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Research
Infotech Enterprises - 4QFY2012 Result Update - Angel Broking
Posted On : 2012-04-20 10:47:27( TIMEZONE : IST )
For 4QFY2012, Infotech Enterprises (Infotech) reported a decent set of results, with volume growth of 2.1% in each of the verticals – network and content engineering (NCE) and engineering manufacturing and industrial products (ENGG). Infotech added 16 new customers during the quarter. Order intake in the NCE vertical in 4QFY2012 was the highest ever, driven in particular by APAC and North America geography. The company has announced wage hike of 8-10% for offshore employees and 2% for onsite employees and is optimistic about the demand scenario. We recommend Accumulate on the stock.
Quarterly highlights: For 4QFY2012, Infotech reported revenue of US$83mn, up 1.6% qoq, on the back of 2.1% qoq volume growth. In INR terms, revenue came in at Rs.417cr, up 0.2% qoq. The company's EBITDA and EBIT margins declined by 75bp and 5bp qoq to 19.8% and 17.7%, respectively, largely because of qoq INR appreciation against USD. PAT stood high at Rs.70cr in 4QFY2012 vs. Rs.34cr in 3QFY2012 because of huge other income of Rs.35cr in 4QFY2012 vs. loss of Rs.23cr in 3QFY2012.
Outlook and valuation: Infotech has been witnessing a 4.6% CQGR in its USD revenue over 2QFY2011–4QFY2012 because of inorganic growth due to the acquisition of Daxcon and Wellsco. The company is on the right track in terms of making investments to strengthen its product portfolio and is taking initiatives to improve its financial metrics. Management indicated that it has not witnessed any change in the demand scenario and expects to grow at 19-20% in constant currency terms in FY2013. Over FY2012-14E, we expect the company to post a USD and INR revenue CAGR of 11.5% and 12.7%, respectively. For FY2013, management expects operating margins to exit at 17-17.5%. We expect EBITDA and PAT CAGR to be at 10.0% and 12.5%, respectively, over FY2012-14E. We value Infotech at 9.5x FY2014E EPS of Rs.18.6, which gives us a target price of Rs.177, and recommend Accumulate on the stock.
