Buy Helios and Matheson; target Rs 75: Sunidhi Securities

Sunidhi Securities' research repport on Helios and Matheson Information Technology

"HMITL has built a strong USA and European presence and deep client relationships. Sustained infrastructure and sales/marketing investments over the last 22 years have helped create a world-class knowledge-networked work environment that empowers HMITL's team to provide high quality solutions to clients. HMITL has 22 years of consistent dividend payments and over 66 percent of its paid-up capital is through bonus issues. Its FCCB was redeemed in a single direct payment of over Rs 100 crore. HMITL derives a majority of its revenues from the US market and focus primarily on the banking, financial services, healthcare, and technology verticals. Its IT infrastructure is in place for the next two years, it does not envision any Capex beyond routine replacement, which can be funded through internal accruals." "Consequent upon conversion of 12, 50, 000 lakh warrants to promoters at Rs 29.24, (premium Rs 19.24), equity capital has gone up to Rs 25.2 crore. With reserves of Rs 292.6 crore, the book value of the share currently (H1FY13) is Rs 126. During FY12, the value of the gross block stood at Rs 604 crore compared to Rs 576 crore in FY11. HMITL's consolidated debt declined to Rs 270 crore as at FY12 from Rs 280 crore in FY11. During H1FY13, the debt stood at Rs 269 crore. HMITL’s cash and cash equivalent stood at Rs 49.8 crore as at FY12 and Rs 62 crore as at H1FY13. The DER as at H1FY13 stands at 0.84 (v/s 1.1 in FY12)." Valuation & Recommendation: "HMITL's increasing focus on BFSI, Healthcare and Technology verticals, strong USA and European presence, deep client relationships, sustained infrastructure, sales/marketing investments, a world-class knowledge-network set up give strong visibility to revenue & profitability going forward. At the current market price of Rs 52, the share is trading at a P/E of 3.1x on FY13E and 2.3x on FY14E. We recommend buy with a target price of Rs 75 in the medium term," says Sunidhi Securities research report. Also read: CRISIL maintains fair value of Helios and Matheson at Rs 80 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.

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