Buy 3i Infotech, tgt Rs 188: Angel Broking

Angel Broking has maintained buy rating on 3i Infotech with target price of Rs 188, in its May 06, 2008 report. "Going ahead, we expect 3i Infotech to maintain a CAGR growth of 36.6% in Topline over FY2008-10E, while Bottomline is expected to grow at a CAGR of 27.4% in the mentioned period. We expect EBITDA Margins to fall by an average 50bp annually until FY2010, as the company’s focus shifts towards transaction processing, where Margins are typically lower. At the CMP, the stock is trading at 8.4x FY2010E EPS."

"We believe these valuations are fairly attractive, given the strong growth expected going forward, apart from a relative insulation to the Rupee-Dollar movements given its widely dispersed geographical spread of revenues. It should also be noted that we have not factored in any revenues or profits from its recently acquired company, Regulus, into our consolidated estimates. Even if we assume a ball-park Net Profit Margin of 5% for Regulus, our FY2010E EPS would increase by around 10%. Thus, there exists an upside to our estimates and Target Price. We maintain a Buy on the stock, with a revised 12-month Target Price of Rs 188 (Rs210), downgraded owing to lower Margin estimates going ahead" says Angel Broking report."