eClerx Services Ltd. In line show, retain ACCUMULATE::Emkay,

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eClerx Services Ltd.

In line show, retain ACCUMULATE

ACCUMULATE

CMP: Rs 732                                       Target Price: Rs 800

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n     Rev at US$ 24.3 mn (+9% QoQ) came in ahead of 7.2% QoQ growth expectations with margins declining by ~30 bps QoQ to 38.9% on a/c of ~130 bps QoQ increase in SG&A expenses

n     Profits at Rs443 mn (+26% QoQ) ahead of est aided by forex gains (Rs 102.3 mn).However, sharp increase in DSO’s over past 2 qtrs to 76(V/s 59 at FY11 end), a disappointment 

n     Non top 5 client revenues grow by ~27% sequentially helping reduce top 5 contribution by ~200 bps QoQ to 86%. Co remains committed to increasing sales/onshore investments

n     Lower currency resets drive a3%/4% raise in FY12/13E EPs to Rs 53.6/63. Retain ACCUMULATE with an unchanged TP of Rs 800