Analytics: Financial performance review

About the Financial Performance Report Series

ValueNotes has conducted a study of the financial performance of 12 pure-play analytics service providers (their size, operating margins, solvency, and efficiency), principally in the Indian analytics industry. The study, which covers fiscal years 2007 through 2011, found that since 2007, the companies in the sample achieved an aggregated compounded annual growth rate (CAGR) of 39%. Revenue of the population of companies in 2011 was INR 2,445 mn, with an increasing dominance of large sized companies (INR 200+ mn), though other companies have seen a slow but steady growth in revenue since 2007.

 

ValueNotes has found that the aggregated revenue per employee of companies in the sample was INR 1,117k in 2011, and has been steadily increasing at a CAGR of 8% from 2007 to 2011. A key finding is that although the pure-play analytics companies in India have successfully controlled their operating costs since 2010, employee costs as a percentage of revenue remain high, at 50%. Furthermore, medium sized companies (INR 50 – 200 mn) have taken on debt since 2008 to improve their financial performance, and currently their debt to equity ratio is the highest amongst their peers. The report includes service provider profiles of 12 analytics firms, along with their service offerings, key financial ratios, shareholding patterns, and names of directors.

 

If you would like a complimentary copy of the executive summary or if you cannot find what you’re looking for, please write to us at reports@valuenotes.co.in

 

To download a complimentary copy of the Report, please follow this link

 

 

Scope of the Report

The Financial Performance Report analyzes key financial ratios of companies that constitute the analytics segment. The companies covered in this report are pure-play KPOs with operations in India. Pure-play KPOs provide services for a specific segment, process or industry; in this case, the analytics segment. Only private limited companies that are incorporated in India and that filed annual returns with the Government of India’s Ministry of Corporate Affairs (MCA) are considered in the report.  The information presented in this report is based on financial statements of companies between the fiscal period from 2007 and 2011.

 

In addition, publicly available information and past research by ValueNotes on information pertaining to the companies’ service offerings and employee strength is used in this report. For more information regarding ValueNotes’ publications on the analytics industry, refer to the section titled For Further Reading.

 

Special Notes

As per the reporting guidelines of the MCA, private limited companies are required to file their balance sheets, profit and loss accounts, annual returns and compliance certificates. However, all the line items in the financial statements are not mandatory.

 

  • Financial information in the report is reported in Indian Rupees (INR).
  • The financial period reported by the company has been considered as is and has not been adjusted. Companies in the sample have differing report periods such as April to March, and January to December
  • The financial statements of the companies have been computed as reported and adjustments or normalizations have not been made by ValueNotes.
  • The analysis in this report uses a data set of those companies that have disclosed all the pertinent financial information for that particular year required to calculate the appropriate financial ratio.
  • Analysis and conclusions regarding industry trends have been made on the basis of available data from the population of companies in ValueNotes’ sample
  • The data in this report does not represent the entire analytics industry, as it excludes multi-service providers and captives. However, we believe that trends within the pure-play analytics business will be similar to those of the industry as a whole.

 

Service Provider Categorization

 

Exhibit i: Service provider categories and sample size

 

The total number of companies that form the sample for this report is 12. Companies have been grouped into categories based on their latest reported total revenue. This has been done to allow for a more meaningful comparison of results. The categories, which are based on annual revenue, are depicted in the adjacent along with the sample size of each category.

equity1

 

Service Provider Comparison and Ratings

The report provides a relative positioning of Indian service providers in the analytics segment featured in the report. The evaluation is based on their financial performance on each of the 10 key financial ratios as listed in the exhibit below.

 

Exhibit ii: Parameters used for service provider comparison

 

exhibit2

 

The ranking of companies are represented using a four-bar scale. The scale used to denote the relative positions is shown in the exhibit below.

 

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Abbreviations

The exhibit below includes a list of abbreviations used in this report. For a more detailed explanation of the financial ratios and how they were calculated

 

eso_exhibit4

 

If you would like a complimentary copy of the executive summary or if you cannot find what you’re looking for, please write to us at bporesearch@valuenotes.co.in

 

Methodology
The methodology adopted for considering companies for inclusion in the ranking requires FY 2011 data to be available for calculating at least five of the financial ratios listed above. A relative ranking is assigned to each company based on their performance on each financial ratio. A single relative ranking is then given to each company by taking an equally weighted average of each ranking. The top five service providers are then positioned relative to each other across the ratios listed in the above exhibit, from 2007 to 2011.  The ranking of companies are represented using a four-bar scale. The scale used to denote the relative positions is shown in the exhibit below.

Table Of Contents

Research methodology
Executive Summary
1 Macroeconomics
1.1 Global economy
1.2 Major economic regions
1.3 National economic performance of select countries
1.4 Currency movements
1.5 Global capital markets
2 Industry Insights
2.1 Indian IT-BPO industry revenue
2.2 IT-BPO contribution towards India’s GDP
2.3 IT-BPO contribution towards India’s exports
3 Operating earnings
3.1 Total income
3.2 Revenue per Employee
4 Expenses
4.1 Operating cost
4.2 Employee cost
4.3 Total cost per employee
5 Profitability
5.1 EBITDA Margin
5.2 EBIT Margin
5.3 Net Profit Margin
5.4 Net profit per employee
6 Operating Efficiency
6.1 Debtor Days
6.2 Creditor Days
6.3 Debtor days versus creditor days
6.4 Net Operating Cycle
7 Solvency
7.1 Quick Ratio
7.2 Debt Ratio
7.3 Debt/Equity Ratio
7.4 Interest coverage
8 Capital Efficiency
8.1 Return on Capital Employed
8.2 Return on Equity
8.3 Return on Assets
9 Service provider evaluation
10 Company Profiles
10.1 ActiveCubes
10.2 Chainalytics
10.3 DenuoSource
10.4 Fractal Analytics
10.5 Glyph
10.5 HansaCequity
10.6 ITCube
10.7 Manthan
10.8 Modelytics
10.9 MuSigma
10.10 Nabler
10.11 TEG Analytics
10.12 Vehere
11 Appendix


