3i Infotech to setup multiple COEs in Upcoming Quarters

For the period 9M FY22, its Indian Business Region (IBR) reported a revenue of Rs.153.7 Cr, the Global Business Region (GBR) that includes North America, UK, Europe and MEA reported a revenue of Rs. 333.4 Cr and finally, the Emerging Business Region (EBR) that includes ASEAN reported a revenue of Rs. 14.1 Cr.   

The company aims to repurpose its entire sales cost, onboard the right talent and make investments across key areas. 3i Infotech is working on margin enhancement projects focused on reduction on indirect cost and built proactive competency centre aligned to the regional strategies. They have also hired BUILD and next-gen technology teams.   

Thompson Gnanam, MD & Global CEO, 3i Infotech Limited said, “We want to assure all our stakeholders that the company is very much on a growth trajectory and the coming quarters would reflect the same. Post the carve out last year, the company has been steadily solving legacy related issues and trying to build a more robust foundation by proactively provisioning slow moving debtors that will be reduced aggressively by the year-end. With regards to the results which show increase in costs and expenses, it is important to understand that the investments of growth and build are happening from the same RUN P/L and going forward build projects of capital nature that would be capitalized by year-end as they will be creating products and platforms. The growth business will be the new services business which will replace RUN and will be tracked as a separate P/L. This will ensure that you see a holistic view of the results, which is not the case presently, and appreciate the growth that we are able to successfully deliver quarter on quarter.”  

Announced during the call, the company has a string of business updates that spans Indian and international markets, with a strong sales funnel and order book pipeline of Rs.136.3 Cr. The company recently signed a multi-year deal in US, with an industry-leading Multi-Enterprise Product and Supply Chain Platform, for their cloud-first services with a TCV of $20 million. Also, an India PSU deal of $6 million TCV was signed for 3 years. The current revenue mix contains the highest revenue share from Banking Financial Services and Insurance sector. The other sectors in focus are manufacturing, government, and consulting.

On the Q3 FY22 results announced, the EBITDA has seen an improvement by 9.4 Cr, primarily due to cost optimization and the normalized EBIDTA is positive for 9M FY22. A growth outlook of 10% annually is projected with one-time cost of 9.6 Cr being recorded as ‘exceptional item’ as part of FCCB early redemption. There has been an overall interest reduction due to long term debts being paid off and reduction in funded limits utilization. The GA cost optimization/rationalization through digital transformation has led to 10% cost reduction.  

For 3i Infotech, Q4 looks bullish as they optimistically look to build projects being identified for capitalization which was in P/L in YTD Dec 21. The GA cost optimization will lead to further improvement in EBITDA. There was an improvement in DSO in Q3 from 109 days to 99 days and this is expected to be improve further in Q4.