Why eClerx Services Share Price is Rising

In today's tech world, a lot of companies prefer to outsource tasks because it is cost effective, easy to manage and brings in a skilled workforce.

On the flip side, for the companies undertaking the outsourced work, effective communication with their clients is crucial as these clients are essentially the lifeblood of the business.

Moreover, a well-executed outsourced project not only ensures immediate gains but also sets the stage for securing long-term contracts.

So, the motive of such companies is to maintain client satisfaction which will ensure steady inflow of revenue for sustained growth in the future.

One such company that matches the above description, involved in the knowledge process outsourcing (KPO) business is eClerx Services Limited.

On 22 November 2023, the share price of the company spiked to hit the upper circuit and offered a 10.6% return to its investors. In the last month, the share has rallied 33.5%.

So, what is the reason behind this rally?

Let's find out.

#1 Robust Q2 Results

The recent surge in its share price can be attributed to the robust second quarter results reported by the company.

If we look at some numbers, the operating revenue for the second quarter rose by 11% compared to the same period last year from Rs 6.6 billion (bn) to Rs 7.3 bn.

The total revenue for the period stood at Rs 7.4 bn, a 9.7% increase from the same quarter previous year.

The earnings before interest and tax (EBIT) for the quarter rose by 7.8% year on year (YoY) to Rs 1.9 bn.

Profit after tax (PAT) for the second quarter was Rs 1.4 bn compared with Rs 1.3 bn for the same period last year, an increase of 8% YoY.

The earning per share (EPS) reported in the September 2023 quarter has also increased to Rs 28.2 as compared to Rs 25.35 in the same period last year.

These positive performances could be the driving force behind the increased buying interest from investors.

#2 Expanding Workforce

You see, for a service-oriented company like eClerx which is engaged in the KPO business, having a skilled workforce is an asset.

Hence, they are always looking out for talented individuals to join their team and contribute their expertise for the betterment of the business.

From January 2023 to June 2023, the company has hired over 3,500 individuals. Moreover, they are now looking to hire 600 more skilled individuals to boost their offshore business operations.

#3 Lexicon Management Institute Tie Up

The Lexicon Management Institute of Leadership and Excellence (Lexicon MILE) has entered into a memorandum of understanding (MOUs) with eClerx to empower professionals.

The motive of this MOU is to help individuals learn about specific skills that are required in the industry.

Moreover, the company aims to give students a competitive edge by offering internships and job opportunities.

So, this move is beneficial for eClerx as it gets access to a skilled talent with ease.

What's Next?

In the recent quarterly result, the company mentioned that they have received positive client feedback for their delivery capabilities and domain expertise.

In the upcoming third and fourth quarters, the company anticipates that the performance will mirror the results achieved in the September 2023 quarter.

The company is also gearing up for the future as they are focusing on evaluating new capabilities in the medium and long term.

How Shares of eClerx have Performed Recently

Over the past one month, eClerx share price has surged by 33.5%. In 2023 so far, the share has rewarded investors with a 79% return.

The company touched its 52-week high of Rs 2,755 on 22 November 2023 and its 52-week low of Rs 1,260 on 6 January 2023.

Domestic Institutional Investors (DIIs) have increased their stake in eClerx by 0.75% on a quarter on quarter (QoQ) basis.

As of the September quarter, DII now accounts for 21.7% of the company's stake, an increase from the 20.9% stake they held during the June quarter.

About eClerx

eClerx Services Limited is an Indian IT consulting and outsourcing multinational company.

It provides process management, automation and analytics, settlements and clearing services, and other IT services to Fortune 500 companies.

The company generates majority of its revenues from the United States and remaining from Asia pacific, Europe and United Kingdom.

For more details about the company, you can have a look at the eClerx Services fact sheet and quarterly results on our website.

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