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eClerx
Investor concerned were centred chiefly on the recent resolution passed by the
board that will allow that company to raise Rs5bn in equity and Rs5bn in debt in
the event of an acquisition. The management clarified that ideal acquisition size
would be between US$20-30mn in revenue, which would not necessitate more
than US$50mn of fund raising. However, the company wants to be prepared to
acquire larger sized targets if the opportunity to acquire captives should arise.*
The company has assessed 25 targets till date, but is not close to an acquisition
till date. The management will raise funds only if a deal is to be concluded.
The other key concern on the company continues to be the 85% revenue
contribution from top 5 clients. eClerx is aggressively trying to grow its non-top
5 clients in a bid to reduce client concentration - the company has at least 10 of
clients with the potential to match current top 5 in terms of revenue contribution.
This includes 3 Fortune 50 clients added over the last 12 months.
Overall, the management remains confident of sustaining strong growth rates
(9M FY11 revenue up 52% YoY and earnings up 85% YoY) and maintain
operating margins in the mid-thirties range. The stock trades at 15.4x FY11 and
12.8x FY12 consensus earnings estimates (Bloomberg). We do not cover the
stock..
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
eClerx
Investor concerned were centred chiefly on the recent resolution passed by the
board that will allow that company to raise Rs5bn in equity and Rs5bn in debt in
the event of an acquisition. The management clarified that ideal acquisition size
would be between US$20-30mn in revenue, which would not necessitate more
than US$50mn of fund raising. However, the company wants to be prepared to
acquire larger sized targets if the opportunity to acquire captives should arise.*
The company has assessed 25 targets till date, but is not close to an acquisition
till date. The management will raise funds only if a deal is to be concluded.
The other key concern on the company continues to be the 85% revenue
contribution from top 5 clients. eClerx is aggressively trying to grow its non-top
5 clients in a bid to reduce client concentration - the company has at least 10 of
clients with the potential to match current top 5 in terms of revenue contribution.
This includes 3 Fortune 50 clients added over the last 12 months.
Overall, the management remains confident of sustaining strong growth rates
(9M FY11 revenue up 52% YoY and earnings up 85% YoY) and maintain
operating margins in the mid-thirties range. The stock trades at 15.4x FY11 and
12.8x FY12 consensus earnings estimates (Bloomberg). We do not cover the
stock..
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