Nucleus Software Q4 Review – Easing Attrition, Strong Execution Drives The Earnings Beat: Dolat Capital

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Nucleus Software Exports Ltd. reported 26% QoQ revenue growth (our estimate: 7.3%).

The beat was led by strong execution of its order book as attrition eased, selective pricing hikes and clocking of several implementation milestones.

Reported operating profit margin of 13% versus estimate of 3.7% and Ebit of Rs 198 million. This beat was led by higher operating leverage and 12% QoQ decline in selling, general and administrative. The beat is quite commendable given the announced wage hike effective Q4.

Nucleus Software’s order book stood at Rs 5.6 billion down 0.3% QoQ (up 17.6% YoY basis). The net new orders stood at Rs 1.5 billion which is similar to the revenue run rate during the quarter.

Order-to-revenue coverage of 125% in product business, suggest sustained momentum.

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