Category Earnings Results

Persistent Systems Q2FY25
Persistent Systems Q2FY25 Earnings: Profit Rises by 23.45% YoY

Company Overview

Persistent Systems, incorporated in 1990, is a global software and technology services company specializing in product engineering and digital transformation. The company has demonstrated expertise in emerging technologies, focusing on IoT products, platform development, and strategic partnerships with leading product companies. With a strong presence across sectors like industrial machinery, healthcare, Smart City, and smart agriculture, Persistent delivers solutions that span the entire product lifecycle. In its recent quarter, the company reported $345 million in revenue, marking 18.4% year-on-year growth and 5.3% sequential growth, with key contributions from Healthcare and Life Sciences (up 71.2%) and BFSI (up 15.3%). Persistent continues to drive growth, leveraging advanced technologies like AI and maintaining 18 consecutive quarters of growth.

Industry Outlook

The outlook for the IT sector in FY25 looks promising, with macroeconomic headwinds expected to subside, leading to improved earnings visibility. After outperforming the Nifty in the previous year, the IT sector is likely to maintain its momentum, benefiting from a lower base and easing headwinds. For Persistent Systems (PSL), the company is well-positioned to seize growth opportunities in digital technologies, thanks to its strong product development capabilities and early recognition of digital trends. Management is optimistic about achieving industry-leading revenue growth in FY24, driven by broad-based demand across various sectors, robust deal bookings, new client additions, and incremental revenue from acquisitions. PSL’s leadership in outsourced product development, long-standing client relationships, and end-to-end service offerings position it to capitalize on emerging opportunities effectively. With a strong presence in North America, Europe, and other regions, Persistent is expected to benefit from global digital transformation trends. Its focus on capability-led acquisitions, particularly in Europe, may help it capture new opportunities in consolidating markets.
Persistent aims to maintain industry-leading growth while optimizing margins by 200–300 basis points. Its focus on scaling advanced services, such as AI, and leveraging its robust pipeline suggests a strong performance in FY25.

Business Segments

  • Healthcare and Life Sciences:
    • This segment has experienced significant growth, with a year-on-year increase of 71.2%.
    • The growth is driven by expanding digital transformation initiatives in healthcare, including IoT applications and data analytics.
  • Banking, Financial Services, and Insurance (BFSI):
    • The BFSI sector recorded a 15.3% year-on-year growth. Persistent’s focus on AI adoption and digital services in financial operations is enhancing customer experience and operational efficiency.
  • Technology and High-Tech:
    • Although growth in this segment has been relatively slower, management expects an uptick in the next few quarters as demand increases. Investments in innovative technologies and strategic partnerships are expected to drive future growth.

Key Subsidiaries and Their Information

Persistent Systems has multiple wholly owned subsidiaries, with presence in over 20 countries.

  • Persistent Systems Inc.:
    • This North American subsidiary plays a critical role in driving growth, especially in the healthcare and BFSI sectors. The company is focusing on enhancing its digital offerings and has been successful in securing large deals.
  • Persistent Systems UK:
    • Focused on the European market, this subsidiary has been pivotal in expanding Persistent’s presence in Europe. It emphasizes product engineering and digital transformation services, catering to various industries, including automotive and finance.
  • Acquisitions and Partnerships:
    • Persistent has made several acquisitions to bolster its technology stack. For instance, the acquisition of MetaLogix has strengthened its capabilities in data management and analytics. Partnerships with leading technology companies enhance its service offerings, particularly in AI and cloud services.
  • Focus on Emerging Technologies:
    • Persistent’s subsidiaries are investing in emerging technologies like IoT, AI, and blockchain to enhance their service offerings and provide innovative solutions to clients. The company employs a global delivery model that leverages talent from various regions, ensuring cost efficiency and high-quality service delivery. With macroeconomic challenges easing and increased demand for digital transformation services, subsidiaries of Persistent Systems are well-positioned for sustained growth. The management is optimistic about capturing a larger market share in the digital services landscape, particularly with their strong track record in OPD.

