BSE Index Analysis, Securties , Standard Experts
CMC : Margin Improvement From H2FY13E......
Reco : Hold
Cmp : 969
Target : 1,019
Revenue momentum maintained in Q4 (up 39% YoY) but onsite delivery in international operations impacted operating margin.
Demand strong but near term concerns on margin: Healthy demand traction, especially in core e-governance, drives our FY13E/FY14E revenue growth of 25%/22%. Onsite ramp-ups in H1FY13 likely to impact FY13E margin. Current margin is at lower end of company guidance (15-17%) due to investments in R&D, hiring and infrastructure. We see margin improving from H2FY13 as gains from asset-based solutions and higher offshore delivery (currently 26%) start contributing at the EBITDA level.
Revise estimates:
We now expect 34% PAT growth in FY13 (38% earlier), as impact of reduced margin is partly offset by 400 bps drop in effective tax rate (higher SEZ operations). Our FY13E/FY14E EPS gets revised to Rs 67/Rs 85 from Rs71/94. Our revised TP of Rs 1,019 (Rs 1,124 earlier) is based on 12x FY14E EPS. Revise rating to HOLD from BUY given 5% upside. Read detailed report
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