eClerx shares fall 12.6% after second-quarter profit declines 1.5% year on year
Key Facts
eClerx reported its second-quarter results for fiscal 2026-2027 on October 28, for the period ended September 30, posting a modest year-on-year decline in net profit amid strong revenue growth. The stock fell as much as 12.6% to 1,630 rupees during trading on October 29, according to Business Standard. At 12:52 p.m., shares were down 9.75% at 1,681 rupees on the NSE. At the same time, the Nifty 50 rose 0.49% to 22,810.35 points. The price of 1,681 rupees was recorded during the session and was not the closing price.
Consolidated net profit was 180.4 crore rupees, compared with 183.2 crore rupees in the year-earlier period, a 1.5% decline year on year. It rose 9.8% from the first quarter of the fiscal year, when it was 164.3 crore rupees. Operating revenue, meanwhile, increased 18.3% to 1,188.7 crore rupees from 1,004.9 crore rupees a year earlier. In dollar terms, operating revenue rose 10.6% to $127.7 million from $115.5 million. The difference between the two growth rates reflects the impact of converting revenue into U.S. dollars, while constant-currency revenue growth was 12.9% year on year and 1.6% quarter on quarter.
Including other revenue, total revenue reached 1,212.6 crore rupees, up 17.1% year on year. Quarter on quarter, operating revenue rose 3.2% to 11,887 million rupees, and total revenue increased 3.6% to 12,126 million rupees. The chief executive said on the earnings call that the second quarter was the 13th consecutive quarter in which the company had achieved sequential revenue growth. The company also reported earnings per share of 19.63 rupees, compared with 19.50 rupees in the year-earlier quarter. These figures show continued revenue growth alongside a year-on-year decline in quarterly net profit.
Operating EBITDA margin was 23.9%, up 87 basis points from the previous quarter but down 191 basis points year on year, according to the investor presentation. Gross EBITDA margin was 25.4%, up 120 basis points quarter on quarter, while remaining 211 basis points lower year on year. Net profit margin was 14.9% in the second quarter, compared with 14.5% for the first half, while EBIT margin was 20.8% for the quarter and 20.4% for the half. For the first half of the fiscal year, total revenue rose 20.3% to 2,382.9 crore rupees, and net profit increased 6.1% to 344.7 crore rupees. First-half profit growth was therefore positive despite the year-on-year decline recorded in the second quarter.
On the earnings call, management said some clients were taking longer to make decisions as they directed spending toward artificial intelligence, starting with smaller deals to test the technology before committing to larger programs. New deal bookings totaled $31 million in the second quarter, down from $41 million in the first quarter. For the first half, bookings reached $72 million, compared with $78 million in the year-earlier period. Meanwhile, revenue from the analytics and automation segment grew 27% year on year and 5% quarter on quarter, with an annualized revenue run rate of about $109 million, or nearly 20% of company revenue. Delivery headcount was 23,151 in September, up 8.7% year on year, while delivery utilization fell to 74.9% from 75.5% in the first quarter.
Management forecast stronger sequential revenue growth in the third and fourth quarters, with the pace tied to how quickly deals convert, and maintained its fiscal-year EBITDA margin guidance at 24% to 28%. It said a recovery in the banking, financial services and insurance sector had been pushed back to the fourth quarter from the third. It also forecast a seasonal rebound in fashion, luxury goods and retail in the third and fourth quarters. The outlook puts deal conversion and a recovery in demand in some sectors among the factors the company is monitoring in the second half of the fiscal year. Management did not specify a more precise timing for the expected recovery.