Q2 Success: Cressanda’s EBITDA Sees Remarkable Growth

Company Name: Cressanda Solution Ltd | BSE Code: 512379 | 52 Week high/low: 33.6/19.6 | CMP: INR 25 | Mcap: INR 994 Cr | PE: 176x

Company Overview:

Cressanda Solution Ltd, an India-based company, specializes in IT enabled services and digital media. The company’s offerings are divided into two baskets: TECHNOLOGY nXT and INFRA nXT. TECHNOLOGY nXT focuses on transforming existing business processes through Automation, AI & ML, Data Science, FinTech, HealthTech, and Data Security. On the other hand, INFRA nXT provides services in mobility, transportation, skilling, healthcare, and digital welfare. Cressanda serves key sectors, including healthcare, education, financial services, and transportation.

PAT Skyrockets 300% YoY Amidst Revenue Decline

In Q2FY24, Cressanda reported a revenue of 19.5 Cr, a 6.7% YoY decline but a substantial 57.4% QoQ increase. Despite the top-line slowdown, the company effectively managed raw material costs, resulting in a 28% YoY reduction and a remarkable 300% YoY surge in PAT. This translated to an 836% QoQ increase in PAT.

EBITDA Jumps 315% YoY Fueled by Strategic Cost Management Initiatives

Q2FY24 saw EBITDA growth of 315% YoY, though there was a 191% QoQ decline to 1.68 Cr. This exceptional performance was driven by effective cost management, with revenue declining by 6.74% YoY to 19.5 Cr and COGS down by 28.5% YoY to 14.5 Cr. Consequently, EBITDA margin increased by 6.6% YoY and an impressive 21.6% QoQ to reach 8.63% in Q2FY24.

Q2 Profits Soar on Other & Exceptional Income, Margins Surge

During Q2FY24, the company reported other income of 1.21 Cr, a substantial increase from the previous quarter’s 0.06 lakh. Additionally, a one-time exceptional income of 2.14 Cr, equivalent to 41% of PAT, contributed to a PAT of 5.10 Cr. This boosted PAT margins to 26%, while EBITDA and EBIT margins stood at 8.63% and 8.60%, respectively.

Valuation and Key Ratios:

Currently trading at a multiple of 176x EPS (TTM) at a market price of 25 Rs, Cressanda Solution Ltd surpasses the industry PE multiple of 40.4x. The stock is also trading at 8.37 times its book value of 2.99 Rs per share. In terms of EV/EBITDA multiple, the company ranks 2nd among peers at 137.8x, compared to the industry median of 20.85x. The trailing twelve-month ROE and ROCE stand at 7.23% and 9.65%, respectively.

Q2FY24 Results Updates: Standalone:

➡️In Q2FY24, despite a 6.7% YoY revenue decline, Cressanda showed resilience with a 57.4% QoQ growth to 19.5 Cr. The company’s commitment to maintaining raw material costs led to a remarkable 673.3% YoY increase in gross profit, reaching 5 Cr.

➡️EBITDA witnessed a substantial 315.6% YoY growth, although there was a temporary 191% QoQ decline to 1.7 Cr. EBITDA margin expanded by 6.7% YoY and an impressive 21.6% QoQ, reaching 8.63% in Q2FY24.

➡️Operating profit (EBIT) saw a remarkable 314.6% YoY increase, with a 190.4% QoQ decline to 1.7 Cr. EBIT margin expanded by 6.6% YoY and an impressive 23.6% QoQ, reaching 8.60% compared to 1.93% in Q2FY23.

➡️Other income in Q2FY24 stood at 1.21 Cr, a significant increase from the previous quarter’s 0.06 lakh. The one-time exceptional income of 2.14 Cr significantly contributed to the boosted net profit.

➡️PAT surged by an impressive 301.9% YoY and an astounding 836.5% QoQ to 5.10 Cr. This robust performance was attributed to effective cost management, other income, and one-time exceptional income. PAT margin increased by 20% YoY and 21.8% QoQ, reaching 26.2% in Q2FY24.

➡️EPS for the quarter stood at 0.12 Rs, a significant improvement from the previous quarter’s 0.01 Rs.

Conclusion

Cressanda Solution Ltd demonstrated remarkable resilience in Q2FY24, navigating a YoY revenue decline through astute cost management. Despite the revenue challenges, the company witnessed an impressive surge in PAT by 300% YoY and 836% QoQ. The strategic focus on maintaining raw material costs and capitalizing on other income sources contributed to robust financial performance. The company’s strong EBITDA growth, expanding margins, and prudent financial measures position it as a noteworthy player in the industry.

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