GSS Infotech Limited faces steep revenue and profit declines in Q1 FY25

GSS Infotech Limited, a prominent global IT services provider, has reported a sharp decline in its financial performance for the first quarter ended June 30, 2024. The company’s consolidated revenues fell to ₹29.80 crores, a significant decrease of 26.67% from the previous quarter. The results highlight a dramatic decline in EBITDA and PAT, underscoring the company’s challenging operational environment.

Consolidated Financial Performance

For Q1 FY25, GSS Infotech Limited reported consolidated revenues of ₹29.80 crores, down 31.25% from ₹43.34 crores in Q1 FY24. This represents a quarter-on-quarter decline of 26.67% from ₹40.64 crores in Q4 FY24. The decrease in revenue reflects ongoing challenges in the IT services market, including heightened competition and fluctuating demand.

The company’s EBITDA for the quarter stood at ₹1.23 crores, marking an 86.54% decrease from ₹9.12 crores in Q4 FY24 and a 22.34% decrease from ₹1.58 crores in Q1 FY24. The significant drop in EBITDA indicates severe cost pressures and reduced operational efficiency during the quarter.

PAT for Q1 FY25 was ₹0.10 crores, a dramatic decline of 98.49% from ₹6.86 crores in Q4 FY24 and a 74.71% decrease from ₹0.41 crores in Q1 FY24. This sharp decline in profitability highlights the impact of adverse market conditions and operational challenges.

Standalone Financial Performance

On a standalone basis, GSS Infotech Limited’s revenues were ₹2.12 crores for Q1 FY25, down 34.30% from ₹3.23 crores in Q1 FY24. This represents a 12.06% decline from ₹2.42 crores in Q4 FY24. The revenue decrease on both a year-on-year and quarter-on-quarter basis underscores ongoing challenges in the company’s core operations.

EBITDA for the standalone segment was ₹0.35 crores, reflecting a 47.90% decline from ₹0.67 crores in Q1 FY24. However, this figure represents a significant 108.54% increase from ₹0.17 crores in Q4 FY24, indicating some recovery in operational efficiency despite the overall decline.

PAT on a standalone basis was ₹0.07 crores, down 53.47% from ₹0.15 crores in Q1 FY24 but up 27.43% from ₹0.05 crores in Q4 FY24. The increase in PAT on a quarter-on-quarter basis suggests some improvement in profitability, although the overall performance remains weak compared to the previous year.

Expert Insight

Mr. Bhargav Marepally, Managing Director and CEO of GSS Infotech Limited, acknowledged the company’s difficult performance in Q1 FY25. Marepally noted that the company is implementing several strategic initiatives to address the current challenges. These measures include cost optimisation, enhancing operational efficiencies, and conducting thorough strategic reviews. He expressed confidence that these actions will help GSS Infotech Limited navigate the short-term market pressures and position the company for future growth.

Marepally also attributed the performance decline to external factors such as market conditions and increased competition. Despite the current difficulties, he remains optimistic about the company’s long-term prospects and its ability to deliver value to stakeholders through its strategic initiatives.

The financial results for GSS Infotech Limited’s first quarter of FY25 reveal a significant decline in revenue and profitability. The company faces a challenging environment, but its proactive measures and strategic focus aim to restore growth and operational efficiency. The extent of the recovery will depend on the effectiveness of these initiatives and the evolution of market conditions.