Q2 FY25 Highlights

  • Revenue growth: PSL reported $345.5 million in revenues, up 5.1% q-o-q in constant currency (CC) terms beating our estimates of $342 million. Revenue in USD terms was up 5.6% q-o-q/18.4% y-oy while revenue in rupee terms stood at Rs. 2,897 crores, up 5.8% q-o-q/20.1% y-o-y. Growth was led by Healthcare & Lifesciences and BFSI verticals. Persistent reiterated its aspiration to achieve $ 2 billion revenue target by FY27. Management would endeavor to maintain utilization at 83-85%.
  • EBIT margins: EBIT margins was flat q-o-q at 14% slightly beating our estimates of 13.9%. Margin headwinds comprising of wage hike (-210 bps), absence of policy rationalization present in Q1 (-130 bps), Incremental impact of fresh ESOP issuance in Q2(-60 bps) and lower earnout credit (-60 bps) was neutralized by margin tailwinds comprising of Utilization (+120 bps), Sub contractor cost reduction (+70 bps), lower resale business (+50 bps), Pricing and right shoring (+130 bps), favorable currency (+30 bps) and absence of H-1B visa cost (+60 bps).
  • Order bookings: In the latest performance metrics, Persistent Systems reported a Total Contract Value (TCV) of $529 million, reflecting a 14% increase quarter-over-quarter (q-o-q) and a 10% increase year-over-year (y-o-y). The company achieved a book-to-bill ratio of 1.5x, up from 1.4x in Q1 FY25. New Business TCVs were particularly strong, reaching $389.8 million, which marks a 25% increase q-o-q and a 24% increase y-o-y. The Annual Contract Value (ACV) totaled $348.3 million, showing a modest 3% increase q-o-q and a more robust 10% increase y-o-y. Additionally, New Business ACV reached $218.6 million, reflecting a 10% increase q-o-q and a 19% increase y-o-y. These figures indicate a healthy growth trajectory for Persistent Systems, driven by strong demand and successful business strategies
  • Top clients & Client additions: Revenue from the top-5 clients, top-10 clients, top-20 clients, and top-50 clients grew 7.7%/ 5.3%/5.7%, and 5.4% q-o-q, respectively. Persistent added two clients in the $10mn+ and four clients in the $1mn+ revenue category sequentially.
  • Headcount & attrition: Net headcount additions declined by 282, taking total headcount to 23,130. TTM attrition inched up by 10 bps q-o-q to 12%. However, utilization improved 270 bps q-o-q to 84.8%.
  • Cash generation & DSO:  Cash & investments stood at Rs 1791.6 crore, down 6.2%       q-o-q. DSO stood at 68 from 67 in Q1FY25. Operating cash flows to PAT for Q2FY25 was 108.3% compared to 49.3% Q1FY25.

SWOT Analysis of Persistent Systems: Key Insights for Strategic Growth

Strengths:

  1. Expertise in Digital Transformation – Persistent Systems excels in cutting-edge digital transformation services, providing a strong competitive edge.
  2. Consistent Growth – The company has demonstrated steady revenue growth, reinforcing its position in the global market.
  3. Robust Deal Wins – Regular success in securing high-value contracts underscores its reliability and industry relevance.
  4. Global Presence – A well-established presence across North America, Europe, and other key regions, giving it a broad market reach.

Weaknesses:

  1. Dependence on BFSI and Healthcare – Heavy reliance on these sectors may limit diversification, posing a potential risk in times of industry slowdown.
  2. Smaller Size – Compared to some industry giants, Persistent Systems operates at a smaller scale, which may impact market dominance.
  3. Flat Margins – Margins have remained relatively stagnant, highlighting the need for cost optimization and efficiency improvements.
  4. Integration Challenges from Acquisitions – Ongoing acquisitions pose potential hurdles in seamless integration, impacting short-term operational efficiency.

Opportunities:

  1. Rising Demand for AI and Digital Transformation – The increasing adoption of AI and digital services presents lucrative growth opportunities.
  2. Healthcare and BFSI Expansion – Expanding its footprint in the rapidly growing healthcare and BFSI sectors can drive significant revenue.
  3. Focus on Cloud and IoT Solutions – With businesses globally shifting to cloud and IoT platforms, Persistent is well-positioned to capitalize on this trend.
  4. European Expansion – The company’s increasing focus on Europe offers new market opportunities, especially in digital transformation and engineering services.

Threats:

  1. Global Economic Uncertainty – Economic fluctuations could negatively impact client spending and growth projections.
  2. Competition from Industry Leaders – Larger competitors with greater resources and market share could pose a threat to Persistent’s expansion efforts.
  3. Currency Fluctuations – Persistent’s global operations expose it to currency exchange risks that could affect profitability.
  4. Cybersecurity Threats – As digital services grow, so do cybersecurity risks, requiring constant vigilance and investment to safeguard client data.

L&T Finance Holdings Q2 FY25
L&T Finance Q2 FY25 Results: Net Profit Rises 2% to ₹696 Crore, Revenue Jumps 17%

Company Overview

L&T Finance Holdings, part of the Larsen & Toubro Group, is a key player in India’s financial sector, offering a wide range of services across rural, housing, and infrastructure finance. Through its subsidiaries, it provides products like microfinance, two-wheeler loans, farm equipment finance, and home loans. The company is also involved in financing large-scale infrastructure projects.

