Buy CMC; target Rs 1138: Firstcall Research

Firstcall Research is bullish on CMC Ltd and has recommended buy rating on the stock with a target price of Rs 1138 in its July 18, 2012 research report.

"CMC Ltd is one of the world's leading information technology consulting, services and business process outsourcing organizations. During the quarter, the robust growth of Net Profit is increased by 66.62% to Rs. 435.90 million. The company has recommended the dividend of 12.50 per share on 3,03,00,000 Equity Shares of 10 each for the financial year 2011-12. CMC Ltd to be in the Global Top 20 Systems Engineering and Integration Company by 2020. The company has earned almost 51% of its revenue in 2011-12 through synergy projects. Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 8% over 2011 to 2014E respectively. The Company is certified under ISO 9001:2008 under the division of the Education & Training."

"The company’s net profit jumps to Rs.435.90 million against Rs.261.62 million in the corresponding quarter ending of previous year, an increase of 66.62%. Revenue for the quarter rose 27.93% to Rs.2663.13 million from Rs.2081.63 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.14.39 a share during the quarter, registering 66.62% increase over previous year period. Profit before interest, depreciation and tax is Rs.578.54 millions as against Rs.384.99 millions in the corresponding period of the previous year."

"At the current market price of Rs.989.45, the stock P/E ratio is at 17.44 x FY13E and 15.22 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.56.75 and Rs.65.00 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 8% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 12.32 x for FY13E and 10.76 x for FY14E. Price to Book Value of the stock is expected to be at 3.45 x and 2.81 x respectively for FY13E and FY14E.

"The Company is looking at newer markets in order to broaden its reach both in India and abroad & also executing multiple analytics projects across spectrum of industry practices. It is engaged in a project for university research centers in USA and in India in domains of healthcare and coastal surveillance. The fourth quarter witness a healthy increase in overall sales as well as profitability on account We expect that the company surplus scenario is likely to continue for the next years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 1138 for Medium to Long term investment," says Firstcall Research report.

Non-Institutions holding more than 90% in Indian cos

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