Buy ALLSEC Technologies: PN Vijay

Buy ALLSEC Technologies, says PN Vijay, Portfolio Manager. It can go all the way up to Rs 100 in the next 12 months without too much difficulty.

Vijay told CNBC-TV18, "ALLSEC Technologies is squarely a midcap IT company in the Business Process Outsourcing (BPO) space and it is remarkable turnaround story. They have about 3,000 odd seats spread over seven domestic centers and overseas and they provide BPO services to almost all the verticals - Banking, Financial Services and Insurance (BFSI), telecom, healthcare etc."
He further added, "The company had not been doing well, it was in the loss. But they have done two very important things in the last 12 months, one is they have rationalized the cost base and cut down the number of seats quite strongly even if it meant losing some loss making clients, they have pruned down their business in a way. The second is they made a very strong acquisition in California of a company called Retail Capital, which services the mortgage lending and other types of lending in the financial sector to large banks, mortgage institutions etc., that came in with a strong top-line and strong bottom-line."
"As thing have proved out it has been a great boom for this company. All these good things are getting factored into the consolidated earnings of Allsec and for the year as a whole I expect Allsec to have a turnover of about Rs 340 crore or so and decent profits of about Rs 17-18 crore."
"You must remember the share has gone up a little bit because people are sensing a strong turnaround in this company. The share trades around Rs 70 plus, but even there I think it is a very attractive buy and it can go all the way up to Rs 100 in the next 12 months without too much difficulty."
"It is a low volume stock, so anybody can put out some news and turn the stock around. Operators can have a field day, so one should remember that it is a low volume stock. Second is too much of its fortunes are dependent on its California based subsidiary. So if anything goes wrong there that will have a terrible effect on the Indian parent. These are some of the risks on the stock." Disclosure: No personal holding in the above stock.