CMP : 202
BUY IN 4 PARTS @ 180 - 156 - 140 - 110 ......IN NEXT 6 MONTHS !
25% ON EVERY 10% FALL........
TIME - FRAME -- 3-5 YEARS MINIMUM !
TARGET -- 1,000 ++
FOR REASONS & ANALYSIS !
CHECK -- http://www.orkut.co.in/Main#CommMsgs.asp
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E CLERX
eClerx Services Limited
================
-- eClerx is one of the leading KPO player with
strong fundamentals to ride the next wave of
outsourcing in India.
-- eClerx is the first KPO player to list in India and
the only listed pure play KPO player available in
India.
-- eClerx has witnessed strong growth rates in the
last 5 years with a CAGR of 56% in Sales, 92% in
profits and its just the beginning.
-- eClerx has top notch minds in the promoters and
the management is completely professional with
most of the overseas operations headed by the
citizens of the respective countries.
-- eClerx has a very strong clientele including the
top computer manufacturer, three leading PC
component manufacturer, leading US wholesaler,
the top two travel portals in the world, major US
investment banks and four of UK’s top 10 retailers
=======================
Snapshot (as on May 22nd 2009)
CMP – Rs. 196.25 (Company has cash reserve of Rs 113Cr which amounts to almost Rs. 60 per share
hence the share is actually available at Rs.136 per share)
P/E (TTM) – 6.19 (With the company growing already at more than 50% and with the expected growth rates to become strong, a definite PE rerating is possible.)
M cap – 381.76 Cr (Mcap below Rs 500Cr are the preferred candidate for small cap multibagger)
Year High/Low – 295/72.30 (The year lows were
FY08 : Sales - 116.98Cr & Net Profit – 43.92Cr
EPS (Trailing Twelve Months) – 32.57
EPS (9M FY 09) – Rs 23.6 (Company is growing with healthy EPS growth, CMP fully justified based on the earnings of the company)
OPM/NPM - 38.58% & 61.67% as per trailing 12
months data.
Face Value – Rs 10
Book Value – 69.87 & Price/Book – 2.89
Issued Capital – 18.87 Cr
Paid up capital – 18.87 Cr (All the issued shares made during Oct’08, from Oct’08 till March’09 it was consolidating in the range of Rs75-100, as on today CMP is just 30% below year high)
Life High/Low – 417/72 (It should be noted that this is one of the very few stocks which did not go below the Oct’08 low, when the broad market made a huge low during Mar’09)
Shares outstanding – 1.89 Cr shares (These numbers have not changed much since IPO. There
has not been any kind of dilution by the promoters) were subscribed to and fully paid up)
Cash Reserve – 113Cr & Debt – Zero.
Div & Yield – 4.21% & Div (%) – 85%
Website: http://www.eclerx.com
Top MF holdings :
ICICI Pru Discovery Fund (G) 385,573
ICICI Pru Technology Fund (G) 288,013
Franklin India Prima Plus Fund (G) 259,796
Franklin Infotech Fund (G) 81,43
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IT, BPO,…… KPO ?
What’s next after IT and BPO?
=====================
-- After witnessing strong growth in IT outsourcing services and BPO and establishing itself in the outsourcing arena, India is poised for a tremendous growth in the field of KPO - Knowledge process
outsourcing. The time has come for India to become an established KPO player as well.
-- KPO industry in India is currently estimated at around 5 billion USD and has grown at a CAGR of more than 50% in the last 4 to 5 years. A most recent survey and analysis estimates KPO outsourcing world wide to touch 16.7 billion USD by 2011. This implies an annual growth rate of 40%. Furthermore, the KPO industry in India is estimated to grow to 11.2 billion USD by 2011. With the stabilization of US majors and the Capital markets expected, the growth rate and the size of the opportunity could only improve.
-- KPO is poised for a strong growth and this growth can be compared with the growth of IT from the start of this century / end of previous century.
-- KPO belongs to a high value process chain where the achievement of the objective is highly dependent on the skills, domain knowledge and the experience of the people carrying out the activity.
-- KPO calls for the application of specialized domain pertinent knowledge of a high level. KPO is a combination of BPO – Business process outsourcing, RPO – Research process outsourcing and APO - Analysis proves outsourcing.
-- KPO derives it’s strength from the depth of Knowledge, Judgment and experience factor; BPO in more contrast is about size, volume and efficiency.
-- BPO is more of entering unsorted data into a black box, while KPO is about retrieving useful
information from the back box
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Valuation !
As on today eClerx with FY09 sales of ~ Rs150Cr has business opportunity which runs
in billions of dollars. As per one estimate KPO business will be $17bn industry by 2010-11 and
India will do 70% of outsourcing which is ~12bn of business.
Assuming that 70% of the KPO outsourcing done in India ($17bn industry by 2010-11 x 70% outsourcing ~ $11.9bn by 2010-11). It means scale of opportunity is approx Rs 53,000Cr ($1 ~ Rs 45).
Assuming that eClerx is able to achieve only 10% of market share by 2010-11, which
throws a business of Rs5,300 Cr for eClerx which is almost 35 times more than the
current sales of eClerx which is just ~ Rs 150Cr.
Considering risk and unknown factors, eClerx will be able to give a return of at least 10
times in 3 years or even 20 times since it has sufficient head room to grow.
in billions of dollars. As per one estimate KPO business will be $17bn industry by 2010-11 and
India will do 70% of outsourcing which is ~12bn of business.
Assuming that 70% of the KPO outsourcing done in India ($17bn industry by 2010-11 x 70% outsourcing ~ $11.9bn by 2010-11). It means scale of opportunity is approx Rs 53,000Cr ($1 ~ Rs 45).
Assuming that eClerx is able to achieve only 10% of market share by 2010-11, which
throws a business of Rs5,300 Cr for eClerx which is almost 35 times more than the
current sales of eClerx which is just ~ Rs 150Cr.
Considering risk and unknown factors, eClerx will be able to give a return of at least 10
times in 3 years or even 20 times since it has sufficient head room to grow.
