74% EBITDA growth reflects improved performance by IRIS

Global fintech major, IRIS Business Services Limited has reported an all-round improvement in its performance in H1FY23 over H1FY22.

"It has been a fantastic half year when we gained recognition for the impactful work we have been doing all these years", says Company Founder, Deepta Rangarajan. In September, IRIS was anointed India's best fintech for which the firm received an award from Union Finance Minister, Smt. Nirmala Sitharaman. Early last week, IRIS was declared India's best tax technology company and two days later, the firm was honoured as India's best MSME in the technology category. "It is a heady feeling," Deepta added.

"The improvement in the financial metrics is satisfying," says Company Founder & CFO, K Balachandran. From being in the red with losses of Rs. 64 lakhs at the PAT level in H1FY22, the company now has profits to show of Rs. 122 lakhs in H1FY23. The improved profitability is driven by a 27% surge in revenues which has pushed EBITDA up 74% on account of a lower increase in expenses.

Balachandran strikes a note of caution though. "We cannot ignore the fact that Q2 topline growth against the corresponding period a year ago has been somewhat lower due to seasonality of revenues," he points out. "There is not much we can do about it as the filing cycle is not in our control," he added. Even as he points to the stability in the share of recurring revenue steady at about 79%, he says that not much should be read into it. "The moment we win a fresh regulatory implementation contract, you will see this go down", he explains.

It is however important to note that the company is now serving about 6,300 customers globally. The biggest addition has happened for the company's existing GST offerings. South Africa with 123 new wins and EU with 44 new wins were the two major overseas geographies where the wins were big.

Company CTO, P K X Thomas said that he has set dealing with attrition as his first priority. "What concerns me is not how many are leaving but who is leaving. We are working on improving the compensation package to reach some level of parity with the market for experienced people through the next ESOP scheme which is in the works," he explained.

While attrition across all divisions in the company is 12%, the number in the case of the technology team is 20%. "It is still less than what IT Services firms are experiencing. But losing experienced people is a problem that can be fixed only if we pay attention to compensation levels," Thomas explained. IRIS has about 425 people on its rolls.

"We propose to overhaul our compensation structure by implementing a variable pay framework, especially ESOP, that our colleagues will find attractive enough to want stay on to financially benefit from future growth. That is our immediate priority for which we will soon be seeking shareholder approval," says Company CEO, S Swaminathan.

Shares of IRIS Business Services Ltd was last trading in BSE at Rs. 75.55 as compared to the previous close of Rs. 77.40. The total number of shares traded during the day was 2224 in over 39 trades.

The stock hit an intraday high of Rs. 77.55 and intraday low of 75.00. The net turnover during the day was Rs. 167625.00.

Source : Equity Bulls

Keywords

IRISBusinessServices INE864K01010 Q2FY23 H1FY23 ResultUpdate