Angel Broking neutral on Infotech Enterprises

Angel Broking has maintained neutral rating on Infotech Enterprises with a target price of Rs 187, in its July 18, 2012 research report.

"Infotech Enterprises (Infotech) reported a decent set of results (for 1QFY2013), with overall volume growth of 2.0%. The utilities, telecom and content (UT&C) vertical witnessed robust volume growth of 5.8% qoq. In engineering manufacturing and industrial products (ENGG) vertical, aerospace segment witnessed volume growth of 2.5% while volumes from home, transportation, hi-tech (HTH) declined by 2.6% qoq. The company added 17 new clients during the quarter."

"For 1QFY2013, Infotech reported revenue of US$84mn, up 1.4% qoq, on the back of 2.0% qoq volume growth. In INR terms, revenue came in at Rs 456cr, up 9.4% qoq. The company’s EBITDA margin declined by 115bp qoq to 18.7%, largely because of wage hikes given during the quarter which impacted the margins by ~370bp qoq. This negative effect was partially absorbed by ~290bp qoq positive impact derived from INR depreciation."

"Management indicated that the company is expected to grow 14% plus in constant currency terms during FY2013, revised downwards from earlier stated 19% plus. The company is on the right track in terms of making investments to strengthen its product portfolio and is taking initiatives to improve its financial metrics. The company has got price increase from some of its selective clients, which instills confidence in the company’s performance going ahead. So, over FY2012-14E, we expect the company to post a USD and INR revenue CAGR of 10.8% and 15.3%, respectively. Infotech was previously consistently underperforming on the operating margin front, which the company is now focused to address by levers such as improving utilization level, rationalizing SG&A expenses and shifting more work offshore. We expect EBITDA and PAT CAGR to be at 15.6% and 15.7%, respectively, over FY2012-14E. We value the company at 9.5x FY2014E EPS of Rs 19.7, which gives us a target price of Rs 187, and maintain Neutral view on the stock," says Angel Broking research report.

FIIs holding more than 30% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More