Axis Securities's research report on WiproWipro has signed a definite agreement to acquire 100% stake in HealthPlan Services, a leading Business Process as a Service (BPaaS) technology provider in the US Health Insurance market. It has ~25% market share and has posted 38% CAGR over CY13-15. It is profitable at EBITDA level but higher investments/ depreciation leads to lower margin at PAT level.Acquisition price of ~USD 460 mn (~2.1x CY15 revenue) seems fairgiven its non-linear and platform-centric business model. Wipro expects 50-80 bps dilution at EBIT level in 1styear of operations. Margin will improve going forward led by revenue growth (cross selling/ new clientele), non-linear revenue, cost synergies and payoffs from accelerated platform investments in the past.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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