Buy Hinduja Global; target of Rs 476: Greshma Research

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Buy Hinduja Global; target of Rs 476: Greshma Research

Greshma Research is bullish on Hinduja Global Solutions and has recommended buy rating on the stock with a target of Rs 476 in its May 13, 2011 research report.

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RELATED NEWS Buy Asian Paints; target of Rs 3010: ICICIdirect.com Buy PTC India; target of Rs 121: ICICIdirect.com Buy Deepak Fert; target of Rs 228: PINC Research ALSO READ See previous views by Greshma Research See what other Experts & Brokerages are saying about Hinduja Global See messages about Hinduja Global Hinduja Global BSE | NSE 31/05/12 Are Mutual Funds betting on Hinduja Global?

Greshma Research is bullish on Hinduja Global Solutions and has recommended buy rating on the stock with a target of Rs 476 in its May 13, 2011 research report.

"Hinduja Global Solutions Ltd (HGSL) is one of the largest transnational business conglomerates in the world. HGSL one of the leading global BPOs is among the largest, listed pure play BPOs in the Domestic Market.  Growth at HGSL has been robust and the company has been able to multiply the size and scale of its operations within a few years. The company provides Information Technology Enabled Services in India and internationally. They offer professional IT Staffing, Claims Processing, Call Center, Software Development, and Consulting Services."

"HGSL registered Revenues of Rs293.5 cr in Q4 FY11 up by 2.3% sequentially and 31.5% Y-o-Y basis. Other Income was up by 68.5% Y-o-Y basis, primarily due to recovery of Bad Debt (Provision kept by the company), other income for the company has increased to Rs9.83 cr against Rs5.84cr in Q4 FY10. HGSL has posted a net profit of Rs30.9 cr in Q4 FY11 as compared to Rs26 cr in Q4 FY10, up by 18.8% Y-o-Y basis. It has posted an EPS of Rs52.1 in FY11 against Rs63.3. This decrease in EPS is mainly on account of acquisition during the year and setting up of facilities which lead to a decrease in PAT margin."

"HGSL as on 31st March 2011 has cash worth Rs227 per share on its books. Cash and cash equivalent for the company stood at Rs618 cr. The stock at Rs398.5 is currently trading at an attractive valuation of 7x and 5.9x at FY12E and FY13E EPS of Rs57 and Rs68 respectively. Considering the positive outlook on IT-BPO Industry and huge cash reserves we advise investors to BUY the stock at CMP of Rs398.5 with the target price of Rs476 which is upside of ~20% from current levels. We have projected the FY13E Revenue of Rs14,169 mn without considering any sort of acquisition; any news on acquisition will rerate the stock upwards. We expect the margins to be under pressure going forward due to pricing pressure in the domestic market and an increase in effective tax rate for the company," says Greshma Research report. 

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