Coforge Ltd
NSE:COFORGE
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
4 283.8733
7 753.75
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Coforge Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Q3 FY '20 Earnings Conference Call of NIIT Technologies Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhinandan Singh, Head of Investor Relations and M&A at NIIT Technologies. Thank you, and over to you, Mr. Singh.
A warm welcome to all of you to our Q3 FY '20 earnings conference call. You would have already received our results by now. These are also available on our website, www.niit-tech.com.Present along with me on this call are our CEO, Mr. Sudhir Singh; and our CFO, Mr. Ajay Kalra. We will start this program with opening remarks from our CEO, and post that, we would open the floor for your questions.With that, I would now like to hand over the floor to Mr. Sudhir Singh, our CEO. Over to you, Sudhir.
Thank you, Abhinandan, and a very, very good evening and a very good morning to all of you across the world. We are pleased to report that we registered a good performance in quarter 3 of fiscal year 2020.Today, before I delve into the quarterly results, I wanted to make an important observation. You would have seen our intimation in November about Mr. Ajay Kalra, who has joined us as our CFO, and I am happy to say that he's present with us on the call today. He joined us from Genpact where he was a Global Controller for the firm. In his long tenure at Genpact, Ajay has accumulated rich experience and expertise across the finance function including corporate finance, complex deal structuring, pricing, contracting, treasury and mergers and acquisitions. Ajay was also a key member of the team that took Genpact public in 2007, and he has been associated with the company's capital-raising efforts. Ajay is a chartered accountant with over 25 years of experience, and the organization and I are very pleased to have Ajay join our leadership team.
Thank you, Sudhir.
Welcome, Ajay. As I walk you through the results today, I would like to call out the framework under which I shall articulate them. As indicated in the earlier calls this year, and as you are aware, in April 2019, we divested the GIS business. And on June 14, 2019, we closed the WHISHWORKS acquisition. I shall be discussing numbers and analysis only in the context of the continuing business, that is excluding SV and including WHISHWORKS.With that, I'm going to jump into the revenue analysis. We would like to share that the revenues grew quarter-on-quarter in constant currency terms by 2% and by 3.4% quarter-on-quarter on a reported basis to report -- to INR 10,734 million. In constant currency terms, BFS contracted 2.9% quarter-on-quarter. Travel, Transport and Hospitality grew by 4.6% quarter-on-quarter. Insurance contracted 2.2% quarter-on-quarter, and the Others portfolio grew 5.2% quarter-on-quarter. In reported terms, BFS contracted 1.3% quarter-on-quarter, contributing to 16% of revenue. Travel, Transportation and Hospitality was up 6.2% quarter-on-quarter, contributing to 28.5% of revenue. And Insurance grew 0.2% quarter-on-quarter, contributing 30.2% to overall revenues. The Others portfolio grew 7.4% quarter-on-quarter, and they represent 25.3% of the overall revenues.Americas, EMEA and Rest of the World contributed 48%, 37% and 15% of the revenue mix. The top 5 clients now contribute 27% of the total revenue, and the top 10 and top 20 contribute 36.4% and 50.3% of the total revenue, respectively. The broad-based growth is reinforced by the number of million-dollar-plus clients, which has risen to 100 this quarter. On-site revenues declined quarter-on-quarter and contributed to 64% of total revenues.Moving on to margin analysis. On margins, we are pleased to report that we registered a healthy performance in quarter 3. EBITDA margin for the quarter is 18.2% in cc terms. In reported terms, the margin is now 18.1%. Effective tax rate for the quarter stood at 20.7%, which is an increase of 265 basis points from quarter 2. Net profit for the quarter stands at INR 1,233 million.The next section that I shall approach is the order intake commentary. The deal flow story for us remains positive. We secured fresh business of USD 218 million during the quarter. This number represents a sharp increase over the order intake number that we have seen in the recent quarters. Out of this $218 million order intake, the U.S. geo contributed USD 90 million; EMEA, USD 62 million; and the Rest of the World, USD 66 million. The uptick in order intake was driven by 4 large deal closures during the quarter under review. Each of the 4 principal business units for the firm: Insurance, Travel, BFS and APAC, contributed 1 large deal each to the mix in this kitty of 4 large deals for the quarter. 