Buy eClerx Services; target of Rs 830: ICICI Direct

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ICICI Direct's research report on eClerx Services

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.

Outlook

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 all recommendations report, click here

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