Karvy's research report on VakrangeeVKI has evolved over the past 2 decades transforming from a sub-contractor and IT enabler for E-governance projects to taking on projects on its own. E-governance projects are capital intensive with low RoA, management gradually shifted focus to high-growth opportunities in financial inclusion and E-commerce. The Vakrangee Kendra and the White Label ATM businesses will help the company reduce its reliance on short-term project-based revenues and cash flows from e-Governance projects and continue generating incremental stable revenues, cash flows over a longer period of time. We expect the revenues to increase by CAGR of 17% from FY15-17E.At CMP of Rs.178, the stock is trading at P/E of 22.5x and 19.9x FY16E & FY17E EPS respectively, We initiate a “BUY” recommendation with a target price of Rs.211 per share at P/E of 23.6x FY17E EPS, which represents an upside potential of 19%.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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