L &T Finance emphasizes digital transformation, using data analytics and AI to enhance customer experience and streamline operations. It has adopted a strong Environmental, Social, and Governance (ESG) framework, ensuring sustainable business practices. In recent years, it has improved asset quality by reducing non-performing assets (NPAs) and focusing on cost optimization. With a focus on retail and rural finance, L&T Finance is committed to long-term, responsible growth in India’s financial ecosystem.

Industry Outlook

India’s economy is projected to grow by 7% in FY25, driven by strong private consumption and credit demand. This growth is set to significantly boost the financial sector, particularly non-bank financial companies (NBFCs), which are expected to see increased profitability despite higher funding costs. Credit demand is likely to expand, especially in infrastructure, housing, and microfinance sectors, with NBFC loan growth projected to increase by 15%, fueled by strong performance in key consumption areas. Infrastructure lending is poised for substantial growth due to large investments in energy and urban development. L&T Finance plans to expand its infrastructure portfolio by over 20% to capitalize on these opportunities. Additionally, the company is focused on improving asset quality, aiming to reduce its Gross Non-Performing Assets (NPAs) to below 3.0%, down from 3.1% in FY24.  L&T Finance is also expected to enhance its sustainability efforts by increasing   its allocation towards ESG projects.

Business Segments

  • Rural Finance: This includes microfinance, farm equipment finance, and two-wheeler loans, primarily catering to rural consumers. It plays a key role in driving financial inclusion in India’s rural economy.
  • Retail Finance: L&T Finance offers home loans, loans against property, and other personal loans, targeting individual consumers in urban and semi-urban areas.
  • Infrastructure Finance: The company has a significant presence in financing large-scale infrastructure projects, such as energy, transportation, and urban development, supporting India’s infrastructure growth.
  • Mutual Funds and Wealth Management:  Through L&T Investment Management, the company manages a wide range of mutual funds and wealth management products for retail and institutional investors.

Q2 FY25 Highlights

  • L&T Finance reported a Profit After Tax (PAT) of ₹696 crore, reflecting a 17% increase compared to the previous year. This growth is a strong indicator of the company’s profitability and overall financial health.
  • The company maintained a stable Return on Assets (RoA) at 2.60%, up 18 basis points year-over-year. With 96% of its loan book now in retail financing, it is advancing its “retailization” strategy to reduce corporate loan dependence and improve asset quality.
  • L&T Finance’s retail loan portfolio grew 28% YoY to ₹88,975 crore, driven by strong demand for home loans, vehicle financing, and microfinance. The consolidated book grew 18% YoY, the highest since Q1FY20.
  • L&T Finance improved its Net Interest Margin (NIM) to 8.94%, up by 32 bps YoY, while reducing its Weighted Average Cost of Borrowings (WACB) to 7.80%, down by 5 bps. Credit cost remained stable at 2.59%, and the collection efficiency for the rural segment stood at 99.45%.

Financial Summary

INR in Cr.FY25 Q2FY25 Q1QoQ (%)FY24 Q2YoY (%)
Total Operating Income401937846.20%321425.10%
Total Expenditure (Excl Depreciation)157514826.20%133118.30%
Operating Profit (PBDIT) excl Other Income244423026.20%188229.90%
Other Income502.00%268-98.30%
Operating Profit (PBDIT)244923026.40%215113.90%
Interest147613519.20%132511.40%
Depreciation332817.10%2817.50%
Profit Before Tax9409221.90%79717.80%
Tax2432372.50%20319.60%
Net Profit6976851.70%59417.20%
Share in Profit of Associates000.00%00.00%
Minority Interest1-0.43-523.10%1-223.60%
Consolidated Net Profit6966861.50%59516.90%

SWOT Analysis

Strengths:

  1. Strong Family Background
  2. Wide Range of Products
  3. Effective Retaliation Strategy
  4. Significant Presence in Rural Areas

Opportunities:

  1. Expanding Rural Market
  2. Government Investment in Infrastructure
  3. Growth in Digital Services
  4. Potential for Cross-Selling

Weaknesses:

  1. Heavy Reliance on External Borrowing
  2. Legacy Issues with Corporate Loans
  3. Non-Performing Assets (NPAs)
  4. Delay in Digital Transformation

Threats:

  1. Changes in Regulations
  2. Economic Slowdown
  3. Increasing Competition
  4. Fluctuations in Interest Rates

Just Dial reports
Just Dial Reports Q2 FY25 Earnings: 114% Surge in Net Profit and 9% Revenue Growth

Prepared On: October 12, 2024

Company Overview
Just Dial Ltd., founded on December 20, 1993, in Mumbai, India, is led by CEO Venkatachalam Sthanu Mani. As a key player in the Technology Services sector, particularly in Internet Software/Services, Just Dial is a leading local search engine in India. It offers comprehensive search services via website, mobile app, phone, and SMS, helping users find businesses, products, and services.