10 new customers were added during the quarter. As I have noted in the past, we have primed our hunting engine to focus on select but highly scalable pursuits. We have also repurposed some of our hunters to drive accelerated growth across existing accounts. The order book executable for the next 12 months has expanded and it now stands at USD 424 million.Commentary for -- on delivery operations and capability augmentation is as follows. The delivery operations of the firm continued to create real-world impact across our 3 chosen verticals. During the quarter, within the Travel industry, we successfully implemented REST-based microservices for the booking engine of a large U.S.-based travel technology company, started the rollout of an intelligent automation platform for a rail major and we built an AI engine for detecting suspicious custom declarations for a low-cost airline.During the quarter, in the BFS space, we worked on transforming the service model to bring efficiencies across development and testing for a large wealth management platform provider. And within Insurance, we are consolidating multiple systems for an EMEA-based global insurer' surety line of business into a single modern experience platform for their brokers, the retail wholesalers and agents. For another insurance major, we implemented Pega-based AI bot that resolves the inquiries during chats and e-mails, thereby reducing 85% of the workload on customer executives.Finally, for a new logo specialty insurer within insurance itself, we implemented SLICE, which is our own internal proprietary framework. It stands for Self-learning Intelligent Content Extractor. And that helps accelerate underwriter decision-making for the client.Talking about capability augmentation. During the quarter, we developed a next-gen quality engineering platform. We internally call it COTAP, cognitive test automation platform. And this platform provides test analytics, and it allows auto hearing of test cases. We expanded our full suite Duck Creek capabilities by expanding our footprint to include Duck Creek data insights and Duck Creek customer 360 platforms. We've also delivered -- developed and delivered a differentiated type code-based customer experience accelerator.As part of the broader leadership talent augmentation program, we were pleased to welcome 3 new executive vice presidents during the quarter. I want to introduce our CFO and EVP, Mr. Kalra, who joins me on the call today and shall be taking questions along with me. In addition, we onboarded a new Global Head of the Digital Business, Arun Varadarajan, who is based in Princeton, New Jersey, and joins us from Cognizant. With an aim to further accentuate our market focus, a new global sales leader, Puneet Sharma, who again shall operate out of the Princeton, New Jersey office, has joined us from Infosys. Our hunting sales engine globally has been aligned with Puneet. Finally, the last 4 sections, and I'm going to run through these quickly. On the people front, the total headcount at the end of the quarter was 10,849, reflecting an increase in headcount of 49 employees. Utilization during the quarter declined to 79.3% given the furloughs that happened in this period. Attrition for the organization has improved quarter-on-quarter. It is lower at 11.9% and continues to be one of the best across the industry.Key balance sheet items that we'd like to call out. Cash and bank balances stand at INR 9,060 million. CapEx spend during the quarter was INR 103 million. Days sales at the end of the quarter were at 67 days of sales outstanding. The DSO including unbilled stands at 83 days. On the payout front, some of you might be aware that the Board today, in its meeting, declared a second interim dividend of INR 10 per share.Quick commentary on the hedge position. Outstanding hedges in U.S. dollars are 71.99 million at an average rate of INR 73.08 to the U.S. dollar. In British pounds, we have 19.11 million outstanding at INR 94.16 to the British pound. And in euro, it is 5.94 million at INR 83.49 to the euro.Finally, for the -- on the outlook moving forward. Overall, the company delivered a robust operating profit performance during the quarter under review. The fundamentals of the business are strong. We continue to plan for robust, for predictable and for profitable growth in the future.With that, I end my opening comments.
Thank you very much. Should we open it for Q&A session now, sir?
Yes, we do.
[Operator Instructions] The first question is from the line of Sandeep Shah from CGS-CIMB India.
And congrats for a very strong order intake. So we just wanted to understand, is it that in the order intake there is a material portion being renewal? Or this is -- the renewal portion continues to remain normal?
Sandeep, thank you for the question. Out of the 4 large deals that I referenced, 3 out of the 4 large deals reflect new revenue streams for the organization. So the significant proportion is new deals and not existing deals going forward.
