Accumulate Rolta India; target of Rs 90: PLilladher

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Accumulate Rolta India; target of Rs 90: PLilladher

Prabhudas Lilladher is bullish on Rolta India and has recommended accumulate rating on the stock with a target of Rs 90 in its February 03, 2012 research report.

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Prabhudas Lilladher is bullish on Rolta India and has recommended accumulate rating on the stock with a target of Rs 90 in its February 03, 2012 research report.

"Rolta's reported disappointing Q2FY12 result with revenue below our expectation and order book witnessing sharpest decline ever. This disappointment was across the three segments. As Rolta moves away from the services business to solution business, we continue to see likellihood of volatile earning performance in H2FY13. The FCCB maturity in June-12 likely to have biggest overhang on the stock in near term. The management is in the process of raising ECB or rupee loan to replace it."

"Rolta reported revenue de-growth of 2.9% QoQ to Rs4.72bn (PLe: Rs5.29bn, Cons: Rs5.16bn). EBITDA margin expanded by 341bps QoQ to 40.2% (PLe: 39%, Cons:38.7%), driven by margin expansion in EGIS and EDOS vertical by 466bps and 520bps QoQ. EPS grew by 4.8% QoQ to Rs4.05 (PLe Rs4.80, Cons: Rs4.81), due to lower forex loss. Order book de-grew by 2.9% QoQ to Rs20.2bn, sharpest decline ever. Order book de-grew by 5.7%QoQ, the sharpest among all the segments, whereas EDOS and EICT were flat. Book-to-Bill (LTM) has fallen to lowest level in last 22 quarters to 1.06. The company's decision to move away from low end services business to solution offering would put additional pressure on order-book in near future. However, the management remained confident of improved pipeline to start contributing in Q3FY12."

"We believe that the sharpest declinein the order book is a matter of concern. We expect FCCB maturity to be the biggest overhang in near term. We retain our 'Accumulate' rating, with a target price of Rs90, 7x FY13e earnings estimates," says Prabhudas Lilladher research report.

Public holding more than 90% in Indian cos    

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