Emkay: eClerx Limited Retain ACCUMULATE; set March’12 TP at Rs 670

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eClerx Limited

Retain ACCUMULATE; set March’12 TP at Rs 670

ACCUMULATE

CMP: Rs618                                        Target Price: Rs670

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n     Sep’10 results in line with revenues at US$ 18 mn (+7% QoQ). EBITDA margins at 36.2% , down by ~50 bps sequentially (V/s expectations of ~40 bps QoQ increase)

n     Rampups in European top clients drives top 5 client revenues up by ~7.1% QoQ. Co exercises call option to expand into 2nd phase of Airoli facility( 600 seats)

n      Tweak est for (1) higher revenues, (2) reset in FY12E tax rates to 12% (V/s 16% earlier) , (3) US$/INR reset to Rs 44/$ and (4) building in hedging gains from co’s favorable hedges

n     Retain ACCUMULATE with a revised DCF based March’12 TP of Rs 670(V/s Rs 465 earlier), implying ~13.5x/12.5x March’12/March’13 earnings.