Okay. Okay. And with a lot of changes and the additions which you have done at senior leadership roles within the sales and marketing delivery, do you believe that we can now sustain this new intake as a target on a quarterly basis?
Sandeep, as you are aware, we do not offer a guidance around financial numbers. We do, however, feel, and we've said this for a while. We do believe that growth will continue to be robust. And the addition of senior seasoned leaders from -- in the form of Ajay, Puneet and Arun, just adds more credence and confidence to our intention that the growth will continue to be robust and profitable and predictable going forward.
Okay, okay. But this quarter, if you look at the growth from top 5, top 6 to 10, all have declined on a Q-on-Q basis at almost 5% to 8%. So is it apart from the one client-specific issue which you called out? What has happened in the other rest of the accounts? Any new client-specific issue within the top 10? Or any other issues which you would like to highlight?
So it was a mix in some ways of a lot of factors, Sandeep. The first one, of course, is quarter 3, as you know, reflects a quarter in which there are furloughs on account of holidays. And some of our more seasoned relationships happen to be within the top 10 and the furlough impact there has been material in the quarter.The second aspect has been a top 10 BFS client, which we had called out in quarter 1 and quarter 2 where we had seen softness. We continued to see softness in quarter 3. However, the important point to note there is 1 of the 4 large deals that I referred to has come in from this client itself. And that is a new revenue stream where we've taken wallet share away from another service provider. So we now expect in quarter 4 a rebound to happen on that front.
Okay. Okay. So overall you believe most of the top client-specific issues are now behind?
There's always an up and down, as you can imagine, in a $600 million organization, but we believe that overall, given the ups, downs that happen in the normal course of our business, the aggregate performance would continue to be robust.
Okay. Okay. And sorry, if I can squeeze 2 more. Any policy being framed in terms of capital allocation, cash distribution policy? And looking at the market price versus the announced buyback price because the steep premium to the current spot rate versus the buyback price, whether Board will reconsider in terms of revising the buyback price? And also some amount of clarity in terms of what should be the payout ratio on an ongoing basis?
I'm going to ask our CFO, Mr. Kalra, to take that.
Sandeep, thank you for your question. Basically, the buyback process is still on. We are currently in the process of e-voting, which is on. We will know the results of the shareholder voting by February 15, and that's when the next course of action will be decided.
Okay, okay. And any cash allocation policy?
So that's decided by the Board, and we will defer this to the Board.
Yes. And we're going to share that with you, as Ajay said, as the Board communicates more to us.
Okay, okay, okay. I have more, will come in the follow-up.
The next question is from the line of Vibhor Singhal from PhillipCapital.
Sir, my question was on -- a bit on the margin front. So at this quarter, we saw the margins basically almost flat on a Q-on-Q basis. Could you just take us through, I mean, what were the major headwinds and the tailwinds that we saw in this quarter? And how do we see those playing out over the next quarters?
Vibhor, you're right, the margin was essentially flat. It was driven by 2 factors. One, the furlough that happens within quarter 3 every year. The second one was because of the investments that we made in 2 out of the 4 large deals that we secured, which have started, and the transition costs associated with it.The last leg of your question was around the outlook for the year. We continue to maintain, as we have in the past, that we are targeting an 18% EBITDA margin for the fiscal year.
Okay. And do you expect these transition costs that you mentioned were -- that incurred in this quarter for those large deals, they could also recur for the large deals that we have won in this quarter, so these could be more recurring in nature than being just one-offs?
No. Transition cost, by definition, is a one-time cost incurred during the beginning of an engagement. The other trade deals might have their own transition -- will have, and not might, -- they will have their own transition costs associated with them. However, taken as a composite, we expect the firm's margin for the year, for the entire fiscal year, to touch the 18% that we've been planning for [ EBITDA ].
Sure, sir. That's really helpful. Also, sir, basically just on the Travel & Transportation domain, what is the kind of outlook that we're looking? I mean we've been reporting very strong growth. Insurance and BFS were slightly weak, and you mentioned the reasons for that yourself. But on the Travel & Transportation, do we expect the momentum to continue? Or any -- let's say, even, let's say, some -- any kind of headwinds that you see maybe far out in the future or something which are likely to be in the next -- in the near future that we see?
