WNS (Holdings) Limited Net Income surged on 129% and EBITDA Margin increased on 3.6 pp from 11.6% to 15.2%
04/26/2018 • About WNS (Holdings) Limited (
$WNS) • By InTwits
WNS (Holdings) Limited reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- WNS (Holdings) Limited is a growth stock: FY2018 revenue growth was 25.8%, 5 year revenue CAGR was 10.5% at FY2018 ROIC 14.4%
- WNS (Holdings) Limited has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.6%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $9m in 2018, $7m in 2017, $3m in 2016, $2m in 2015, $1m in 2014
- In the last 5 years the company invested considerably less than D&A: $134m vs. $190m
- The company has highly profitable business model: ROIC is 14.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 25.8%. Revenue growth showed acceleration in FY18Q4 - it increased 27.2% YoY. During the last 5 years Revenue growth bottomed in FY2016 at 5.3% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.9 pp from 18.2% to 22.1% in 2018.
Gross Margin increased slightly on 0.56 pp from 33.1% to 33.6% in FY2018. SG&A as a % of Revenue showed almost no change in FY2018. SG&A as a % of Revenue stuck to a growing trend at 0.77 pp per annum in FY2014-FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. SBC as a % of Revenue stuck to a growing trend at 0.72 pp per annum in FY2014-FY2018.
Net Income margin increased on 5.1 pp from 6.3% to 11.4% in FY2018. The efficient tax rate was 15.1% in FY2018 while the average for the last five years was 24.2%.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 4.4% in FY2018. The company's CAPEX/Revenue showed almost no change from FY2015 to FY2018. It's average level of CAPEX/Revenue for the last three years was 4.4%.
Accounts receivable as a % of Revenue decreased slightly on 0.61 pp from 10.0% to 9.4% in FY2018. Accounts payable as a % of Revenue showed almost no change in FY2018.
WNS (Holdings) Limited has spent
$6m on M&A in FY2018 which accounts for 0.74% of revenue.
Return on investment
The company operates at good ROIC (14.4%) and ROE (19.0%). ROIC increased on 7.4 pp from 7.0% to 14.4% in FY2018. ROE increased on 9.8 pp from 9.2% to 19.0% in FY2018.
Leverage (Debt)
Debt level is -0.1x Net Debt / EBITDA and 0.8x Debt / EBITDA. Debt dropped on 23.7% while cash jumped on 43.0%.
WNS (Holdings) Limited has good short term financial stability: Interest coverage ratio (ICR) is 24.9x. WNS (Holdings) Limited has no short term refinancing risk: cash is higher than short term debt (359.9%).
Average interest expence charged on company's debt was 3.6% in FY2018.
Valuation and dividends
WNS (Holdings) Limited's trades at EV/EBITDA 20.8x and P/E 27.9x.
Management team
Keshav R Murugesh is a WNS (Holdings) Limited's CEO. Keshav R Murugesh is a founder and has spent 9 years with the company. CEO total compensation was
$3,259,147 in FY2018 which included
$714,968 salary and
$2,475,037 annual bonus. The company's CFO is Sanjay Puria. Sanjay Puria has 5 years tenure at the company.
At the end of financial year the company had 36,540 employees. The number of employees increased on 7.6%. Average revenue per employee in FY2018 was
$20,743 and it jumped on 16.9%.
Financial and operational results
FY ended 03/31/2018
WNS (Holdings) Limited ($WNS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 502.6 | 533.9 | 562.2 | 602.5 | 758.0 | 25.8% |
| Gross Profit | 174.9 | 191.2 | 196.8 | 199.2 | 254.8 | 27.9% |
| SG&A | 90.6 | 101.1 | 109.7 | 124.4 | 159.4 | 28.2% |
| EBITDA | 98.3 | 104.5 | 102.5 | 70.1 | 115.4 | 64.7% |
