Sharekhan's research report on Intellect Design Arena
Margins weakened due to rising investments on capacity and higher travel expenses; but Q1 saw steady growth in deal pipeline, pick-up in deal wins and deal sizes and stable attrition. Management expects to achieve a $75 million quarterly revenue run-rate in the next couple of quarters ($70 million in Q1FY23), while it targets to achieve $90 - $100 million revenue run-rate over 8-12 quarters. Growth would be driven by strong deal wins, market expansion and investments in platforms. Management lowered EBITDA margin guidance to 22-25% for FY2023E from earlier 25-30% as it plans to reinvest around 4-5% of its profitability in building platform and capacity for the next level of growth.
Outlook
We maintain Buy on Intellect Design with a revised PT of Rs. 780, given strong revenue growth visibility, expansion in new markets and a strong deal pipeline.
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