Vibhor, Travel & Transport for us largely reflects revenue that we derive from the airlines and the airports sector. At this point in time, we do not see any macro headwinds impacting demand that's coming our way, largely because of the fact that digital spend for both airlines and airports. So it's no longer materially discretionary. So the short answer to your question is, at this point in time, no material headwinds on the macro environment front for Travel & Transport that we see.
Sure. That's really reassuring.
[Operator Instructions] The next question is from the line of Shashi Bhusan from Axis Capital.
Congrats on strong deal wins. So our deal wins coming from clients that are scalable. Given our strong deal wins, can we have some of these new clients translating to top 10 or, say, top 20 clients in the coming quarter? And is there effort by the management team to reduce exposure to few of our top 10 clients, which are -- which doesn't have opportunity to spend even during the good time?
So we do expect the new revenue stream that has been created for some of these to translate into becoming clearly a top 10 corporate account for the firm. At this point in time, we have no intention of pulling back from any of the existing relationships that we have. We have, in the case of a lot of those relationships, grown not only because their spending has grown, but we've also grown because we've been able to wrest wallet share from some of our competitors in those accounts. So the intent is not to go away from any book of business that we have. And the intent also is to make sure that our new revenue streams that are represented as part of these 4 large deals to scale up to join the corporate top 10 group.
And the last one from my side, sir. Four large deals in the quarter, that too when the decision-making is missing almost for a month in Q3. Was there any deal that would have been pulled into this quarter from Q4? And how is our large deal pipeline after 4 large deal wins in this quarter?
No, Shashi. Nothing was pulled in from quarter 4. The large deal pipeline for quarter 4 also, independent of quarter 3, continues to be robust.
The next question is from the line of Dipesh Mehta from SBICAP Securities.
A couple of questions. First, about just to get sense about quarter 3, whether it played out broadly in line with management expectation at the beginning of quarter, so if you can provide some perspective?Second question is on the data point related. If you can provide NITL and WHISHWORKS revenue, EBITDA performance? And another question is about the weakness in BFS and Insurance, which we have seen this quarter. And partly, you alluded about the large deal with one of the clients, which -- where we have seen some challenges. So can we say now the broadly basic client-specific challenges are behind and we should see a steady performance going forward?
Thank you, Dipesh. I'll take each of your 3 questions in sequence. The first question that you had was whether the management -- quarter 3 panned out in accordance with how the management expected it to pan out, and the answer is yes. We had called out the fact that in quarter 3, we expected growth to get moderated after 2 successive quarters of 4% and 4.1% quarter-on-quarter constant currency growth. The number of 2% constant currency quarter-on-quarter growth that you see, therefore, is in line with this. The margins are flat, but still above 18%, as you would have noticed. And that's largely because there were 3 large deals that were signed, and there is an upfront investment cost that went into kicking those off in quarter 3. So that's the answer to question one.The answer to question 2 around revenue and margin profile for NITL and WHISHWORKS is as follows. NITL, the revenue for the quarter was INR 576 million, and the margin was -- EBITDA margin was 28%. On the WHISHWORKS front, the revenue for the quarter was INR 431 million, and the EBITDA for the quarter was 24%.The third question that you had was around BFS and Insurance weakness. We have, over the last many quarters, driven our growth essentially through a strategy which has been broad-based and has derived its strength from coming through all the businesses -- constituent businesses that the business had -- that the firm has. On the BFS side, as I noticed -- as I noted, with the large deal win that we had in Q3 in the client where we saw softness, we expect BFS to turn around. And we expect Insurance also, after relative weakness and -- that we saw in quarter 3, to turn around as well.
Understood. And if I can ask last question. If I look at your segmental reporting APAC segment has some weakness in margin. So anything specific to read into it?
That's essentially largely been a function of the furloughs that we referenced earlier in the conversation that we had.
The next question is from the line of Madhu Babu from Centrum Broking.
Sir, on the new hiring of the digital head, so what are the immediate areas of focus where the investments in digital need to be strengthened for organization of our size?Second, on the Others verticals, which showed a strong growth. So which are the subsegments where we are seeing deal wins? And would we carve out something especially from this vertical?And lastly, on the earn-out, I mean, the payouts for the earlier acquisitions, your views on that? When is the time line for the amount to be paid out?
