Narrower focus, digital tailwind lift eClerx revenue

Technology outsourcing firm eClerx reported a net consolidated profit of Rs 91.3 crore in the first quarter of financial year (FY) 2022. It was 76.4 percent higher than a year ago, but 6.4 percent lower sequentially.

Incorporated in 2000, eClerx provides process management and data analytics services to enterprises. It clocked revenue of Rs 1,582.7 crore in fiscal year (FY) 2021, growing 6.7 percent over the previous year.

eClerx derives around 70 percent of its revenue from North America, and has 12,842 employees across locations.

The technology company reports three revenue segments, namely customer operations, digital, and financial markets. For the financial markets, eClerx provides domain knowledge and analysis, equipping its customers with technology tools to adhere to regulatory guidelines, and manage their trade activities.

"We were trying to channel [our] energies into a few service areas, in which we have an excellent reputation, and a high-quality offering," eClerx Co-founder Anjan Malik told equity analysts at the end of the 2021 fiscal.

The company saw a rise demand in its digital segment in the last financial year, "which took a lot of people by surprise," Malik added. "We've seen demand actually increase over the past six months from our large client base."

The total income for eClerx grew 4 percent sequentially in the quarter ended June 2021 to Rs 495.7 crore, and was 41.6 percent higher over a year ago.

The company announced a buyback of share for Rs 3,200 for a maximum amount of Rs 303 crore. This was 40 percent over the share trading price on Friday. On Monday, its share touched the highest value of Rs 2395.05, reacting to the information, limited by the upper circuit limit of 5 percent.

The company reported operating profit of Rs 156.1 crore in the June 2021 quarter, down 1.7 percent sequentially but 64.6 percent over a year ago. It attributed the sequential fall in profit to wage hikes and rise in offshore benched employees, according to its investor presentation.

“After posting flat revenue growth over the last three or four years, FY 2021 marked a turnaround for the company as it benefited from the tech upcycle tailwind,” said stock brokerage Edelweiss in a report dated June 10, 2021.

ICICI Direct, in its report on June 11, 2021, said the company had reported healthy growth due to “lower roll offs, acquisition, healthy demand in analytics in customer and financial operations, and improving demand from large clients.”

This quarter, the company got two new clients with a revenue contribution of more than $3 million, taking its number of clients in this bracket to 21. It added two new customers in its $0.5 million to $1 million bracket. However, the number of clients in the $1 million-$3million remained at 20.

“The company is witnessing improving growth in customer care, RPA, analytics and content development,” ICICI Direct added in its report.