Get technical stocks tips totally free, which are technically analyzed by our expert. And also get "Free Technical Analysis Courses" on this blog.
Thursday, May 24, 2012
Buy stocks of eClerx Services; target of Rs 874
“eClerx came out with its Q4FY12 results, which were slightly below our estimates. The company has registered a revenue growth of 0.4% QoQ to $25.5mn (SPAe: 26.1mn). The FY12 EPS of INR 54.9, however exceeded our guidance on the back of improvement in margins from 39.3% to 40.1% due to INR depreciation. We expect Agilyst to start adding to the topline from Q1FY13 with an annual revenue run-rate of $14mn. On the back of inorganic growth push, we expect the company's FY14 EPS at INR 73.”
“The company reported a moderate volume growth of 0.4% QoQ in Q4FY12, with no change in pricing. The revenues for FY12 at $97.5mn were slightly below our expectations of $98.1mn. This could be attributed to the volatility in the top-5 clients spending, which continues to contribute 85%+ to the company's topline. However revenue at INR 4,728mn (SPAe: INR 4,650mn) grew at 38.2% helped by 7% dip in INR. eClerx has $94.3mn outstanding hedges for FY13/14 at INR 49.1/$ and cash and equivalents of INR 2,686mn or INR 92.4/share. eClerx has improved its EBITDA Margins from 39.3% in FY11 to 40.1% in FY12 leading to an EPS growth of 34.9% to INR 54.9. The margins for Q4FY12 however, declined sequentially by 600bps to 38.2% due to (i) One time G&A spike by 190bps on the back of M&A transaction cost and decommissioning of an old facility (ii) ongoing increase in S&M investments by 330bps and (iii) INR appreciation.”
“We expect the organic growth to be 6% in FY13 due to higher volatility in Top 5 client's spending and slower pick up in non-top-5 clients causing a lack of revenue generation opportunities. However with Agilyst starting contribution by Q1FY13 we expect the company's topline to grow by 30% & 18% in FY13 & FY14. On the margins front we expect eClerx to come off a bit to 35.5% & 36.7% in FY13 & FY14 due to (i) Pricing pressure from top-5 clients and (ii) wage inflation (10.5% offshore and 3% onsite) though partially offset by INR depreciation in H1FY13. Thus, on the back of inorganic growth coupled with lower margins, we expect EPS to grow at 15.2% CAGR over FY12-14E vis-à-vis 37.5% CAGR over FY08-12. The company had enjoyed premium valuation due to its higher than industry margins, growth rates and being the only listed Indian KPO; but with tapering growth we have risk-adjusted our valuation multiple, lower by 15% to 12x, continuing to recommend BUY for the stock, with a 2 year target price of INR 874,” says SPA Research report.
Subscribe to:
Post Comments (Atom)
-
Lupin’s Q2FY17 revenues were in-line with our estimates. Revenues grew by 32% YoY to INR 42.1 bn (as compared to our estimate of INR 41.9 b...
-
Volume grew by 4.2% QoQ, best in last 12 quarters. The company expects strong volume momentum to continue despite the mixed view on clie...
-
Neeraj Deewan, Quantum Securities told CNBC-TV18, “I would not really buy metals right now because I need to get lot more clarity regard...
No comments:
Post a Comment