So Madhu, I'm going to take the first 2 questions, and I'm going to request our CFO to take the third one.The new hiring with Mr. Arun Varadarajan joining us as a Global Digital Leader. Arun was running the data services business of Cognizant Technologies globally. With his arrival, we expect him and we believe he will drive broad-based growth across our entire digital portfolio, but of course, we expect data to be an area of particular focus. In addition, we will continue to drive focus around cloud, around automation, around cognitive where we've already invested significant dollars and continue to invest and also around interactive technologies.The second question that you had was around Others and the Others revenue stream going up. The growth that we've seen in this quarter in the Others space has come from a clutch of industries. It's come from industries straddling manufacturing, a little bit of retail, a little bit of oil and gas and a little bit of government, right? So once we think that we've built enough expertise and depth in any one of them, the management in consultation with the Board will take a call around incubating fourth vertical. At this point, the call has not been taken.The third question that you had was centered around payouts, and I'm going to request Mr. Kalra to answer that.
Thank you, Sudhir. The payouts for WHISHWORKS are in June 2020 of approximately INR 60 crores and another payout for WHISHWORKS, which is in June 2021 for INR 69 crores. So this will complete the acquisition of WHISHWORKS. For RuleTek, the payment is of approximately INR 70 crores in May of 2020.
Okay. Sir, just one last one on Incessant. I think the earlier promoters have left, I think, 4 months ago. So how is expanding currently in Incessant portfolio?
The Incessant portfolio is a portfolio that's now aligned by the different NIIT geos, and we now are using the better capabilities, which are very strong capabilities that the Incessant business brought to us as a spearhead as part of the NIIT Europe, NIIT U.S. geo and the NIIT APAC portfolios. In the quarter that just closed, quarter 3, 1 out of the large -- 4 large deals that we talked about was actually spearheaded by a [ benefit ].
The next question is from the line of Manik Taneja from Emkay Global.
My first question was more from a -- from an FY '21, '22 perspective. Given the number of large wins that we've seen and the robust pipeline that we have, along with the fact that some of the challenges within our BFSI portfolio are behind, should we essentially see further increase in our revenue growth rates going forward?
Manik, thank you for the question. We, as a firm, have never given our guidance. What we've always done is share our broad plans. Given the large deals that you referenced and given the revenue trajectory that we've built up over the last 11 to 12 quarters, our plans and our intent continues to be to figure out a model of driving robust growth, equally importantly, driving predictable growth and profitable growth. We'll continue to do that.
Sure. If I can chip in with one more question. So this quarter, we've seen our offshore mix of revenues reduced by about 400 bps on a quarter-to-quarter basis. Should we see further changes around this metric given the large deal pipeline?
The blip that you saw, Manik, in the -- was in the onshore revenues, which have decreased, and that blip was largely because the furlough impact onshore in the holiday season tends to be more pronounced. We expect the onshore revenue to continue to be around the 65%, 66% mark, which is where we've been.
[Operator Instructions] The next question is from the line of Abhishek Shindadkar from Equirus Securities.
This is Abhishek from Equirus. I know our strategy has been to focus on select verticals, but as you mentioned that we are reaching about $600 million size and the investments that we are making in the hunting and the farming side of the business, do you believe that we may need investments in any other verticals apart from the ones we have from a '21 perspective?
Thank you for the question, Abhishek. The call around whether we want to incubate a new vertical or not is going to be driven on the basis of the traction that we see in the market. If we were to incubate a new vertical, we would, in all likelihood, take existing resources, both employees, IP, alliances, partnerships, people and allocate them to the new vertical. I do not believe creating a new vertical in a services business like ours is going to be a very huge investment, at least at the outset. So if we were to create a new vertical, the approach we will take is going to be consistent with the approach that we've taken in the past. We will first dip our foot in the water, make incremental investments. And as we start recognizing returns, start accelerating those investments.
But have we thought of any particular vertical where we might start investing?
We haven't -- we -- as you can imagine, Abhishek, we always have potential verticals under consideration every quarter when we sit down as a management team. We bounced off a few, but we haven't finalized on any.
[Operator Instructions] The next question is from the line of Rahul Jain from Dolat Capital.