| EBIT | 60.5 | 65.9 | 61.9 | 32.6 | 79.9 | 144.9% |
| Interest expence | 2.9 | 1.3 | 0.3 | 0.4 | 3.2 | 658.3% |
| Tax | 14.3 | 22.4 | 21.2 | 17.5 | 15.4 | -12.0% |
| Net Income | 41.6 | 58.6 | 59.9 | 37.8 | 86.4 | 128.9% |
| Stock Based Compensation | 6.8 | 9.4 | 17.7 | 22.8 | 29.9 | 31.2% |
Balance Sheet
|
|---|
| Cash | 33.7 | 32.4 | 41.9 | 69.8 | 99.8 | 43.0% |
| Accounts Receivable | 62.0 | 55.8 | 54.9 | 60.4 | 71.4 | 18.1% |
| Accounts Payable | 29.1 | 22.7 | 19.9 | 14.2 | 19.7 | 38.4% |
| Short Term Debt | 71.2 | 25.7 | 0.0 | 27.6 | 27.7 | 0.5% |
| Long Term Debt | 13.5 | 0.0 | 0.0 | 89.1 | 61.4 | -31.1% |
Cash flow
|
|---|
| Capex | 27.2 | 23.0 | 27.5 | 22.9 | 33.7 | 47.3% |
| Acquisitions | | 0.3 | | 101.3 | 5.6 | -94.5% |
Ratios
|
|---|
| Revenue growth | 9.2% | 6.2% | 5.3% | 7.2% | 25.8% | |
| EBITDA growth | 28.2% | 6.3% | -1.9% | -31.6% | 64.7% | |
|
|---|
| Gross Margin | 34.8% | 35.8% | 35.0% | 33.1% | 33.6% | 0.6% |
| EBITDA Margin | 19.6% | 19.6% | 18.2% | 11.6% | 15.2% | 3.6% |
| EBIT Margin | 12.0% | 12.3% | 11.0% | 5.4% | 10.5% | 5.1% |
| SG&A, % of revenue | 18.0% | 18.9% | 19.5% | 20.6% | 21.0% | 0.4% |
| SBC, % of revenue | 1.4% | 1.8% | 3.1% | 3.8% | 3.9% | 0.2% |
| Net Income Margin | 8.3% | 11.0% | 10.7% | 6.3% | 11.4% | 5.1% |
| CAPEX, % of revenue | 5.4% | 4.3% | 4.9% | 3.8% | 4.4% | 0.6% |
|
|---|
| ROIC | 16.1% | 16.7% | 15.5% | 7.0% | 14.4% | 7.4% |
| ROE | 13.3% | 16.4% | 15.0% | 9.2% | 19.0% | 9.8% |
| Net Debt/EBITDA | 0.5x | -0.1x | -0.4x | 0.7x | -0.1x | -0.8x |
| Interest expence / Average debt | 3.5% | 5.2% | | 0.7% | 3.6% | 2.9% |
People
|
|---|
| Employees | 27,020 | 28,890 | 32,388 | 33,968 | 36,540 | 7.6% |
| Revenue/Employee, th. $ | 19 | 18 | 17 | 18 | 21 | 16.9% |
WNS (Holdings) Limited ($WNS) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 180 | 187 | 189 | 203 | | 21.7% | 24.5% | 29.7% | 27.2% |
| EBITDA | 19 | 24 | 25 | 52 | | -8.7% | 5.8% | 36.2% | |
| Net Income | 17 | 19 | 26 | 25 | | 36.9% | 50.0% | 46.1% | |
Balance Sheet
|
|---|
| Cash | 105 | 103 | 90 | 100 | | 63.2% | 91.1% | 26.9% | 43.0% |
| Short Term Debt | 28 | 28 | 28 | 28 | | | | | 0.5% |
| Long Term Debt | 89 | 75 | 75 | 61 | | | | | -31.1% |
Ratios
|
|---|
| Gross Margin | 30.8% | 32.7% | 34.0% | 36.7% | | -2.6% | -0.7% | 1.0% | 4.0% |
| EBITDA Margin | 10.5% | 12.8% | 13.4% | 25.6% | | -3.5% | -2.3% | 0.6% | 29.4% |
| Net Income Margin | 9.3% | 10.1% | 13.9% | 12.1% | | 1.0% | 1.7% | 1.6% | 15.2% |
Peers in Data Processing & Outsourced S
Below we provide WNS (Holdings) Limited benchmarking against other companies in Data Processing & Outsourced S industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.1% | 7.7% | 11.8% | 7.4% |
|---|
| WNS (Holdings) Limited ($WNS) | | 6.2% | 5.3% | 7.2% | 25.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 39.3% | 39.6% | 39.5% | 39.5% | 41.0% |
|---|
| WNS (Holdings) Limited ($WNS) | 34.8% | 35.8% | 35.0% | 33.1% | 33.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.6% | 21.2% | 21.3% | 21.1% | 19.4% |
|---|
| WNS (Holdings) Limited ($WNS) | 19.6% | 19.6% | 18.2% | 11.6% | 15.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.0% |
|---|
| WNS (Holdings) Limited ($WNS) | 5.4% | 4.3% | 4.9% | 3.8% | 4.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 13.3% | 12.8% | 11.1% | 10.7% | 10.2% |
|---|
| WNS (Holdings) Limited ($WNS) | 16.1% | 16.7% | 15.5% | 7.0% | 14.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.5x | 0.7x | 1.6x | 2.3x | 2.2x |
|---|
| WNS (Holdings) Limited ($WNS) | 0.5x | -0.1x | -0.4x | 0.7x | -0.1x |
