Motilal Oswal
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Earnings

Margins likely to improve in Q1FY20, says E-Clerx

Updated : February 04, 2019 01:16 PM IST

E-Clerx was sulking in trade on the back of another set of disappointing earnings in the third quarter with low single digit revenue growth and contracting EBIT margins.

The quarter-on-quarter (QoQ) dollar revenue was up 0.4 percent and rupee revenues were up 0.5 percent. However, EBIT came in lower at Rs 54.8 crore versus 72.8 crore QoQ. Profit after tax was down 44.3 percent.

Rohitash Gupta, CFO of the company, discussing the numbers, said that the decline in margins was mainly because of change in mix of onshore and offshore. The onshore share revenue share increased while offshore revenues contracted. In addition, the impact on margins in Q3 was also due to one-off cost of Rs 5 crore, which could last in Q4 but would disappear in Q1 of next fiscal, he said.

In near-term the company does not expect onshore revenue mix crossing 25 percent, said Gupta.

There is no material stress in top 10 clients but there was some negative impact in ordering from small clients that were taken over by larger ones, he said.

With regards to cash on the books, he said for the last 3 three years, the company has been distributing about 55 percent of the net operating cash flow and would continue to maintain that through buybacks and dividends.
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