Target: ₹3,069
CMP: ₹2,439
eClerx reported robust revenue of ₹560 crore in Q3-FY22, beating our and the Street’s estimates — both ₹530 crore. EBITDA margin edged up 60 bps year-on-year to 32.3 per cent, outpacing our and the Street’s estimate of 30.7 per cent and 30.5 per cent, respectively. PAT at ₹106.60 crore, up 5.8 per cent quarter-on-quarter, too, came in higher than our estimate of ₹99.30 crore and Street’s ₹101 crore.
Pradeep Kapoor has resigned as Chairman and Independent Director due to his advancing age. Aneesh Goshal, who has been Independent Director for 17 years, will replace him. Additionally, Rohitash Gupta has stepped down as CFO due to personal reasons and will be replaced by Srinivasan Nadadhur, who has been with eClerx since 2009.
eClerx has been witnessing strong demand for the last few quarters, along with stable pricing. Its management is confident of a robust deal pipeline in the short-to-medium term.
Management believes demand environment remains healthy and expected to remain robust in the near future. Margins were strong, too, benefiting primarily from operating leverage. All in all, we are maintaining ‘Buy’ and increasing the Target Price to ₹3,069 (from ₹2,950) while rolling forward the valuation to Q1-FY24.