Infotech Enterprises - Q4FY13 Results Update - Kotak

Infotech's results were lower than expectations. The 1.8% drop in USD revenues was due to temporary stoppages and continuing ramp down in one account. Shift to off-shore by one client also had an impact. EBIDTA margins were down QoQ due to reduced volumes and rupee. While the management has indicated a general pick-up in sentiments and a good pipeline, few sub-sectors and clients are facing challenges. The order booking has been robust though, and the order book stands at $290mn.

The company added the second-highest number of employees on a gross basis during the quarter, reflecting higher visibility. However, the unanticipated scale down in accounts pose growth risk over the next few quarters.

We tweak our earnings estimates for FY14 to Rs.21.3 per share (Rs.22.1). Our PT stands at Rs.193 (v/s Rs.218). Maintain BUY, based on valuations. Expected cash / cash equivalents of Rs.61 per share by FY14 end, may provide cushion to the stock.

Source : Equity Bulls

Keywords