Release Date: August 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hinduja Global Solutions Ltd (BOM:532859, Financial) reported a significant increase in total profit after tax, showing a growth of 870.9% year-over-year.
- The company has successfully set up its South Africa office and is ready to start operations in the next couple of months.
- Investments in AI capabilities, including setting up AI labs and developing conversational bots, are expected to enhance customer experience and operational efficiency.
- The media business, particularly the digital television and broadband segments, has shown robust year-on-year growth, with digital television growing by 6% and broadband by 15%.
- The company has reduced its borrowings by INR198 crore between March and June 2024, strengthening its financial position.
Negative Points
- Consolidated revenues saw a slight dip of 3.7% year-over-year, indicating some challenges in revenue growth.
- EBITDA margins were low at 1.5% due to certain one-off costs incurred during the quarter.
- There is a noted slowness in demand due to macroeconomic factors and uncertainties around upcoming elections, affecting client decision-making.
- The company faces challenges in the macro economy with volatility and delayed decision-making in key clients.
- There was a drop in other income by INR23 crore compared to the previous quarter, primarily due to the absence of profits from the sale of fiber assets.
Q & A Highlights
Q: Could you clarify the components that contributed to the increase in other expenses in Q1 FY25?
A: We are investing in solutions for future business growth and incurred one-time costs such as severance and joining bonuses. - Srinivas Palakodeti, Global CFO
Q: Can you throw some light on the components of other income for this quarter and the last quarter?
A: For Q1 FY25, interest income was INR102.3 crore, and FX gain was INR8 crore. In the previous quarter, other income included INR50 crore from the sale of fiber assets. - Srinivas Palakodeti, Global CFO
Q: Can you elaborate on the profit from discontinued operations for this quarter?
A: We received the final installment from the sale of our healthcare business, resulting in a net profit of INR218 crore. We do not expect major ongoing costs related to this. - Srinivas Palakodeti, Global CFO
Q: What are your views on the productivity improvements from implementing GenAI in BPO services?
A: While it's case-specific, GenAI will improve productivity by automating processes, allowing us to offer technology services alongside traditional services. - Partha DeSarkar, Group CEO
Q: How will the treasury surplus be utilized?
A: The funds will primarily be used for acquisitions in digital analytics and to grow our South Africa business organically. - Srinivas Palakodeti, Global CFO
Q: Could you explain the decline in BPM business revenue and margins YoY and QoQ?
A: The decline is due to slower demand and deferred decision-making amid election uncertainties. We hope for improvement in the second half of the year. - Partha DeSarkar, Group CEO
Q: What drove the growth in media business revenue on a QoQ and YoY basis?
A: The growth is due to our focus on subscriber base expansion last year, which is now translating into revenue growth. - Vynsley Fernandes, Head of Digital Media Business
Q: Is the current growth in the media segment sustainable?
A: We focus on sustainable growth and profitability, leveraging opportunities in broadband and digital inclusion. - Vynsley Fernandes, Head of Digital Media Business
Q: Could you provide an update on the current order book and pipeline?
A: The pipeline is fair but not as robust as desired due to macroeconomic factors and election uncertainties. - Partha DeSarkar, Group CEO
Q: How will incorporating AI affect the attrition rate and provide an outlook for the future?
A: AI will improve customer experience without displacing human jobs, though it may slow job growth. - Partha DeSarkar, Group CEO
Q: Could you give a breakup of TekLink and Diversify business revenue and EBITDA?
A: TekLink's revenue is around $8.3 million with EBITDA margins in the 20s. Diversify's revenue is around $7-$7.5 million with similar margins. - Srinivas Palakodeti, Global CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