The latest JD App integrates features like Map-aided Search, Live TV, and Stock Quotes, making daily tasks easier. Just Dial also provides services such as bill payments and travel bookings, generating revenue through search services, transaction commissions, and certifications.

Key Company Information:

  • Company Name: Just Dial Ltd.
  • Founded: December 20, 1993
  • Headquarters: Mumbai, India
  • CEO: Venkatachalam Sthanu Mani
  • Sector: Technology Services
  • Industry: Internet Software/Services
  • ISIN: INE599M01018
  • Website: justdial.com

Industry Outlook:

The Internet Software and Services industry is growing rapidly due to increased internet use, digital transformation, and the shift to online platforms. Companies like Just Dial are well-positioned as more people rely on digital tools to find local businesses and services. The industry is being reshaped by emerging technologies like AI and automation, enhancing user experiences and operational efficiency. With a focus on mobile apps and personalized solutions, businesses are catering to the rising smartphone user base. As digital adoption spreads, especially in rural areas, localized search services are expected to thrive, driving further growth and innovation in the industry.

Business Segments:

  • Local Search Services: Users can discover businesses, products, and services via website, app, and SMS.
  • Transaction Services: Includes bill payments, travel bookings, and online transactions.
  • Rating Certifications: Business rating and certification services.
  • Website Creation & Digital Marketing: Offers website building and marketing solutions.
  • Revenue Streams: Search-related services, service certifications, and transaction commissions.

Earnings Report:

  • Q1 Results:
    • Net Profit: ₹141 crore
    • Revenue: ₹281 crore
    • Operating Expenses: ₹214 crore
    • Profit Before Tax (PBT): ₹154 crore
  • Q2 Results:
    • Net Profit: ₹154 crore (9% increase from Q1)
    • Revenue: ₹285 crore
    • Operating Expenses: ₹217 crore
    • Profit Before Tax (PBT): ₹182 crore
  • Summary: Strong financial performance with growth in net profit and revenue from Q1 to Q2.

Financial Summary

Just Dial’s financial performance has shown significant growth over the recent quarters. In Q1, the company achieved a net profit of ₹141 crore with revenue of ₹281 crore, accompanied by operating expenses of ₹214 crore and a Profit Before Tax (PBT) of ₹154 crore.

By Q2, Just Dial reported a net profit of ₹154 crore, marking a 9% increase from the previous quarter. Revenue rose to ₹285 crore, with operating expenses slightly higher at ₹217 crore. The PBT for Q2 reached ₹182 crore, reflecting the company’s robust financial health and effective cost management strategies.

Performance Overview:

Just Dial Ltd. delivered a strong performance in Q2 FY25, with significant growth across key financial metrics. The company’s net profit surged by 114% year-over-year, reaching ₹154 crore, driven by efficient cost management and rising revenue. Revenue from operations grew by 9%, totaling ₹285 crore, reflecting sustained demand for its digital solutions. The company also reported a 25% increase in total income and a 98% rise in profit before tax, signaling robust profitability. With strategic investments in technology and a growing user base, Just Dial continues to strengthen its position in the market.

Debt and Coverage:

Just Dial Ltd. maintains a healthy financial position with manageable debt levels.

  • Debt: ₹2.80B (2023), up from ₹700M (2020) 
  • Free Cash Flow: ₹64B 
  • Cash Reserves: ₹48B 
  • Strong debt coverage ensures financial stability and growth.

Stock Performance:
Just Dial’s stock has shown impressive growth, with a 2.96% increase on the BSE to ₹1,307.10 after its Q2 FY25 report and a 7% surge on the NSE to ₹1,359. Over the past year, the stock delivered a 76.10% return, with a 5-year growth of 110.43%. Its market cap stands at ₹100.10 billion, reflecting investor confidence.

SWOT Analysis:
Strengths: Strong brand, profit growth, AI investments.
Weaknesses: Limited global presence, rising debt.
Opportunities: B2B expansion, AI integration.
Threats: Intense competition, market dependency.

Conclusion:

In conclusion, Just Dial Ltd.’s Q2 FY25 performance highlights its strong market position and effective cost management, evidenced by significant profit and revenue growth. With strategic investments in technology and a focus on B2B expansion, Just Dial is well-positioned for continued success and value creation for stakeholders.

