HDFC Securities is bullish on Intellect Design Arena has recommended buy rating on the stock with a target price of Rs 275 in its research report dated May 07, 2018.
HDFC Securities' research report on Intellect Design Arena
Intellect Design Arena (INDA) posted robust 4QFY18 both on the revenue and margin front. Revenue stood at USD 47.7mn (higher than our est. of USD 43.6mn), up 14.1% QoQ and 27.6% YoY. Growth was driven by higher license component (+42.3% YoY). The company has a strong order backlog of Rs 10.40bn (excluding GeM project) which is ~79% of FY19E revenue. EBITDA margin expanded 207bps QoQ to 8.0% (in-line with our est. of 8.0%). There is non-linearity in the business and margins will expand with growth in licence revenue (led by new deal wins).
OutlookWe expect quarterly swings in revenue (1QFY19E will be soft), top-line growth will be fuelled by new deal wins, and margins will increase with operating leverage. The stock is up 44% in the last six months, and we expect this momentum to continue.
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