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Mphasis is witnessing modest growth from non-HP channel business.
The company's ITO business is witnessing good growth, with open billable position
standing at 600 in 3QFY2011. In fact, this business segment has grown at a
scorching pace of 9.7% CQGR over 1QFY2010-3QFY2011 and is expected to
continue as a growth driver for the company.
The company is looking at an inorganic strategy to supplement its growth further.
Recently, management acquired Wyde, an international software vendor and creator
of Wynsure - an insurance policy administration IP solution - to scale up its insurance
portfolio. Also, in our view, there is a good possibilities that the company may use
its cash pile (~`1,500cr) to announce a buy-back.
Going forward, management expects the direct channel (33% to revenue) and HP
non-enterprise solution business (which is currently ~5% of revenue from HP channel)
to drive growth, whereas the HP-ES business is expected to remain sluggish. We
expect the company to record a revenue CAGR of 10% over FY2011E-13E. We
value the company at 10x FY2013E (March ending) EPS of `38.2, which gives us
a target price of `382 and recommend a Buy rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Mphasis is witnessing modest growth from non-HP channel business.
The company's ITO business is witnessing good growth, with open billable position
standing at 600 in 3QFY2011. In fact, this business segment has grown at a
scorching pace of 9.7% CQGR over 1QFY2010-3QFY2011 and is expected to
continue as a growth driver for the company.
The company is looking at an inorganic strategy to supplement its growth further.
Recently, management acquired Wyde, an international software vendor and creator
of Wynsure - an insurance policy administration IP solution - to scale up its insurance
portfolio. Also, in our view, there is a good possibilities that the company may use
its cash pile (~`1,500cr) to announce a buy-back.
Going forward, management expects the direct channel (33% to revenue) and HP
non-enterprise solution business (which is currently ~5% of revenue from HP channel)
to drive growth, whereas the HP-ES business is expected to remain sluggish. We
expect the company to record a revenue CAGR of 10% over FY2011E-13E. We
value the company at 10x FY2013E (March ending) EPS of `38.2, which gives us
a target price of `382 and recommend a Buy rating on the stock.
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