Just a simple bookkeeping question. The shares, which are going to be issued, what is the indicative price? And therefore, what is the expected goodwill that we would need to recognize in the books?
Desikan Narayanan
I don’t think there will be a goodwill coming in this. Because if you look at it, it will be an additional issue of shares, which is [indiscernible] for the valuation – for the value which is coming in.
Unknown Attendee
So are you issuing it at par? Or are you issuing it at a certain price? The reason why I asked you this question is – just bear with me. The reason I asked you this question is the net effect remains the same. All that I’m saying is supposing you had issued the shares, let’s say, INR 900 or INR 1,000 or whatever, that would have led to a creation of goodwill on the – on Expleo’s assets. And then obviously, you have the – you could sort of choose to either write it off or keep the goodwill on the books over a period of time.
Desikan Narayanan
This is when we issued at par at a INR 10 rate, it’s going to be the issue of what is going to happen now.
Unknown Attendee
Okay. So you are going to be issuing it at par. Okay. Fine. I think for the rest of the questions, I’ll probably wait for the quarterly earnings call. I just wanted to convey my best wishes to the entire group at Expleo.
Interesting results. 10% topline expansion QoQ. Minor increase in employee costs, but steep rise in “other expenses”. No details of what these other expenses are in the notes.
Results looks okay only… not so great…
Employee cost increase is good sign for an IT svc company…
But no clarification on dividend is a dampener…
Hopefully some clarification comes in the presentation or concall…
Q1 EPS should have been ,₹25 , however it is ₹12.50 due to ₹121 million increase in other expenses.
There is only a minor increase in depreciation, computer & software purchase expenses.
My view is that the bulk of ₹120 million has been spent on specialists, marketing executives , temporary employees as well as wage hike & employee benefits to prevent attrition.
IMO ,Expleo can easily report an estimated EPS of ₹25 in Q2 , with the present contingent of specialists, marketing executives & temporary employees with robust order pipeline , the required investment in human resources ( Raw material) has already been made. Let’s wait for the fruits from Q2 onwards.
Hi @Balki, if the increase in other expenses is actually due to specialists, marketing executives and temporary employees, then why have they not been accounted for in the employee costs line item? Also if this is true, these will be recurring costs and not one time right?
In the last concall ,it was mentioned that expenses will go up due to enrichment of human resources ( Raw material) for ramping growth & profitability as well as execute complex digital projects , which require specialists.
Now , you are right, instead of showing as employee expenses, it has been shown under different heads, it’s for the company secretary to explain the above position in today’s concall.
Yes these expenses will be recurring & not a one time expense , but this will be compensated several fold by rise in turnover & profitability as well as high margins from complex digital project execution.
They are not employees but consultants.The company had said they have about 1500 trainees and will be absorbed as business picks up.The salaries to these are accounted under other expenses till they are absorbed.
I was unable to attend the concall due to office meetings. If anyone here can summarize the discussion, and especially details of the other expenses, I will be much obliged.
Robust results expected from Q2 due to positive trends , traction,pent up demand in Europe, Asia & US due to acceleration in digital transformation, projects execution, security surveillance & latest digital technologies says the MD
Expleo seeing significant growth in automation, security, specialized digital & performance testing
MD anticipates Sequential Q on Q growth of 15 percent with Ebidta margin of 18 to 19 percent, going forward
MD says looking at ₹90 cr plus turnover in Q2 with Ebidta margin of 19 percent
Amalgamation to be completed by March 31, 2022.
current headcount at 1470 , amalgamated entity to have headcount at 4300 which will be raised to 6000 , by 2023 .
₹ 121 million other expenses for 300 plus third party consultants ,as short term to ensure faster deployment of delivery team, training ,wages of trainees etc classified as other expenses. Now this is not one time expenses but recurring, but will ease
Out over 3 to 4 quarters ,due to surge in turnover & profitability
Meeting was attended by Rohit Balakrishnan, Sharekhan ,& leading analysts
offshore , onsite ratio around 55 : 45 , presently, company will be ready with Dividend distribution policy before the end of this calendar year.
My view is that Expleo will show sales in the vicinity of ₹ 1015 million in Q2 , with consolidated EPS of around ₹ 25 . Dividend will come only after completing amalgamation. Pune , chennai & Coimbatore facilities being upgraded.
For Rs 25 EPS we need 25 cr profits. On sales of 101.5cr and 19% margins EBIDTA comes 19.28 cr. How can it achieve Rs 25 EPS. Can you elaborate more your thought process please ?
Whatever I have mentioned are statements from the lips of the MD , like 15 percent Q on Q growth & 19 percent Ebidta margins. other expenses ( on trainees , training,short term consultants of 300 plus) will be recurring & not one time, but will be mitigated over 3 to 4 quarters due to rising turnover & profitability.
Now Expleo neither gives forward guidance nor forward looking statements , so investors have to decipher from concall & make assumptions.
Rajesh 1975 is right on the track ,on his query. It’s for other learned members of this forum to enlighten us.
