WNS Holdings ADR (WNS, $35.99): “WNS Making Investors Trust the
Process”
By:
Matthew Holland, AIM Student at Marquette
University
Disclosure:
The AIM Equity Fund currently holds this position. This article was written by
myself, and it expresses my own opinions. I am not receiving compensation for
it and I have no business relationship with any company whose stock is
mentioned in this article.
Summary
• WNS (Holdings) Limited Sponsored ADR (NYSE:WNS) offers
comprehensive data, voice, analytical, and business transformation services to
various industries, including travel, banking, financial services, insurance,
manufacturing, retail and consumer packaged goods, shipping and logistics,
healthcare, and utilities.
• WNS is well positioned
in multiple growing markets.
• Recent acquisitions of
Denali Sourcing Services Inc. and HealthHelp look to improve WNS’s finance and
accounting solutions and healthcare services, respectively.
WNS’s partnership with Locus
Software Limited aims to update ERP systems for shipping companies.
• WNS’s recent strategic
initiatives provide optimism for future prospects.
Key
points: WNS is currently well positioned in the promising BPO
market. This market is expected to reach
$198.9 billion by 2021, representing a CAGR of 4.7%. As one of the top BPO providers in India, WNS
is looking to reap the benefits of this growing market. Additionally, WNS handles financial contracts
to support the growth of financial service providers. Therefore, the continued growth of the
financial sector could provide additional opportunities for WNS.
In January of 2017, WNS
acquired Denali Sourcing Services Inc.
This deal will add strategic procurement capability to WNS’s existing
finance and accounting solutions. This
acquisition also allows WNS to add end-to-end Source-to-Pay (S2P) solutions to
their existing Procure-to-Pay (P2P) capabilities. In March, WNS acquired HealthHelp to
strengthen their end-to-end Healthcare and Insurance BPM offerings. The expectation is this will provide
opportunities to cross-sell services.
WNS announced a strategic
partnership with Locus Software Limited in early September. As part of this partnership, WNS will work with
Locus and their Odyssey platform to enable shipping companies to transfer their
old ERP solutions to more modern cloud-based solutions. This will allow for reduced costs, increased
operational efficiencies, improved customer service, and reduced time to value
for a variety of clients, including Odyssey’s accessed users in 40 plus
countries.
In December of 2016, WNS
introduced WNS TRAC and announced their partnership with Finnair. WNS TRAC is an advanced BPM
technology-enabled solution with the potential to provide advanced solutions to
WNS’s clients. Finnair is a passenger
and cargo airline service provider that could provide improvements to WNS’s
current business operations.
Additionally, WNS’s launching of eAdjudicator, InsurACE, and Broker
Connect is expected to help accelerate the digitization of their business
processes.
What
has the stock done lately?
Since
the beginning of 2017, WNS’s price has increased by over 33%. While there are many factors in play, it is
notable that roughly 30% of that increase occurred after the acquisition of
HealthHelp. That being said, first
quarter organic
constant currency revenue still increased 13.3% year-over-year.
Past
Year Performance: WNS has increased 22% in value over the
past year. WNS remained in line with EPS
estimates during the first quarter of 2017, generating an EPS of $0.45. WNS had a strong first quarter in terms of
revenues, reporting revenues of $175.3 million. This represented a year-over-year increase
of 25.5%.
 |
| Source: FactSet |
My
Takeaway