GM Breweries Q2 Earnings Report
GM Breweries Q2 Report: Stock Falls 3% Following Year-on-Year Sales Decline and Shrinking Profit Margins

Prepared On: October 10, 2024

Company Overview:
G M Breweries Ltd. is a significant player in the consumer non-durables sector, specializing in the production and sale of alcoholic beverages. Founded on December 9, 1981, by CEO Jimmy William Almeida, the company is based in Mumbai, India. G M Breweries focuses on manufacturing country liquor (CL) and Indian Made Foreign Liquor (IMFL) under brand names like G.M. Santra, G.M. Doctor, G.M. Limbu Punch, and G.M. Dilbahar Sounf. With a strong presence in Maharashtra, the company has established itself as the largest manufacturer of country liquor in the state.

Key Company Information:

  • Market Capitalization: ₹19.64 Billion
  • Dividend Yield (Indicated): 0.65%
  • P/E Ratio (TTM): 12.55
  • Net Income (FY): ₹1.52 Billion
  • Revenue (FY): ₹6.15 Billion
  • Employees: 363
  • ISIN: INE075D01018
  • Website: gmbreweries.com

Industry Outlook:
The alcoholic beverages industry in India is experiencing steady growth driven by factors like rising disposable incomes, changing consumer preferences, and urbanization. Market segments include beer, spirits (CL and IMFL), and wine, with spirits holding a significant market share.

Key Industry Trends:

  1. Regulatory Environment: Stringent regulations on licensing, taxation, and advertising impact industry profitability.
  2. Consumer Preferences: Shift towards premium and branded products, with a focus on quality and brand reputation.
  3. Distribution Channels: Expansion of organized retail and e-commerce enhancing consumer accessibility.
  4. Health and Wellness: Rising health awareness driving demand for healthier beverage options.
  5. Market Growth: Indian alcoholic beverages market is expected to grow at a CAGR of around 10% in the next five years.

Business Segments
G M Breweries operates in key segments focusing on country liquor, IMFL, and exploring opportunities in non-alcoholic beverages to diversify its product portfolio.

  • Country Liquor (CL): Leading presence in Maharashtra with brands like G.M. Santra and G.M. Doctor.
  • Indian Made Foreign Liquor (IMFL): Catering to middle to high-income consumers with a variety of spirits.
  • Other Segments: Focus on non-alcoholic beverages for product diversification.

Earnings Report
Q1 FY25:

  • Revenue from Operations: ₹152.3 crore
  • Net Profit: ₹31.5 crore
  • Profit Before Tax (PBT): ₹29.8 crore

Q2 FY25:

  • Revenue from Operations: ₹149 crore
  • Net Profit: Decreased by 13.11% quarter-on-quarter
  • Profit Before Tax (PBT): ₹28.97 crore

Half-Year Performance:

  • Net Profit: Increased by 10.24% to ₹46.61 crore in H1 FY25.

Financial Summary

  • Revenue (FY 2023): ₹6.15 Billion
  • Net Income (FY 2023): ₹1.52 Billion
  • Market Capitalization: ₹19.64 Billion
  • Dividend Yield (Indicated): 0.65%
  • P/E Ratio (TTM): 12.55

Performance Overview:

  • Revenue Trend: Stable with minor fluctuations, half-year revenue up by 1% year-on-year.
  • Profitability: Net profit improved in H1 FY25 despite a decrease in Q2 FY25.
  • Expense Management: Total expenses slightly increased, and raw material costs declined.
  • Cash Flow: Operating cash flow has declined over the past three years.

Debt and Coverage:

  • Debt managed effectively with a steady increase.
  • Careful monitoring of free cash flow and coverage ratios is needed for financial stability.

Stock Performance Insights:

  • Appreciation of 41.98% YTD, absolute 1-year return of 39.67%.
  • Shareholding pattern indicating ownership distribution among promoters, institutional investors, and public shareholders.

SWOT Analysis:

  • Strengths: Market leadership, diverse product portfolio, robust financials, consistent dividend growth.
  • Weaknesses: Decline in PAT, cash flow issues, market dependence.
  • Opportunities: Market expansion, product diversification, digital growth, partnerships.
  • Threats: Regulatory risks, competition, economic factors, health trends.

Conclusion:
G M Breweries Ltd. showcases strength and market positioning in Maharashtra’s alcoholic beverages industry. Despite challenges in Q2 FY25, the company reported stable revenue and improved profits in H1 FY25—an attractive investment option with strengths and areas of concern for investor consideration.