Congratulation on strong order win. My question is more about the commentary if you could give around the various verticals, what you are seeing in terms of the client behavior, their area of spend, any challenges and incremental opportunity area that you identify? You are more sure in terms of specific plans, but if you could give an overall flavor in this space.
Thank you for the question, Mr. Rahul. Let me just address the 3 verticals that we have. Travel, Transportation & Hospitality for us, as I noted earlier in the call, is essentially an airlines and airports play.Airports, given the significant stress that they put on trying to push more passengers using the same existing infrastructure, are increasingly adopting digital as a tools for getting that done. One pivot of that has -- that they are trying to pursue is around making the passenger travel more seamless, reducing the amount of time a passenger spends in an airport before boarding the flight. And that is essentially a digital play where we expect to -- we expect significant investment to be made.Airlines, again, are driving most of the discretionary revenue using digital channels, so digital spends there are likely to expand.Moving on to BFS which, for us, has essentially been centered around capital markets buy side, wealth and asset management. Innovation dollars have been coming back into this space, largely because most of the majors have been challenged by the newer fintechs in the wealth management space, and we would like and we hope we will be able to participate in the new investment dollars that are flowing in.Finally, Insurance for us is essentially a property, casualty and Specialty insurance play. At this point in time, especially the Specialty insurance industry is an industry where we expect we will be growing our geopolitical risk, geoeconomic risk. We expect investment spend to continue to be robust.
And secondly, on the profitability, you said, your aspiration of the 18% margin. I missed your comment. How do you see that happening given the current 9-month performance? And your comment on that.
Mr. Rahul, we've all -- we've shared in the past that we are planning for an EBITDA margin of 18%. We, at this point in time, feel confident that we should be able to deliver on that promise for this fiscal year.
Fair enough. And any specific reason that you would see a significant jump in Q4? Is this a general business revenue load momentum that you see? Or there are any specific factors beyond that?
No, the principal reason there would be, a, that we don't -- we, obviously, will not have the overhang of load that we normally have; b, quarter 4 tends to be a higher -- normally tends to contain a higher number of billing days than quarter 3 does; and third, I would expect transition costs of the same order that hit us in quarter 3 to hit us in quarter 4.
Right. Right. And if I could squeeze one more. The executable next 12 months orders that you share, if we look at the Y-o-Y growth in that business is 13%, although we've been hitting much stronger on the order intake front. So is it fair to assume that given that we are adding a larger order size than average what we used to add in the past? Most of these orders are creating more visibility in future than what they add to the current run rate.
Yes, you're right. Order executable is a good metric for figuring out the extent to which we are able to look into the future, especially over the next 12-odd months. So to that extent, your analysis is correct. We have more visibility to -- and more certainty. This is a higher number that you've seen with higher numbers in order intake having flown into order executable numbers.
Right. So although you don't give specific guidance, this 12%, 13% kind of a growth that we are seeing in the executable order book and also the order intake is strong. Should that be a good way to look into the expected growth?
I -- as you know, we don't offer guidance, right? And there is a certain extent to which math works well in a real-world sales environment, and after that, it stopped. So I think it's a good metric to look at. But it's, I suspect, going to be very difficult for any one of us to say that's the only metric to look at to forecast where we land at.
Sir, what essentially I'm asking here is that if you look at the run rate, which is at $424 million, and if you look at our revenue run rate, basically, the 75% of the revenue of our existing run rate is taken care of on the existing order and the incremental should be function of new orders that we win and execute. So that, by nature, in terms of the nature of the deal and the recognition period, is that more favorable than in the past? Or this is not the conclusion that we can make?
Mr. Rahul, at this stage, right, the business has many moving parts, as you know. There are pieces of our business, which tend to have a very strong multi-year managed services component. There are other pieces where it is the velocity of the deals more than the PCB that's important. So it's going to be very difficult to calibrate and give you a very hard answer to that. All I can say, and the whole management team can say with conviction, is that we are planning, and we hope to deliver robust growth moving forward.
The next question is from the line of Sandeep Shah from CGS-CIMB India.
