Highlights of the call
- For the quarter ended March 2009, on sequential basis, Polaris reported 9% dip in operating revenues at Rs 337.25 crore. OPM dipped 190bps at 18.3% on the back of higher SG&A expenses. Forex loss for the quarter was Rs 19.59 crore down 31% and effective tax rate was up 160bps at 14.7%. The resultant net profit was down 14% at Rs 32.11 crore.
- The shortfall in revenues was on account of shift from offshore to onsite; rate cut about 3% and slowdown in Citibank India business.
- For the quarter, Intellect revenues were at Rs 66 crore up from Rs 61.71 crore in the sequential quarter. The OPM for Intellect was 28%.
- For the quarter, Optimus the BPO arm had revenues of Rs 12.61 crore down from Rs 14.35 crore in the sequential quarter.
- Polaris Retail Infrastructure (PRIL) reported revenues of Rs 10.27 crore against Rs 5.36 crore in Q4FY08.
- OPM for services business was about 16%.
- The effort mix for the quarter for onsite/offshore was 29:71. The revenue mix for onsite offshore was 54.74:45.26 against 53.77:46.23 in the sequential quarter.
- For the quarter, the Company reduced headcount by 649 employees to 9238 employees. In the standalone company, the headcount was reduced by 164 employees to 7100, in Optimus by 484 employees to 1946, in PRIL by 6 employees to 109 and in SEEC added 5 employees to 83 employees. Going forward, the management has not given any headcount guidance as it follows just in time recruitment.
- The utilization for IT services was 80% down from 81% in the sequential quarter.
- Polaris added 16 new clients during the quarter. The total number of active clients at the end of the quarter stood at 197 with 50% accounts to grow going forward.
- Top client contribution dipped 18.3% at 12.38%, top 2-5 client contribution dipped 18.2% at 25.09%, top 6-10 client contribution dipped 15.6% at 11.19% and other than top 10 client contribution was flat at 51.34%.
- Geographically, USA contributed 39.79% (39.65% in the sequential quarter) of the revenues, Europe contributed 29.23% (29.22% in the sequential quarter) of the revenues, India contributed 8.73% (8.66% in the sequential quarter) of the revenues and APAC & Japan contributed 22.25% (22.47% in the sequential quarter) of the revenues.
- The Company has opened an office in Chile and has plans to enter Egypt and Vietnam.
- For FY09, Insurance contributed Rs 90 crore of the total revenues of Rs 1377.95 crore. The management expects revenues from Insurance segment to double in next 2.5 years.
- Hedging at the end of the quarter was US$ 103 million at Rs 44.53/US$ and Euro 6.9 million.
- The capex for FY10 is about Rs 50 crore. Cash & Cash equivalents stood at Rs 340 crore and debt at Rs 36 lakh at the end of FY09.
- The company plans to launch the SAAS module of Intellect soon.
- The outlook going forward is cautious. The funnel for “Intellect” in USA is about US$ 30 million. The funnel for Europe and Asia is also good. The next 3-4 quarter, the management would be watchful.
- The IT budgets are flat or down. However, since the share of IT budgets for the Company is small, the impact would not be much.
- For FY10, the management is guiding for PAT of Rs 150 crore meaning an EPS of Rs 15 per share.