eClerx Services - Q2FY21 Company Update - ICICI Direct

eClerx Services reported healthy Q2FY21 revenues, up 7.1% QoQ (in constant currency terms) and 8.1% QoQ in reported terms mainly led by growth in Europe (up 31.8% QoQ). EBIT margins improved 490 bps to 24.5% mainly led by higher utilisation, lower work from home cost and G&A cost. Net profit increased 17.8% QoQ to Rs. 61 crore. The company declared a dividend of Rs. 1/share. eClerx expects H2FY21E to be better than H1FY21.

Valuation & Outlook

We expect the company to witness a gradual improvement in revenues mainly led by improved deal wins, traction in digital and CLX revenues. Hence, we revise our revenues, EPS estimates & target price upwards. This coupled with reasonable valuation, healthy balance sheet & the company's aspiration to reach industry level growth prompt us upgrade stock from HOLD to BUY rating with a revised target price of Rs. 830 (11x FY23E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_eClerx_CoUpdate_Nov20.pdf

Shares of ECLERX SERVICES LTD. was last trading in BSE at Rs.709.45 as compared to the previous close of Rs. 676.15. The total number of shares traded during the day was 8920 in over 997 trades.

The stock hit an intraday high of Rs. 721 and intraday low of 680. The net turnover during the day was Rs. 6231906.

Source : Equity Bulls

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