So we just wanted to understand with the Brexit coming into play, do you believe that there could be some pause in terms of decision making? Or you believe the growth momentum may continue to remain stable, especially with our higher revenues coming out of U.K.? So any client discussion gives you any kind of a worry?
Nothing. No client conversation, Sandeep, specific to Brexit has given us any immediate cause of worry at this point in time. RPA in Europe is centered around the airline industry, to a limited extent around airports and largely around Specialty insurance. And in those 3 subsegments, we haven't heard or seen anything that gives us pause.
Okay. Okay. Okay. And just on the margin, when you say for the full fiscal 18%, you are saying margin excluding the one-off which we had in terms of excretion payment in 1Q, right?
That is correct. What I was referring to was the EBITDA percentage margin. And you're right, that was taking into account the exclusions that you just referenced.
Okay, okay. So even considering that, I think we are looking at almost 100 bps kind of Q-on-Q improvement, which you believe because of the tailwinds which you have discussed, is possible on a constant currency basis.
We don't call out guidance, Sandeep, but I guess the math is correct, yes.
Okay, okay. And just a few things on the deal pipeline. Do you believe the deal pipeline which you were catering at Q3, the size on a Q-on-Q basis still remains robust even at entering Q4?
That's right, Sandeep. The deal pipeline entering Q4 for large deals continues to be robust.
Okay, okay, okay. Just to know, last question in terms of -- we are showing a consistent, stable, profitable growth. What can go wrong according to you in the next maybe 6 to 8 quarters or maybe in the next 2 to 4 quarters, which gives you a bit of a worry?
See, the only thing that we can think of is possibly very large macro moments when it comes to immigration-related issues. We haven't seen any. We haven't heard of anything that is fundamentally going to take place there. But that's the one thing that we can think of. I cannot think of anything else because for a firm our size, which is, I mean, $600 million, a lot of our growth has been predicated on wresting market share from existing providers in our large accounts.We have, over the last 12 quarters, grown with some ups and downs in top 10 accounts, as is the usual. But beyond material issues happening at a global level, which are specific to immigration or mobility, as a team, we can't really think of anything else that should significantly waylay the current trajectory.
Okay, okay, okay. And just last bookkeeping question, maybe CFO can answer, is what is the reason for Q-on-Q decline in the intangible assets, which has gone down by more than INR 40 crores?
Yes. The reason is that we finalized our purchase price allocation study of the WHISHWORKS acquisition. And this is the impact of the reduction in assets around that.
Okay, okay, okay. Anything to read for reduction in the future acquisition liability from INR 192 crores to INR 175 crores? Is it the growth outlook of slight decline in some of your maybe RuleTek or WHISHWORKS?
No, it's not growth decline. It's the impact of the purchase price allocation, which is basically certain assumptions getting correct -- changed and finalization of our acquisition. And it is pertaining to the liability of the WHISHWORKS acquisition, not RuleTek.
Okay. And just -- just wanted to understand, once the e-voting is done on the buyback, is it -- we will have an option to revise the buyback price? Or there is no such option? And your clarity in terms of how the buyback taxes, which will impact you in terms of percentage?
So once we have the results of the e-voting, which we will have on February 15, we will decide the next course of action. At that point of time, the Board will take a call if we get the positive movement. But at this moment, we are just waiting for the results from the shareholders.
Okay. And in terms of buyback taxation, I think you would be obliged to pay, right?
As of now, that is correct.
[Operator Instructions] The next question is from the line of Madhu Babu from Centrum Broking.
Sir, just 2, 3 strategic questions. On the -- we have been strong mostly in the European and Asia Pac on the airlines side. So in the American Airlines, which are very larger enterprises. So how has been the -- because we tried to enter a few accounts there. So how is the traction on the American Airlines side?
Mr. Madhu, we don't answer questions specific to individual clients, but at an aggregate...
I'm not saying American Airlines. I'm not asking the specific company assets. Overall, in the U.S. region on the airlines side, rather we put it that way.
Yes. So on the -- within North America, there's been good traction within the airline industry for us, both in terms of growth of the existing airline relationships and also in terms of new logo and new relationship initiation.
Okay. And second, on the ecosystem, sir, I think, how are we expanding within the areas like, I mean, any new areas of investments and partnerships we are signing? Like we have strengthened Pega and MuleSoft. So any other areas where we would like to strengthen on the ecosystem side?
