NYSE listed and one of the worldâs largest Business Process Management (BPM) Company, WNS Holdings Limited (WNS, Financial), announced in a statement their plans to incur an investment of up to $33 million in the buy-back of nearly 1.1 million of their own American Depository Shares (ADS). Each of these ADS represents one ordinary share and is priced in the range of $10 to $30.
WNS, is a leading global business process management company employing about 27,755 professionals spread across 37 delivery centers worldwide in countries like China, Costa Rica, India, Philippines, Poland, Romania, South Africa, Sri Lanka, United Kingdom and the United States. The company has a portfolio of over 200 clients from various fields like Travel, Insurance, Banking and Financial Services, Manufacturing, Retail and Consumer Packaged Goods, Shipping and Logistics, Healthcare and Utilities providing multiple business process management services like front and back office, finance and accounting, research and analytics among many others.
Buy Back Strategy
The announcement of the buy-back came on the heels of WNS releasing their Fourth Quarter and Full Year Fiscal 2014 Earnings in a separate statement. WNS declared revenue of $130.3 million, a 2.4% q-o-q increase from the third quarter revenue of $127.1 million and a 9.3% rise from $119.2 million in Q4, 2013. The profit also increased to $13.4 million from $ 8.2 million same time last year and $12.2 million in the third quarter.
Keshav Murugesh, WNSâs Chief Executive Officer said in the statement that, âIn the fourth quarter, WNS continued to make progress in adding new clients, strengthening our existing relationships and building the new business pipeline. We successfully signed our fifth large deal of the year, and the pipeline for large opportunities remains robust. Overall, we are pleased with WNSâs performance in fiscal 2014, as the company was able to post healthy revenue growth, expand margins and profits, improve cash flow and solidify the balance sheet. We are confident that the company remains on the right track to differentiate our position in the market, and generate substantial business value for all our key stakeholders in the coming yearsâ.
Taking certain assumptions on the exchange rates, WNS expects the revenue less repair payments to be in between $490 million and $520 million and Adjusted Net Income (ANI) is expected to range between $77 million and $83 million, up from $72.4 million in fiscal 2014. âOur guidance for the year reflects top line growth of 4% to 10%, which represents 1% to 7% revenue growth on a constant currency basis. Profitability is again expected to expand faster than revenue this fiscal year, with our ANI guidance reflecting 6% to 15% year-over-year improvement,â said Sanjay Puria, WNSâs Chief Financial Officer.
Current Scenario
WNS ended the fourth quarter with $146.2 million in cash and investments and $84.7 million of gross debt. WNS still has some catching up to do with its competitors like Infosys (INFY, Financial) with a market cap of around $40.10 billion and Genpact (G, Financial), around $ 4.43 billion. However, with its market cap of nearly $1.23 billion, it has managed to consolidate its position ahead of Exlservice holdings (EXLS, Financial) (market cap in the region of $992.93 million).
WNS announced the buy-back of shares keeping in line with the forward looking statements better known as the âSafe Harbor Statementâ as defined in the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. The share buy-back will be refunded through internal cash accruals. âWNS management is confident in the strength of its business and the continued growth of its target markets,â said Keshav R. Murugesh, WNSâs Group Chief Executive Officer. âWe are committed to invest in our long-term growth and enhance shareholder value. Our company has a strong balance sheet and solid cash flows, and the management team and Board of Directors believe this share buy-back represents a good use of company funds while demonstrating the companyâs commitment to deliver long-term shareholder value.â
Final Words
The move is subject to shareholders approvals and WNS intends to have an extraordinary general meeting of its shareholders sometime in the fourth quarter of financial year 2015 for the same. Once the shareholders approve, WNS may look to purchase the ADS periodically through the open market over the next twelve months commencing from April 1 2015.
The move by WNS to buy-back its own shares does seem to be a step in the positive direction especially after a positive Q4 result. As is always the case, buy-backs generally tend to send out positive signals in the market and affects the stock price in a positive manner.
