ. Revenue was impacted due the following factors: a) it lost potential revenue booking of US$ 6.1 mn during the quarter b) some impact of GBP depreciation against the US dollar. SaaS revenues (22.6% of mix) grew 35.4% YoY to Rs 119 crore while license revenues (lumpy in nature) declined 21.8% YoY to Rs 68 crore. AMC revenues grew 10.6% YoY to Rs 90 crore while implementation revenue reported 27.9% YoY growth to Rs 251 crore. The company’s EBITDA declined by 28.2% QoQ to Rs 84 Crs while EBITDA margin declined by 570 bps QoQ to 15.9%, due to negative operating leverage. It revised downward revenue guidance for FY23 from 20% to ~15% in USD terms while EBITDA margin guidance also revised to ~20% now compared to 22-23% band earlier

View:

 The company’s funnel remained steady however deal conversion has seen a moderation in last couple of quarters which stands at 44% now vs ~50% earlier. The revenue is impacted due to slower decision making at the client side as there has been some revisit at the client side on deal evaluation as well as split of deals for longer duration. The company expects these factors to impact its performance for short to medium term. Due to continued higher employee expenses (quarterly appraisal cycle), elevated marketing expenses and continue investment in platforms will restrict margin expansion going ahead.

Impact:

Negative