Vaibhav Global (VAIBHAVGBL) Q4 14/15 earnings summary

Executive summary

• FY2014-15 revenue growth moderated to 6% as technology and call-centre transitions disrupted customers and US competition intensified; profitability and cash generation remained strong.

• Core product gross margin was 61%, return on capital employed exceeded 44%, and cash and liquid balances exceeded borrowings on a net basis.

Financial highlights

• Consolidated revenue from operations and other income was ₹1,388.45 crore vs ₹1,333.31 crore; operating profit/PBDIT was ₹146.89 crore vs ₹177.25 crore.

• Consolidated PAT was ₹103.16 crore vs ₹152.53 crore; reported profit decline reflected ₹17 crore lower FX gain and ₹22 crore higher tax provision YoY.

• Operating revenue was ₹1,376 crore, up 6%; EBITDA margin was 10.7% and PAT before exceptional items was 7.5% of revenue.

• Free cash flow was ₹106 crore vs ₹91 crore in FY2013-14; ₹48 crore of debt was repaid, ₹9 crore paid as dividends and ₹23 crore reinvested in net worth.

Outlook and guidance

• Web-platform upgrade was expected by Q2 FY2015-16, with management targeting a return to double-digit topline growth; management also expected pricing normalization to improve realizations.

• Management expected reasonable growth over time as initiatives stabilized; mobile apps, a responsive website and adjacent product categories were intended to broaden customer reach and spending.

• Jaipur SEZ facility investment of about ₹20 crore, funded from accruals, was planned to raise monthly manufacturing capacity 50% to 450,000 pieces.