Key takeaways of the call 

Q4FY20 was another quarter of steady performance for the company. The company reported an operating revenue of Rs 438.89 crore of which about 87.3% from embedded products (EPD), 10.1% from Industrial Design & Visualization (IDV) and 2.6% froshm System Integration & Support (SIS). While the revenue of EPD was up by 4.1%QoQ & 10.6%YoY, that of IDV was up by 7.6%QoQ and 5.4%YoY. However the system integration services (SIS) business was impacted by lockdown due to which it was not able to ship hardware impacting revenue recognition. Growth of EPD in Q4FY20 was largely driven by M&C and H&MD verticals. 

Of the EPD revenue in Q4FY20 about 47.1% was from transportation; 40.9% was Media & Communication (M&C), 7.7% was Healthcare & Medical Devices (H&MD) and that of others was 4.4%.  

Automobile/transportation segment was already facing softness for a while, but now the adverse situation is amplified by Covid 19 related lockdowns across Europe, USA and Japan. 

Media & Communication (M&C) segment reported a growth of 8.6%QoQ and 50%YoY. There will be small impact of Covid related disruption in this segment but the company is expecting recovery from that. The company has some of the leading names in M&C industry as customers. 

Client delivery and service is not hampered any way on account of current pandemic situation as about 98% of the workforce of the company is working from Home. However some renegotiation are on in transportation vertical by clients as far as timelines, price etc. Clients are trying to reduce cash flow. Knowing clients are in pain the company wants to be reasonable. The company looks to sustain the long term relationship with the clients.  

Don't see any mass cancellation. The large deals are expected to go on as R&D projects are long term and has to go on.  

The adverse impact in transportation/automotive is as much as was in Q1FY20 but for different reasons. The Q1FY20 impact was more due to stress in one company i.e. Jaguar, the top customer of the company. But the situation now is due to more wide spread stress across more players. Recovery in transportation will happen but at the moment could not say when but expect V shape recovery in transportation segment as and when it happens.  

M&C and H&MD will be the savior for the company this fiscal and next fiscal. Expect M&C to continue to sustain steady growth in FY21 as well. 

Expect offshore and on shore mix to change going forward with clients accustomed to remote working. Even the onshore engineers are currently working from home. So onshore work can be easily handled from India. The company is also speaking to customers for more offshore work and they will accept. The company expects onsite share to reduce to 30% in medium to long term from about 42.1%in Q4FY20, which will boost the margin.  

Want to do better in each quarter of current fiscal compared to corresponding previous fiscal. This is the focus of the company currently. The company after subdued Q1FY20 has made recovery in rest of the quarter in FY20. 

The company continues to invest in 5G technology space and expect returns to trickle in from end of current fiscal. 

Lower other expenses in Q4FY20 is largely due to fall in travel cost due to travel bans in the wake of Covid 19.  

The company will not be planning retrenchment and honor all offerings made so far. As far as promotion and salary hike is considered the company has not taken a call.