Buy CMC; target of Rs 2160: Firstcall

Firstcall Research's report on CMC

"CMC is a pioneer Information Technology solutions provider in India and is a subsidiary of Tata Consultancy Services Limited, Asia's largest software Company, reported its financial results for the quarter ended 30th June, 2015. The company’s net profit stood at Rs. 562.83 million against Rs. 584.28 million in the corresponding quarter ending of previous year, a decrease of 3.67%. Revenue for the quarter rose by 13.43% to Rs. 6722.41 million from Rs. 5926.35 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 18.58 a share during the quarter, registering 3.67% decreased over previous year period. Profit before interest, depreciation and tax is Rs. 1011.51 millions as against Rs. 961.05 millions in the corresponding period of the previous year."

OUTLOOK AND CONCLUSION

At the current market price of Rs.1960.00, the stock P/E ratio is at 20.22 x FY16E and 18.21 x FY17E respectively.

Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.96.93 and Rs.107.64 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 9% over 2014 to 2017E respectively.

On the basis of EV/EBITDA, the stock trades at 12.75 x for FY16E and 11.47 x for FY17E.

Price to Book Value of the stock is expected to be at 3.79 x and 3.36 x for FY16E and FY17E respectively.

"We recommend ‘BUY’ in this particular scrip with a target price of Rs 2160 for Medium to Long term investment", says Firstcall Research Report.

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