Hold eClerx Services; target of Rs 2750: Emkay Global Financial

Emkay Global Financial recommended hold rating on eClerx Services with a target price of Rs 2750 in its research report dated November 24, 2023.

Broker Research

November 28, 2023 / 14:18 IST

Hold

26 Aug, 2025 12:21

Volume

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Emkay Global Financial's research report on eClerx Services

We interacted with Srinivasan Nadadhur, CFO, to understand the demand environment and outlook. Key takeaways: i) The company expects sequential growth to continue in Q3 with stable margins because of a healthy deal pipeline. ii) Europe has remained soft over the last few quarters due to higher exposure to digital, which remains under pressure. Europe’s Q2 performance was also impacted by the holiday season. Luxury and fashion brands reported growth moderation in Q2, after strong growth in the last 2-3 years, and thus management is watchful of their spending. iii) Customer operations led to H1 growth and management expects growth to sustain because of a healthy deal pipeline. We remain constructive on medium-term growth prospects and raise our target multiple to 20x (earlier 18x) and roll forward TP to Dec-25E EPS.

Outlook

However, we believe the stock price has rallied sharply, up ~34%/62% in 1M/3M, and seems to be running ahead of fundamentals and does not price in adequately near-term risks of challenging macros and implications of potential tweaking in the growth strategy. We downgrade to HOLD with a revised TP of Rs2,750.

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