Buy Intellect Design Arena, target price Rs 785: Centrum Broking

Centrum Broking has buy call on Intellect Design Arena with a target price of Rs 785. The current market price of Intellect Design Arena is Rs 667.05. Time period given by analyst is one year when Intellect Design Arena Ltd. price can reach defined target.

Intellect Design Arena Ltd., incorporated in the year 2011, is a Small Cap company (having a market cap of Rs 8983.57 Crore) operating in IT Software sector.

Intellect Design Arena Ltd. key Products/Revenue Segments include Computer Software for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 522.69 Crore, up .69 % from last quarter Total Income of Rs 519.09 Crore and up 30.55 % from last year same quarter Total Income of Rs 400.38 Crore. Company reported net profit after tax of Rs 82.31 Crore in latest quarter.


Investment Rationale
Intellect Design Arena (INDA) is an IT products company focused on the banking & financial services (BFSI) sector. The company earns revenues from selling products either via sale of licenses or from its rapidly growing SaaS business. The banking & financial services sector both globally & in India is increasing spends on technology, benefiting BFSI focused players like Intellect. After spending substantially on R&D for its product base, Intellect turned profitable in FY18 and its liquidity, transaction banking and central banking products have turned market leaders. Intellect’s focus on predictable SaaS/AMC revenues should reduce revenue volatility. The company’s revenues have grown at a 5-year CAGR of 15% while PAT margins have improved from -2.3% in FY17 to 18.2% in FY22. The brokerage expects Intellect’s Revenue/EBITDA/PAT to grow at 17%/23%/20% from FY23-27E as operating leverage improves margins and newer products drive revenue growth. It values Intellect at 24x FY24 EPS to arrive at a target price of Rs803 and initiate with a BUY rating.

Promoter/FII Holdings
Promoters held 30.86 per cent stake in the company as of 31-Mar-2022, while FIIs owned 25.42 per cent, DIIs 2.6 per cent.