Kotak Securities has maintained `Buy` on Infotech Enterprises with a price target of Rs 205 as against the current market price (CMP) of Rs 178 in its report dated July 19, 2012.
Infotech`s results were broadly in line with estimates on the revenue and EBIDTA front. Volume growth at about 2% was impacted by client specific issues; expected to be better in 2Q. EBIDTA margins were marginally better than estimates. The business outlook is largely positive subject to few sub-sectors like telecom and railways which are facing challenges on some fronts.
The company added the largest number of employees in the past 5 quarters, reflecting good revenue visibility. While the management is confident of beating Nasscom`s growth projections for FY13 of 11-14%, and believe that, the overall uncertainties in the macro environment may present a challenge.
FY13E earnings now stand at Rs.22.2 a share (Rs.19.2 earlier). The improvement is largely on the back of rupee depreciation. It correspondingly increase their target price to Rs 205 (v/s Rs.183), based on FY13 estimates. At their target price FY13 estimates will be discounted by about 9.3x. It believe this discount to larger peers is justified due to the lower margins and maintains Buy. Expected cash of Rs.45 a share by FY13 end, may provide cushion to the stock.
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Infotech Enterprises Limited (Q,N,C,F)*