Key takeaways of the call

Q1FY21 was a pretty satisfying quarter. Although the company did see general sluggishness across all verticals at the end of last quarter and beginning of this quarter, the Media & Communications and Healthcare verticals recovered strongly to post sequential growth.Auto continues to see muted though.

Within EPD, Media & Communications vertical grew by 23.3% YoY and 3.3% QoQ and healthcare vertical grew by 26.5% YoY and 5.3% QoQ. Transportation vertical continues to be impacted owing to muted sales and sales forecasts from OEMs leading to reduction in spends and deal deferrals across the transportation value chain.

Significant part of IDB business is from transportation and thus the muted transportation business has impacted IDB as well.

The company expects the growth momentum of Q1FY21 to continue. The company in Q4FY20 concall stated its looking to better Q1FY20 revenue in Q1FY21 but it has beat Q2FY20. So in Q2FY21 the company expect to better Q3FY20. On extrapolation the company will look to end current fiscal with a growth of 5-10% in revenue.

Within transportation the share of rail and off road is just around 4-5%. This being new initiative will take time to grow. The company looks to grow the share of rail & off-road to about 15-20% of overall transport revenue in medium to long term.

In auto the company is winning deals but closure of large deals are taking more time than usual or delayed.

In M&C verticals the company serves customers in telecom operation, broadcasting (OTT platforms) and devices. Largest customer of the company in M&C vertical is associated with the company forabout 12 years.

But for COVID the growth of M&H would have been better than reported. Medical devices continue to grow and expect this trend to sustain going forward.

The strategy of the company is 1) to protect revenue from top customers and 2) derisk. As far as top customers is concerned the negative has bottomed out and new deals and ramp up are expected in coming quarters. As far as derisking the company is aggressively looking for other accounts for growth.

No additional cost pressure expected in Q2FY21. As far as operating cost, the company had strict control on hiring, no travel and no addition of office spaces etc.

In EPD the long term mix expected is 40% from transportation; 40% from M&C and 20% from M&H.

The margin of M&C and M&H vertical are better than transportation.