Hold 3i Infotech; target Rs 62: Asit C. Mehta

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Asit C. Mehta has recommended hold rating on 3i Infotech with a target of Rs 62 in its July 29, 2010 research report.

"3i Infotech's  high debt position continues to be our main concerns. Despite recent QIP placement of Rs 1.8 billion, net debt position came down only by Rs 0.4 billion. Moreover, even after taking into account refinancing of short term loan of around Rs 8.4 billion via long term loan, debt service coverage ratio (DSCR) will be around 0.7 and 0.8 in FY11E and FY12E, respectively, much lower than bare minimum requirement of 1. Considering, slower revenue growth than peers in FY11E and DSCR lower than comfort zone in FY11E and FY12E, we downgrade our recommendation on the stock to sell from hold with a target of Rs 62," says Asit C. Mehta research report.

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