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Dec 08, 2009, 10.28 PM IST
3i Infotech has target of Rs 94, says Phani Sekhar of Angel Broking. The stock was up close to 5% on news of stake sale by ICICI Bank.
3i Infotech has target of Rs 94, says Phani Sekhar of Angel Broking.
Sekhar told CNBC-TV18, "3i Infotech business model is one of the most diversified in the midcap space. Almost an equal amount of revenue comes from IT products, IT services and BPO. Its high dependence on BFSI, which actually made the market de-rate the stock, is proving to be a blessing in disguise because this is where the IT spending has picked up first and this is where we believe the spending will lead.”
He further added, “It is a 2,500 crore revenue company with an EBITDA of around Rs 500 crore. The only concern was a very high debt-equity ratio which the management is consciously trying to bring down with an Rs 300 crore QIP that they had done recently, which has brought down the debt-equity ratio and it has led to some kind of dilution. But going forward looking at the revenue growth run rate and the earnings run rate, we believe that the concerns are over done when we see the stock is trading at just around 5.5 times FY11 earning which is almost a 50% discount to any other midcap IT company.”
“You don’t expect the company to trade at this kind of valuations for a sustained period of time, so rerating looks inevitable along with their earnings momentum. So a one year price target will be around Rs 140 but for the day it is Rs 94. Along with that the news about the proposed stake sale is also going to be a shorter term trigger.”
May 22 2013, 10:28
- in Technicals
May 22 2013, 10:44
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