Yes. We focused a lot in and we put and poured in a lot of investment dollars into a few spaces. One is in terms of strengthening the partnership and alliances, ecosystem itself under a leader who's taken charge of it. Out here, we've constructed and are in the process of constructing newer partnerships with players where we think the partnership is going to be stable and scalable.The second thing that we focused on very significantly is building an advisory business, an industry consulting advisory business, for the 3 verticals, and of late, also incubating a digital advisory business for our clients. So those have been the areas of focus for us.
Okay. And last one on the IP portfolio, which we used to have on the insurance side. So any further investments or any further areas where we want to build our IP portfolio because we had some IPs even in Travel. So just on IP, your own IP portfolio, any views on that?
We would like to continue to focus on the services side, Mr. Babu, and that continues to be our prime focus for now and leading into the future. The IP portfolio that we have is continuing on a steady trajectory and continues to be stable.
The next question is from the line of Devanshu Bansal from Emkay Global.
Sir, there are several cash outflows, which are yet to be done. Our interim dividend of INR 10 per share and pending buyback against the cash of about INR 880 crores. So what would be the comfortable level of cash that we would like to maintain to pursue growth opportunities in the business?
So post the payment of the future acquisition liabilities and the buyback and dividend, we will still have enough cash for the growth. And we -- as you are aware, we are generating cash on a quarterly basis. And that also will add to our kitty and will be enough for our future growth plans.
Any absolute number which you can provide for the...
It will be approximately around INR 400 crores level. That would be the right number.
The next question is from the line of Ruchi Burde from Bank of Baroda Capital Markets.
Congratulations for very strong deal. I have 2 questions. First, regarding your Europe business. It's good to hear that Brexit doesn't have any worry for you in terms of client discussion at this point of time. I wanted to check with you, does Brexit kind of make you rethink about your leadership bandwidth or delivery mechanism in the Europe at this point of time?
We've recently called out Europe geo, which is the entire European business outside the 3 core verticals under a new executive vice president. What triggered that was an appreciation that we believe there are opportunities within Continental Europe and U.K. that we missed in the past. So to your specific question, Ruchi, we've already acted on that realization. We've already invested in a leader and a team to address that opportunity. We look at Brexit as something that has to be monitored, but also as an opportunity because the exit is going to warrant significant amount of investment in IT dollars to facilitate the entire process in some cases of integration and other cases of actually demerging systems. Hence, the investment in a leader and a new sales team to address this potential opportunity.
Understood. The second question I had was regarding your ROW, Rest of World. For last 2 quarters, you have been winning significant amount of deal wins there. Can you elaborate more what kind of engagements we are seeking now? What is working for us? And what's more there in the pipeline?
Absolutely. In the Rest of the World, we closed 1 large deal, which was a new client for us. And that was, as I said, in Asia Pacific, which was Pega leg. What we are doing very consciously is we've added 2 leaders -- 2 sales leaders. One is to run Australia as a sales geo for us and to spearhead that team, that has been an investment from our side over the last quarter. The second leader who has been hired has been hired as an APAC Sales Head in Singapore to drive that growth. Given the growth that APAC has seen over the past decade or a couple of decades, we believe there is significant leeway for us to grow in Asia Pacific, in Australia on a go-forward basis. And our investments there in quarter 3 have been in line with that philosophy.
And is there some difference between how the deals that you get in Rest of World versus your international business? Or those are mostly similar in terms of the profitability by the onshore/offshore construct kind of aspects?
So these margins and the on-site/offshore is on par with what we see in other Western deals, North America and Europe.
[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Sudhir Singh, CEO, NIIT Technologies, for closing comments.
Thank you. And I want to thank you, ladies and gentlemen, for making time for us late in the evening for this conversation. We introduced our new CFO, Mr. Kalra, on the call. And we very, very, as always, very sincerely appreciate the interest that you take in the organization and the time that you make for joining these sessions. We look forward to speaking with you again next quarter. Thank you. Good night.
Thank you, on behalf of NIIT Technologies Limited. That concludes this conference. Thank you for joining us, and you may now disconnect your lines.