Buy eClerx Services; target of Rs 1640: ICICI Direct

ICICI Direct's research report on eClerx Services

eClerx Services reported healthy Q4FY21 revenues, up 19.3% QoQ (in constant currency terms) and 19.7% QoQ in reported terms. Out of this, organic growth was 6.3% QoQ and rest was through acquisition of Personiv. EBIT margins improved 295 bps to 27.6% mainly led by lower S&D expenses and higher gross margins. PAT increased 39% QoQ to Rs 98.8 crore. The company has proposed a dividend of Rs 1/share.

Outlook

This, along with reasonable valuations, healthy balance sheet prompt us to maintain BUY rating on the stock with a revised target price of Rs 1,640 (15x PE on FY23E EPS, earlier target price Rs 1,150).