Intellect Design Arena slips over 5% after decline in net profit

Shares of Intellect Design Arena slipped over 5 percent on BSE on Friday, a day after the company posted a decline of almost 25 percent in the April-June quarter net profit at Rs 40.94 crore.

The shares of the company, which provides financial technologies to banks, were trading at Rs 630, a decline of 5.37 percent from the previous close on the BSE.

The firm's total revenue increased by 33 percent year-on-year and stood at Rs 541 crore. The EBITDA margin — a measure of a company's operating profit — stood at 21.6 percent as compared to 24.5 percent during the corresponding period in the previous financial year.

The firm said the drop in EBITDA margin and profit after tax was in line with its estimates, as announced during the May 2022 investor call. It said the drop was related to higher platform investments, increased travel and marketing costs, and the regular tax rate of around 26 percent.

"We will be re-investing 4-5 percent margin to support platform revenue build-up journey,” Venkateswarlu Saranu, Chief Financial Officer, Intellect Design Arena Limited, said in a regulatory filling.

Intellect Design Arena reported that the revenue growth was backed by a 34 percent increase in pipeline projects. “Out of $805 million funnel value, $702 million is accounted by 173 opportunities," the company added in the filling.

Arun Jain, chairman and managing director at Intellect Design Arena, told CNBCTV18 that the company’s partnership with Microsoft was helping them to build the deal pipeline.

“Microsoft has helped us to build a funnel. A lot of Europe meetings have started happening with them,” said Jain.

The company is eyeing a 20 percent growth. “The opportunity for us is in technology, product and markets, which is where the growth opportunities are. In rupee terms, we had a 33 percent growth (in revenue), with a 31 percent growth in gross margin,” added Jain.