eClerx Services - Inline show, inexpensive valuations drive upgrade - Emkay

eClerx's Dec'12 qtr operating performance was inline with expectations with a 5% QoQ US$ rev growth and ~190 bps sequential increase in EBITDA margins to 39.1%.

Profits at Rs 490 mn (+94% QoQ) beat exp a tad (Emkay est of Rs 464 mn) led by lower taxes. Strong traction in emerging accounts continues, albeit on a low base.

Management indicates softness in co wide revenue growth as client concentration related sluggishness continues to daunt overall performance.

Moderate our rev est (16% growth V/s 19% earlier for FY14), FY13/14E EPS remain unchanged. Inexpensive valuations at ~11/9x FY13/14E P/E drive ratings upgrade albeit BUY case remains contingent on uptick in revenue growth trajectory.

Source : Equity Bulls

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