Buy Intellect Design; target of Rs 435: Dolat Capital Market

Dolat Capital Market's research report on Intellect Design

Intellect Design (INDA) reported 15.2% YoY growth in $ Revenues to $52mn in-line with our estimates and a continued improvement in EBIT margins at 20.6% (up 153bps QoQ) v/s our estimate of 19.1% led by stable costs (flat QoQ at $40mn, down 15% on YoY basis). Commentary remains confident on sustaining revenue traction in the near future, given its strong deal win momentum (10 deal wins including 6 large deal), order book traction (up 6.9% YoY to Rs12Bn), large funnel (pursuit $564mn - up 13% YoY) with improving win rates. Outlook remains positive as it is confident to gain from deepening Geo reach (Ex: 2nd Deal in Jordan), cross sell in iGTB/iGCB clients and launching products in new market (added Data client in Australia). Reiterated Guidance of 30% EBITDA Margin within next 4Qtr led by improving license linked revenue and stable cost.

Outlook

Sustained growth traction and improved profitability/cashflow profile reinforces our positive view as we factor in revenue/EPS CAGR of 14%/18% over FY21-23E with Buy rating and DCF based TP of Rs 435.

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