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Last Updated : Aug 23, 2012 03:26 PM IST | Source: Moneycontrol.com

Accumulate Rolta India; target of Rs 85: PLilladher

Prabhudas Lilladher is bullish on Rolta India and has recommended accumulate rating on the stock with a target of Rs 85 in its August 22, 2012 research report.

 
 
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Prabhudas Lilladher is bullish on Rolta India and has recommended accumulate rating on the stock with a target of Rs 85 in its August 22, 2012 research report.


“Rolta reported another quarter of revenue below expectation with margin ahead of expectation. The currency depreciation resulted in higher interest cost and MTM losses eroding bottom-line. As Rolta moves away from the services business to solution business, we continue to see likelihood of volatile earnings performance in H1FY13. The company has managed to honor its FCCB comittment by raising debt at 7.75% interest cost. High interest cost in a challenging demand environment makes the outlook for the company cautious. We retain our ‘Accumulate’ rating.”


“Rolta reported revenue growth of 4.4% QoQ to Rs4.45bn (PLe: Rs4.90bn, Cons: Rs4.60bn). EBITDA margin expanded by 886bps QoQ to 54.6% (PLe: 45.9%, Cons:42.4%), driven by margin expansion in EGIS, EDOS and EICT segments by 977bps, 1557bps and 604bps QoQ, respectively. EPS de-grew by 29% QoQ to Rs2.97 (PLe: Rs4.22, Cons: Rs3.72), due to lower lower tax rate and stronger margin performance. Order book grew by 3.5% QoQ to Rs21.42bn, strongest growth in the last five quarters. EICT order book grew by 8.3% QoQ, the sharpest growth among all the segments, whereas EGIS and EDOS grew by 1.8% and 2.7% QoQ, respectively. Book-to-Bill (LTM) overall moved to high teens for the first time in the last five quarters. Q4FY12 book-tobill remains at 1.17, highest level since Q3FY11. The company’s decision to move away from low-end services business to solution offering could put additional pressure on order book. We expect order book to remain volatile.”


“We believe that the decline in the revenue is a matter of concern. We believe that a high interest cost in depreciating currency and a weak business environment could result in decline at the bottom-line. We retain our ‘Accumulate’ rating, with a target price of Rs85, 6x FY13e earnings estimates,” says Prabhudas Lilladher research report. 


FIIs holding more than 30% in Indian cos


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To read the full report click on the attachment

First Published on Aug 23, 2012 02:53 pm
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