- 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 abhay.moghe@ilfsindia.com 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. None of the analysts involved in the preparation of this research report or members of his/her household hold any financial interest in the securities of the company(ies) that is/are the subject of this research report. Disclaimer This document has been prepared by IL&FS Broking Services Private Limited (IBSPL) formerly known as Avendus Securities Private Limited. This document is meant for the use of the intended recipient only. Though dissemination to all intended recipients is simultaneous, not all intended recipients may receive this document at the same time. This document is neither an offer nor solicitation for an offer to buy and/or sell any securities mentioned herein and/or official confirmation of any transaction. This document is provided for assistance only and is not intended to be, and must not be taken as, the sole basis for an investment decision. The user assumes the entire risk of any use made of this information. 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In order to provide complete transparency to our clients, we have incorporated disclosures about interests of analysts and about potential conflicts of interest of IBSPL and its associate companies in this document. This should, however, not be treated as an endorsement of the view expressed in the document. IBSPL is committed to providing high‐quality, objective and unbiased research to our investors. To this end, we have policies in place to identify, consider and manage potential conflicts of interest and protect the integrity of our relationships with investing and corporate clients. Employee compliance with these policies is mandatory. Any comment or statement made herein are solely those of the analyst and do not necessarily reflect those of IBSPL. OFFICE ADDRESS IL&FS Broking Services Private Limited
The IL&FS Financial Centre, 3rd Floor, Plot C ‐ 22, G ‐ Block, Bandra Kurla Complex, Bandra (East), Mumbai ‐ 400051, Maharashtra, India.
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
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