Religare Technova sees operating margin improvement ahead

The stock got re-listed today and is currently quoting at Rs 84.00, up Rs 7.25, or 9.45%.

In an interview with CNBC-TV18’s Udayan Mukherjee, Ralph James Home, managing director of Religare Technova, spoke about the company’s plans going forward.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Can you just take us through what Religare Technova’s core businesses right now? Is it just a pure BFSI focused IT services player?

A: Yes. It is a very clear strategy for the business evolved over the last few months. What we have is a company that is very clearly focused in the BFSI space and particularly in capital markets. It is driven around product-based solutions, which are sold internationally and we wrap solutions around those products.

Q: By when will this company be profitable because in fiscal year 2010 you had an EBITDA level and net level loss? Was it from the core IT services businesses this loss?

A: A number of things have been happening. Firstly, this business has been brought together over the last couple of years by the merger of a couple of companies. What we have been doing is really for the last couple of years forming the basis of the global IT products based company. We have been investing heavily in new products in new technology, in a brand new state-of-the-art development capability in Noida and in some acquisitions.

There are various other parts of the business that we have since moved away and that is Religare Technova. So what we will see is the business at the operating profit level which is moving towards small profits in the coming reporting season.

As we send out new products and globalize the strategy we can expect to see operating margin start to increase quite significantly.

Q: So by when do you think you will start reporting a positive bottom-line which quarter?

A: I think from an operating profit perspective we will see that by the March year-end.

Q: How big is this business? What is the quarterly run rate in terms of revenues for Religare Technova—the pure IT business?

A: It is running probably around about USD 6 million per quarter. That is increasing. We are been very acquisitive as a business both organic and inorganic growth and that tends to be increasing quarter-on-quarter at the moment. Two acquisitions or investments have been completed over the past nine months for example.