Feb 14, 2017 06:14 PM IST | Source: Moneycontrol.com

Hold SQS INDIA BFSI LTD; target of Rs 596: Axis Direct

Axis Direct recommended hold rating on SQS INDIA BFSI LTD with a target price of Rs 596 in its research report dated February 09, 2017.

Hold SQS INDIA BFSI LTD; target of Rs 596: Axis Direct

Axis Direct's research report on SQS INDIA BFSI LTD

SQS India BFSI Ltd delivered a modest performance in Q3FY17, with the company’s earnings (PAT) coming in at Rs 3.8 Cr, down 48.6% Y-o-Y on account of higher other expenses, decline in sales and forex loss. In Q3FY17, revenue of the company declined 9.2% Y-o-Y to Rs 60.9 Cr while other expenses increased 28.6% Y-o-Y to Rs 14.4 Cr, resulting in contraction in EBIDTA margin to 12.2% (down 660 bps).

Outlook

Indian IT players are likely to face challenges due to USA’s provisions to increase minimum wages and 50:50 local hires. Also Brexit is likely to act as an overhang for next few quarters. We revise our earnings estimates downward to Rs 26.2 Cr/ 34.9 Cr from previous estimates of Rs 33.3 Cr/47.6 Cr for FY17E/FY18E respectively. We value the stock at a PE of 18xFY18E EPS and revise target price downward to Rs 596. Downgrade to hold.

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