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For 2QFY2012, Infotech Enterprises (Infotech) reported good set of results with
volume growth of 6.4% and 4.1% qoq in the network and content engineering
(NCE) and engineering manufacturing and industrial products (ENGG) verticals,
respectively. To control staff costs and rationalize the employee pyramid, the
company plans to hire 1,200 freshers in FY2012, of which ~600 were hired in
1HFY2012. We expect Infotech to post a 19.3% CAGR in USD revenue over
FY2011–13E. We recommend Accumulate on the stock.
Quarterly highlights: For 2QFY2012, Infotech reported revenue of US$81.4mn,
up 5.0% qoq, on the back of 5.0% qoq volume growth. The company witnessed a
0.3% qoq increase in price in this quarter. In INR terms, revenue came in at
`372.6cr, up 7.5% qoq. The company’s EBITDA and EBIT margins increased by
318bp and 321bp to 15.7% and 12.4%, respectively, on the back of a 190bp
qoq positive impact derived from higher operational efficiency, 100bp qoq gain
from qoq INR depreciation against USD and 30bp positive impact on account of
increased price realization.
Outlook and valuation: Management has guided for 22-25% yoy growth in INR
revenue in FY2012, which seems easily achievable, as after looking at the
company’s performance in 1HFY2012, the company just requires 2% CQGR in
the next two quarters to achieve it. So, over FY2011-13E, we expect the company
to post a revenue (INR terms) CAGR of 19.8%. Management expects EBITDA
margin exit rate for FY2012 to be at ~17%, which is likely to remain unachieved
as going ahead utilization level is expected to come down due to fresher hiring.
Management has been time and again missing on its guidance by a wide margin
in terms of profitability metrics. Thus, we expect margins to bottom out in FY2012
at 14.9% and rebound to 15.7% only in FY2013. Hence, we value the company
at 8.5x FY2013E EPS of `14.9, which gives us a target price of `127.
We recommend Accumulate on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, Infotech Enterprises (Infotech) reported good set of results with
volume growth of 6.4% and 4.1% qoq in the network and content engineering
(NCE) and engineering manufacturing and industrial products (ENGG) verticals,
respectively. To control staff costs and rationalize the employee pyramid, the
company plans to hire 1,200 freshers in FY2012, of which ~600 were hired in
1HFY2012. We expect Infotech to post a 19.3% CAGR in USD revenue over
FY2011–13E. We recommend Accumulate on the stock.
Quarterly highlights: For 2QFY2012, Infotech reported revenue of US$81.4mn,
up 5.0% qoq, on the back of 5.0% qoq volume growth. The company witnessed a
0.3% qoq increase in price in this quarter. In INR terms, revenue came in at
`372.6cr, up 7.5% qoq. The company’s EBITDA and EBIT margins increased by
318bp and 321bp to 15.7% and 12.4%, respectively, on the back of a 190bp
qoq positive impact derived from higher operational efficiency, 100bp qoq gain
from qoq INR depreciation against USD and 30bp positive impact on account of
increased price realization.
Outlook and valuation: Management has guided for 22-25% yoy growth in INR
revenue in FY2012, which seems easily achievable, as after looking at the
company’s performance in 1HFY2012, the company just requires 2% CQGR in
the next two quarters to achieve it. So, over FY2011-13E, we expect the company
to post a revenue (INR terms) CAGR of 19.8%. Management expects EBITDA
margin exit rate for FY2012 to be at ~17%, which is likely to remain unachieved
as going ahead utilization level is expected to come down due to fresher hiring.
Management has been time and again missing on its guidance by a wide margin
in terms of profitability metrics. Thus, we expect margins to bottom out in FY2012
at 14.9% and rebound to 15.7% only in FY2013. Hence, we value the company
at 8.5x FY2013E EPS of `14.9, which gives us a target price of `127.
We recommend Accumulate on the stock.
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