ICICI Direct Recommends This Stock To Buy For 20% Upside, In 1 Year

Renowned brokerage firm ICICI Direct recommended buying the stocks of eClerx Services, for a target price of Rs. 2900. The share price of eClerx' has grown by ~1.8x over the past 5 years.

Target Price

The Current Market Price (CMP) of eClerx Services is Rs. 2419. The brokerage firm, ICICI Direct has estimated a Target Price for the stock at Rs. 2900. Hence the stock is expected to give a 20% return, within 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 2419
Target Price	Rs. 2900
1 Year returns	20.00%

Company performance

NRB Bearings's net sales were recorded at Rs. 1564 crore in FY 21, which is expected to increase at Rs. 2072 crore in FY 22. The company's Net Profit was Rs. 283 crore in FY 21, which is expected to grow at Rs. 403 crore in FY22. The company's EBITDA has been Rs. 465 crore in FY 21, which is expected to grow at Rs. 637 crore in FY 22. ICICI stated, "Revenues in the past 4-5 years were subdued due to 3-4 large roll-offs, which took place during 2016-19. However, the company has been reporting strong growth in recent quarters and guided for 20%+ growth in FY22."

Comments by ICICI Direct

Maintaining a buy rating, ICICI Direct said, "Overall revenue mix has been inching towards off-shoring as in the last 4 quarters, onshore revenue mix has come down from 23% to 20%, which is a tailwind to margin. The management does not expect materially different mix going forward; guided for healthy EBITDA margin band of 28-32%."

Additionally, the brokerage firm thinks, "Key beneficiary of improved digital demand, industry-leading revenue growth, and healthy capital allocation prompt us to be positive. The revenue CAGR is expected to 16.7% over FY21-24E." Traction in customer care, RPA, analytics & content development, cross-sell and up-sell to Personiv clients to drive growth - is a key trigger area for the company to boost.

About the company

eClerx Services provides business process management, automation, and analytics services. It caters to financial services, communications, retail, media, manufacturing, travel, and technology companies. eClerx Services recently acquired personiv, which is an outsourcing provider with over 35+ years of experience with offices in the US, India, and the Philippines. The acquisition can leverage synergies in digital and customer experience services. It would add ~US$32 million annual revenues to eClerx.

Disclaimer

The above stock was picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.