I have taken a liberal outlook,as IT sector is on upswing & assuming that Expleo is likely to come out with blockbuster Q2 & get to more revenues & profitability , surpassing outlook given by the MD.
Taking a rise in other income, due to cash in books & forex gains ,I have arrived at an estimated Consolidated EPS of ₹25 ( as guidance) for Q2 , though we have to wait for the actual figure.
Key markets- EU, ME, SE Asia, India ( no call out for usa)
A large EdTech company in the Middle East has
partnered with Expleo to build its capabilities
in virtual tutoring collaborative classrooms
and a teacher productivity portal
One of the world’s largest core banking service providers has chosen Expleo as their partner to move their offering to the Cloud and for a largeOscale security and vulnerability assessment.( good to see cloud migration capabilities)
Good quality projects in New wins( also helps understand true direction of skills and capabilities)
Future could be exciting as Expleo capabilities are part of Digital projects driven demand with a lag of few Qtrs, mgmt has been conservative and past performance has been not much to talk about. With building blocks in place, execution and demand generation is key - need to watch Growth aggression- slight temp margin dip is expected.
June’21 sales Rs88 crs and receivables Rs72 crs.Sep’21 sales Rs97 crs and receivables Rs95 crs.So T/o moves up by Rs9 crs and receivables up by Rs23 crs.
Incompetent guys who will declare dividend only when the holding co becomes eligible and indulge in making rosy statements. Shareholders should vote out these guys like they did in case of Eicher motors.
Expenses have gone up significantly,due to one time expenses on merger, hiring, attrition, third party consultants, training,Expleo academy & notional forex loss of ₹5cr
Robust order pipeline,new deal wins & to tap into demand, above expenses has been a necessity.
Around 350 trainees ready for deployment, another 700 headcount in 2022 & around 10,000 headcount by 2023.
Both the listed & unlisted entities are confident of 10% Q on Q growth over the next few quarters.
Parent anticipates 20% Annual growth over the next 3 years & a major portion of this, will be outsourced to the amalgamated entity . Hence, amalgamation & high expenses for this incurred.
Coimbatore facility running at full swing ( Beta testing) commercial production, in December 21.
Both listed & unlisted entity are seeing strong traction across all geographies ,on the 3 key verticals of Digitalization, Quality assurance & Engineering, particularly aerospace & Automotive seeing Huge pent up demand
Post amalgamation, Expleo is set to see annual turnover of ₹700cr ,as per Rajesh Krishnamurthy.
Again Rajesh , highlighted the focus of making india a digital & offshoring hub for Expleo group,as well as substantial outsourcing from the parent, which necessitated the Coimbatore facility.
Meeting was attended by Ralph Gillsen , Rajesh Krishnamurthy , MD & Desikan with several analysts from Sharekhan to Rohit Balakrishnan chipping in
MD deftly navigated, saying a dividend policy will be formulated as per sebi guidelines by Feb 22 & dividend will be declared either in Q4 or in next Q1 .
I could decipher that a dividend or buyback in lieu of dividend or both are certain, but only post amalgamation which is likely to be completed before March 31, 2022.
current offshore, onsite split is at 65 : 35 & digital revenues are 35 %. Current headcount is 5000 for listed & unlisted entities which will be upped to 10,000 by 2023
Management justified the high receivables, but unfortunately ,I could not hear properly.
Conclusion, Future looks promising & bright, for Q2 on revenue of ₹97 cr , consolidated EPS , stood at ₹10.80 ,in comparison to Last Q EPS of ₹12.36 ,due to higher expenses, incurred, for tapping into demand
With Roll out of 5 G , will come Internet of Things ( IOT) which will cause massive disruption & create hefty new revenue streams for Expleo in india as well as across geographies
The possibilities of IOT are endless, like a surgeon based in Mumbai, doing a Robotic surgery on a patient in Chennai, using IOT
IOT will create mega opportunities & disruption across all spectrum of industries from Fintech to healthcare.
This will create massive opportunities for Expleo with parent outsourcing to indian amalgamated entity.
5G & IOT would be embedded in all systems, possibly by 2023 .
As per latest trends, amalgamation is likely to be completed by January 2022 or at the max by March 31, 2022.
The sooner the better, for all . What I could decipher is that the amalgamated entity is likely to report consolidated EPS in the vicinity of ₹100 for the year ended March 31, 2023 .
The Market always factors the future earnings & Hence the traction in this scrip , to a new life time high.
I will not be surprised , to see a price of ₹2500 to ₹3000 ,in few months from now, considering the traction in IT sector & Digitalization .
This scrip has given 250 percent returns in last 1 year & 3500 percent returns in last 10 years.
Again, I don’t rule out another 3500 percent returns from the current level in coming 10 years , provided the IT sector & Expleo does well.
As always returns , will not be linear & there will be periods of aggressive growth & flat growth.
From Reliant trading company to Thinksoft global & thence to SQS BFSI , Amalgamated Avatar of Expleo solution is on its way to become a midcap in coming 10 years .
