Allied Digital Services- Diwali Mahurat Picks by India Capital Markets

Visit http://indiaer.blogspot.com/ for complete details �� ��


Allied Digital Services (ADSL), a growing Infrastructure management services
company offers System Integration and Infrastructure Management Solutions, to
Indian & Global Corporate. ADSL has been making growth investments in expanding
delivery centers, establishing data centers etc to address the business from its recent
tie ups with OEM’s for white labeling its services. ADSL has raised funds via QIP,
warrant placements from strategic investors to fuel its growth plans. ADSL’s
expanding presence in the growing enterprise remote infrastructure management
space makes it a preferred mid cap IT pick.




ADSL has entered into strategic alliances with global OEMs (Lenovo / IBM etc ) to white label its RMS services in
addition to its direct offerings and in turn access the market through its established partner’s existing network. Such
initiatives gives ADSL a far wider reach to clients than what it can achieve by branding its services & lets ride over its
partners established brand image. ADSL’s services would be white labeled & bundled as its OEM partner’s warranty
service feature.

ADSL raises investment commitment in growth assets for FY11 to ` 800 -850 mn, from ` 500 mn as guided in the
previous quarter. The proposed investments are in the form of expansion of its development center at MAHAPE facility,
mainly to address the anticipated increase in business out of the OEM initiative. ADSL plans to further develop 300 seats at
the acquired SEEPZ facility, with a total delivery capability of 750 seats, post expansion.

ADSL’ s order book as on June 10 stands at ` 5.65bn, nearly 65% of our expected FY11 revenue, giving enough visibility
for our expectations of 24% YoY growth. Management has guided for a 30% growth in FY11.

Valuations : At the CMP of ` 220, ADSL trades at a P/E of 7 & 6 on FY11E & FY12E EPS of ` 30.4 & ` 34.9 respectively.
On a EV/ EBIDTA basis, the stock is available at a multiple of 1 & less than 1 on FY11 & FY12 estimate.

We recommend a
“BUY” on the stock.