Barrington Gets Aggressive On WNS: Likes Momentum And Management Team

WNS (Holdings) Limited (ADR) WNS seems well positioned in the right market. Barrington’s Vincent A. Colicchio initiated coverage of the company with an Outperform rating and a price target of $39.

The company’s primary target market is the offshore business-process outsourcing [BPO] market, which is both large and rapidly growing, analyst Vincent Colicchio said. India’s National Association of Software and Services Companies [NASSCOM] projected the country’s BPO export market to record a six-year CAGR of 17 percent, growing from $20 billion in fiscal 2014 to $50 billion in fiscal 2020.

Strong Management Team

“Senior management has extensive experience in the offshore outsourcing business, which gives us confidence in their ability to execute their plan,” Colicchio wrote. CEO Keshav Murugesh and Chief People Officer Swaminathan Rajamani had “successful tenures” as CEO and Global Head of Human Resources at Syntel, an offshore IT services firm.

Strong Momentum

WNS has been consistently generating organic revenue growth in constant currency terms in recent years, backed by benefits from investments and organizational changes implemented by the current management team, the analyst mentioned.

In FY12, FY13, FY14, FY15 and the first nine months of FY16, organic revenue growth in constant currency terms was at 5 percent, 7 percent, 7 percent, 5 percent and 10 percent, respectively. “In fiscal 2015, the growth would have been 9.1%, excluding the loss of Travelocity as a client,” the Barrington report stated. From FY12 to FY15, the company’s total number of clients rose 27 percent.

Colicchio further commented that the valuation of WNS shares appeared compelling.