Table Of Exhibits

Exhibit i: Service Provider Categories and Sample Size
Exhibit ii: Parameters Used for Service Provider Comparison
Exhibit iii: Legend Used for Service Provider Comparison
Exhibit iv: List of Abbreviations
Exhibit v: Top Five Service Providers in the Analytics Segment in 2011
Exhibit 1: Global GDP growth rate for 2007 to 2013
Exhibit 2: European Union (EU) GDP growth rate for 2007 to 2013
Exhibit 3: BRIC (Brazil, Russia, India, China) GDP growth rate for 2007 to 2013
Exhibit 4: UK GDP growth for 2007 to 2013
Exhibit 5: USA GDP growth for 2007 to 2013
Exhibit 6: UK GDP Growth Rate from 2007 to 2013
Exhibit 7: Indian Currency Movements from 2007 to 2011
Exhibit 8: Capital Market Performance from 2007 to 2011
Exhibit 9: Indian IT-BPO revenues for 2007 to 2012
Exhibit 10: Indian IT-BPO Contribution to the National GDP
Exhibit 11: Indian IT-BPO Contribution to the National Exports
Exhibit 12: Revenue and Growth Over Five Years
Exhibit 13: Revenue by Service Provider Type
Exhibit 14: Revenue Change (YoY) by Service Provider Type
Exhibit 15: Revenue of Analytics Segment by Service Provider in 2011
Exhibit 16: Revenue Per Employee (RPE) Over Five Years
Exhibit 17: RPE by Service Provider Type
Exhibit 18: RPE Change (YoY) by Service Provider Type
Exhibit 19: Operating Expense as a Percent of Revenue For Five Years
Exhibit 20: Operating Expense Change (YoY) by Service Provider Type
Exhibit 21: Operating Expense as a Percent of Revenue by Service Provider Type
Exhibit 22: Employee Cost as a Percent of Operating Expense Over Five Years
Exhibit 23: Employee Cost as a Percent of Revenue Over Five Years
Exhibit 24: Total Cost Per Employee Over Five Years
Exhibit 25: Total Cost Per Employee by Service Provider Type
Exhibit 26: EBITDA Margin Over Five Years
Exhibit 27: EBITDA Margin by Service Provider Type
Exhibit 28: EBIT Margin Over Five Years
Exhibit 29: EBIT Margin by Service Provider Type
Exhibit 30: NPM Over Five Years
Exhibit 31: NPM by Service Provider Type
Exhibit 32: Net Profit Per Employee Over Five Years
Exhibit 33: Net Profit Per Employee by Service Provider Type
Exhibit 34: Net Profit Per Employee Change (YoY) by Service Provider Type
Exhibit 35: Debtor Days Over Five Years
Exhibit 36: Debtor Days by Service Provider Type
Exhibit 37: Debtor Days Change (YoY) by Service Provider Type
Exhibit 38: Creditor Days Over Five Years
Exhibit 39: Creditor Days by Service Provider Type
Exhibit 40: Debtor Days Versus Creditor Days
Exhibit 41: Net Operating Cycle Over Five Years
Exhibit 42: Net Operating Cycle by Service Provider Type
Exhibit 43: Quick Ratio Over Five Years
Exhibit 44: Quick Ratio by Service Provider Type
Exhibit 45: Quick Ratio Change (YoY) by Service Provider Type
Exhibit 46: Debt Ratio Over Five Years
Exhibit 47: Debt Ratio by Service Provider Type
Exhibit 48: Debt/Equity Ratio Over Five Years
Exhibit 49: Debt/Equity Ratio by Service Provider Type
Exhibit 50: Debt/Equity Ratio Change (YoY) by Service Provider Type
Exhibit 51: Interest Coverage Over Five Years
Exhibit 52: Return On Capital Employed (ROCE) Over Five Years
Exhibit 53: ROCE by Service Provider Type
Exhibit 54: Return On Equity (ROE) Over Five Years
Exhibit 55: ROE by Service Provider Type
Exhibit 56: Return on Assets (ROA) Over Five Years
Exhibit 57: ROA by Service Provider Type
Exhibit 58: Consolidated Ranking of Top Five Service Providers
Exhibit 59: Revenue Ranking of Top Five Service Providers
Exhibit 60: RPE Ranking of Top Five Service Providers
Exhibit 61: Total Cost Per Employee Ranking of Top Five Service Providers
Exhibit 62: EBITDA Margin Ranking of Top Five Service Providers
Exhibit 63: Net Profit Per Employee Ranking of Top Five Service Providers
Exhibit 64: Net Operating Cycle Ranking of Top Five Service Providers
Exhibit 65: Quick Ratio Ranking of Top Five Service Providers
Exhibit 66: Debt/Equity Ratio Ranking of Top Five Service Providers
Exhibit 67: ROCE Ranking of Top Five Service Providers
Exhibit 68: ROE Ranking of Top Five Service Providers

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