Hinduja Global Solutions Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Hinduja Global Solutions Ltd (HGS) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:35:10] Jyoti Singh from Arihant Capital asked about the organic growth of BPM business. Srinivas Palakodeti Global CFO answered the revenue growth of BPM business is 34.4%.

• [00:38:40] Ritwik Rai with Star Invest enquired about any future outlook in terms of business growth. Partha Desarkar ED answered that the offshore business is going strong as it’s HGS’ strong focus that is giving improved margins. The digital business is also strong that grew 63% YonY.

• [00:41:08] Ritwik Rai of Star Invest asked what kind of company is HGS planning to acquire next. Partha Desarkar ED answered that HGS is trying to be digital experience company that is technology led. Some of the M&A targets are going to be around increasing the digital capabilities in the data and analytics, and public sector space.

• [00:45:03] Ridham Desai from M Square Capital asked how the debt part post acquisition is retained in the consolidated balance sheet. Partha Desarkar ED clarified that HGS has only acquired the digital media business of NXT Digital Limited. So it’s not a like-to-like case of just adding two balance sheets together.

• [00:46:55] Ridham Desai from M Square Capital asked about the strategy to convert loss at the net level into the profit over next few quarters. Srinivas Palakodeti Global CFO answered that at an overall level, HGS is PBT positive. HGS will look for synergies and growth in customers with a better customer experience. That’s the focus going forward.

• [00:48:04] Ridham Desai from M Square Capital enquired about reason behind some operations being discontinued that are profit making. Partha Desarkar ED answered that valuations of the business by public markets in India were poor vs. the business being in hands of private investors. So the stark difference was the reason behind discontinued operations.

• [00:51:42] Imran Contractor from Quantum Investments enquired more about the timeline for getting the accounts audited for the last March and announcing a buyback. Srinivas Palakodeti Global CFO answered that the audit is for Sept. 30 and it would be done quickly.

• [00:52:42] Imran Contractor from Quantum Investments also asked when the Nxtdigital business is likely to turn profitable on a bottom line basis. Srinivas Palakodeti Global CFO answered that it’s already EBITDA positive. At an overall level, HGS is confident and even at the PBT level, the combined businesses are profitable.

• [00:54:51] Preeti Sharma with Invest First Advisors asked about the plans with the cash in the balance sheet. Srinivas Palakodeti Global CFO answered that it will be used for buyback and the taxes payable on the buyback. Second is for acquisitions. And third is to grow the business on BPM and digital media side.