- IL&FS Broking Services Private Limited
Transcription
- IL&FS Broking Services Private Limited
India Equity Research IT Services February 09, 2015 Hexaware Technologies BUY Target price (INR) 265 Company report Last Price (INR) 237.7 Bloomberg code HEXW IN Reuters code HEXT.BO Avg. Vol. (3m)(mn) 1.81 Avg. Val.(3m)(INRmn) 389 52‐wk H/L (INR) 242 / 130 28,227 Sensex MCAP (INRbn/USDbn) 71.53 / 1.15 Shareholding (%) Promoters MFs, FIs, Banks 09/14 12/14 64.5 71.5 2.5 2.9 FIIs 14.8 14.1 Public Others 11.2 7.1 11.5 0.1 Stock Chart (Relative to Sensex) 240 4QCY14 Preview HEXW is likely to report a revenue of INR6.8bn, a 1.4% q‐o‐q growth, driven by a 2.3% average INR depreciation against the USD during the quarter ended Dec14. The weakness of the quarter is likely to be evident in a 97‐bp margin erosion, leading to a 4% q‐o‐q EBITDA decline to INR1.2bn. This margin erosion would be mainly led by lower utilisation, which is further worsened by higher fresher additions. Excluding potential forex loss, the net income is likely to rise 12% q‐o‐ q. There is likely to be a dividend announcement along with the quarterly results, as this is the year ending quarter for Hexaware. In 2014, HEXW declared an INR7.5 per share dividend in the past quarter. Key factors to watch for will be: (1) employee and fresher additions; (2) movement of clients within various billing buckets; and (3) outlook on CY15 revenue and margins. Announcement of a large deal win will be positive for the stock. We have a Buy rating on the stock. Currently, the stock is trading at a P/E of 14.1x on CY16f EPS. Exhibit 1: 3QFY15 preview 210 (INRmn) 180 150 Dec‐13 Sep‐14 Dec‐14 q‐o‐q (%) Total operating income 6,200 6,706 6,802 1.4 9.7 Total operating expenses 4,806 5,498 5,643 2.6 17.4 EBITDA 1,394 1,208 1,159 ‐4.0 ‐16.8 106 24 168 Other Income Depreciation 120 EBIT Feb14 Jun14 Oct14 Hexaware Feb15 Sensex Rebased Forex loss/(gain) PBT (reported) Total taxes y‐o‐y (%) 101 111 113 2.1 12.2 1,399 1,121 1,214 8.3 ‐13.2 ‐5.9 108 35 1,291 1,087 1,214 11.7 259 227 248 9.3 ‐4.2 1,032 860 966 12.3 ‐6.4 Stock Perfm. (%) 1m 3m 1yr Net income (reported) Absolute 13.6 13.1 69.4 Shares outstanding (mn) 302 302 302 0.1 0.1 Rel. to Sensex 10.8 11.8 30.8 EPS (INR) 3.4 2.9 3.2 12.2 ‐6.5 Financials (INRmn) 12/13 12/14f 12/15f Sales 22,853 25,460 29,159 EBITDA margin 22.5 18.0 17.0 ‐97.3‐bp ‐544.3‐bp EBIT margin 22.6 16.7 17.9 112.7‐bp ‐471.4‐bp Net profit margin 16.6 Source: Company, IL&FS Institutional Equities 12.8 14.2 137.7‐bp ‐244.4‐bp YoY (%) EBITDA (%) A.PAT 17 11 15 21.0 17.6 19.3 4,204 3,791 3,432 Sh o/s (diluted) 300 301 303 A.EPS (INR) 12.6 11.4 13.9 YoY (%) 14 ‐10 22 D/E (x) ‐0.7 ‐0.6 ‐0.6 P/E (x) 18.8 20.9 17.1 EV/E (x) 13.1 14.4 11.6 32 32 29 29 36 37 RoCE (%) RoE (%) 12/13 03/14 06/14 09/14 Sales (INRmn) Quarterly Trends 6,200 5,889 6,104 6,706 PAT (INRmn) 1,032 703 766 860 Please refer to the disclaimer towards the end of the document. Operating ratios(%) Abhay Moghe, +91 22 66842857 [email protected] Hexaware Technologies Analyst Certification The following analyst(s) is(are) primarily responsible for this report and, certifies(y) that the opinion(s) on the subject company(ies) and its security(ies) and any other views or forecasts expressed herein accurately reflect their personal view(s): Abhay Moghe Disclosures Meaning of IL&FS Broking Services Private Limited’s equity research ratings The rating represents the expected change in the price of the stock over a horizon of 12 months. Buy: more than +15% Add: +5% to +15% Reduce: ‐5% to +5% Sell: less than ‐5% Analyst disclosures None of the analysts involved in the preparation of this research report or a member of his/her household is an officer, director or supervisory board member of any of the company(ies) that is/are the subject of this research report. 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T: +91 22 2653 3333 F: +91 22 2653 3548 IL&FS Broking Services Private Limited ‐ Corporate Identity Number: U67120MH2009PTC191131; SEBI Registration Numbers: BSE CM ‐ INZ010005833 | NSE CM ‐ INZ230005738 | NSE F&O ‐ INZ230005738 IT Services 2