Sharing notes from Q2 FY24 concall
Business
- Revenue 381.9 crore, up 27%
- Excluding newly acquired company St. Charles, the revenue growth is up only 7%.
- Added 4 new customers. Total active customers are 85
- Renewed 4 customers out of which 2 were expansions
- Maintained a 100% renewal rate
- Visibility of $350 mn (~Rs 2870 crore) over two years
- Temporary increase in working capital due to transition of contracts from the parent entity to the new entity.
- Cash balance 585.5 crore. Net cash balance 480.9 crore
- Added 78 employees QoQ. Total headcount at 2468. The new addition was done to service customers added in the last quarter
Risk
- Uncertainty in demand continues for a longer time. In such cases, the company may have to rely on inorganic expansion. Fortunately, they have a decent cash balance of Rs 585 crore at their disposal.
Management
- Guided that revenue growth for FY 24 will be ~12% to 15%. Management expects 20%+ revenue growth in the long term but not immediately
- EBITDA margin will be 22% to 24%
- The acquisition approach is that NLSL looks to gain new clients, new geography or new capability. EIT InnoEnergy acquisition will help gain clients in the green energy sector. It is applicable for both large and small customers.
- AI will materially impact NLSL as well as their clients
- Management is actively looking for inorganic growth
- Expect headwinds in the near term. Per management, deal velocity has accelerated which is visible in new customer additions.
- St. Charles has performed better than expectations
- No challenge on supply side. They are able to hire and retain talent
- NLSL has 25% trainers in full-time roles and the rest on a contract basis. Note that apart from training, there are other services such as building content, managing schedules and programs, purchasing on behalf of customers and building technology
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