ExlService Holdings, Inc. (NASDAQ: EXLS)

Sector: Technology Industry: Information Technology Services CIK: 0001297989
Market Cap 6.88 Bn
P/B 7.23
P/E 28.50
P/S 3.40
ROIC (Qtr) 17.16
Div Yield % 0.00
Rev 1y % (Qtr) 12.18
Total Debt (Qtr) 434.46 Mn
Debt/Equity (Qtr) 0.46

About

EXLService Holdings, Inc., often recognized by its stock symbol EXLS, operates in the data analytics and digital operations and solutions industry. Since its incorporation in Delaware in 2002, the company has grown to become a significant strategic partner for businesses leveraging data and artificial intelligence (AI). EXL's primary business activities involve collaborating with clients to implement large-scale business transformation initiatives, aimed at enhancing customer experience, stimulating revenue growth, improving operational efficiency,...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 338.68M provides robust 0.78x coverage of total debt 434.46M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 179.83M provide 7.47x coverage of short-term debt 24.06M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 338.68M provides exceptional 18.35x coverage of interest expenses 18.46M, showing strong debt service capability.
  • Strong tangible asset base of 1.27B provides 2.93x coverage of total debt 434.46M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 287.24M exceeds capital expenditure of 51.44M by 5.58x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 338.68M barely covers its investment activities of (107.23M), with a coverage ratio of -3.16, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 179.83M provide limited coverage of acquisition spending of (1.01M), which is -178.58x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 338.68M shows concerning coverage of stock compensation expenses of 74.20M, with a 4.56 ratio indicating potential earnings quality issues.
  • Operating cash flow of 338.68M is outpaced by equity issuance of (224.36M) (-1.51 ratio), indicating concerning reliance on equity markets for funding operations.
  • Retained earnings of 1.47B provide limited buffer against comprehensive income items of (168.98M), which is -8.72x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Information Technology Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 IBM International Business Machines Corp 279.99 Bn 35.41 4.28 66.57 Bn
2 ACN Accenture plc 168.17 Bn 22.09 2.38 8.20 Bn
3 INFY Infosys Ltd 74.96 Bn 23.74 3.89 -
4 CTSH Cognizant Technology Solutions Corp 41.45 Bn 19.48 1.99 1.17 Bn
5 FIS Fidelity National Information Services, Inc. 35.21 Bn 231.62 3.36 13.00 Bn
6 WIT Wipro Ltd 29.93 Bn 19.70 2.97 1.95 Bn
7 BR Broadridge Financial Solutions, Inc. 26.38 Bn 28.51 3.74 3.28 Bn
8 LDOS Leidos Holdings, Inc. 23.72 Bn 16.88 1.37 5.23 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 4.07 1.44
EV to Cash from Ops. EV/CFO 20.82 5.63
EV to Debt EV to Debt 16.23 8.06
EV to EBIT EV/EBIT 21.48 -4.05
EV to EBITDA EV/EBITDA 18.08 -0.52
EV to Free Cash Flow [EV/FCF] EV/FCF 24.55 -1.66
EV to Market Cap EV to Market Cap 1.02 1.35
EV to Revenue EV/Rev 3.48 57.14
Price to Book Value [P/B] P/B 7.23 3.34
Price to Earnings [P/E] P/E 28.50 -5.47
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -0.83
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 0.66
Dividend per Basic Share Div per Share (Qtr) 0.00 0.47
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 6.24
Interest Coverage Int. cover (Qtr) 17.78 -319.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -8.04 -253.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 10.15 114.15
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 35.23
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 27.23 -22.49
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 22.26 -25.03
EBIT Growth (1y) % EBIT 1y % (Qtr) 24.31 -82.44
EBT Growth (1y) % EBT 1y % (Qtr) 25.55 97.07
EPS Growth (1y) % EPS 1y % (Qtr) 30.43 147.29
FCF Growth (1y) % FCF 1y % (Qtr) 47.60 -8,638.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 17.50 -8.24
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.17 0.78
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.59 0.66
Current Ratio Curr Ratio (Qtr) 2.91 2.12
Debt to Equity Ratio Debt/Equity (Qtr) 0.46 0.88
Interest Cover Ratio Int Coverage (Qtr) 17.78 -319.17
Times Interest Earned Times Interest Earned (Qtr) 17.78 -319.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 20.30 -550.76
EBIT Margin % EBIT Margin % (Qtr) 16.20 -775.74
EBT Margin % EBT Margin % (Qtr) 15.29 -827.89
Gross Margin % Gross Margin % (Qtr) 38.20 24.07
Net Profit Margin % Net Margin % (Qtr) 11.90 -830.34