Vakrangee Software has target of Rs 90: SP Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, "Vakrangee Software is one of the Aadhaar enrollment agencies. They have exhibited excellent execution capability and have enrolled more numbers of applicants under the Aadhaar registration ahead of Wipro. Many companies that too are in the listed space, have not been able to fulfill their commitments given to the Aadhaar enrollment and that is a big plus point for this e-governance company. They are now into financial inclusion project."

He further added, "They are very active in states like Rajasthan, UP. This financial inclusion project will eventually get connected to the Aadhaar and things like direct cash subsidy transfers are going to take place in the time to come for which this company is very active in Rajasthan and UP both. Apart from that, they are making the national population register, and records and many state governments are after them. This is because substantial progress is likely to be shown by these people ahead of the general elections." "The elections will be fought on this agenda by all the political parties and the ruling parties are also trying to catch the deadline like in the state of Rajasthan, UP, Maharashtra. All this will give good advantage to the company. Their top-line has also been quite respectable for FY13 close to Rs 1,500 crore plus with earnings before interest, taxes, depreciation and amortisation (EBITDA) of Rs 380 crore and the profit after tax (PAT) has been at about Rs 100 crore. " "Going forward, I am expecting a big jump into the revenue as well as EBITDA margin, because the kind of network that they are expanding is very difficult for any other company to make. You cannot penetrate in the villages where these setups are being created by the company." "Last year, the company gave a 1:1 bonus, went for split and the share has seen a good run up. Despite that, considering the Life Insurance Corporation (LIC) holding, 5.7 percent stake in the company, Stock Holding Corporation of India (SHCIL) holding 1.7 percent stake in the company also gives the confidence, because both are PSU investment arms and have information of the business model of the company. Taking all this into account, there is still good upside for the stock, but for the six months or so one can look for a price target of Rs 90. Disclosure: No holding or interest in the stock.