With Over 170% YTD This Multibagger IT Stock Gets A “BUY” Call From ICICI Direct

eClerx's share price has recorded 175.61% year-to-date (YTD). In this period, the shares of eClerx Services have offered multibagger returns to shareholders, rising from about Rs. 886.15 to Rs. 2442.30 per share as of now. ICICI Direct, a brokerage, sees more upside in this multibagger stock. According to its most recent report, eClerx's share price may rise to Rs. 2900 in the next 12 months from its current market levels, offering a near 20% return to its shareholders.

The brokerage’s take on eClerx Services Ltd

ICICI Direct has noted in its latest research report that "Revenues in the past four to five years were subdued due to three to four 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. The company recently acquired personiv, an outsourcing provider with over 35+ years of experience with offices in the US, India and Philippines. The acquisition would leverage synergies in digital and customer experience services. It would add ~US$32 million annual revenues to eClerx."

According to the brokerage the company's "Overall revenue mix has been inching towards offshoring as in the last four 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%."

Key triggers for future price performance of eClerx Services according to ICICI Direct

• Traction in customer care, RPA, analytics & content development, cross-sell and up-sell to Personiv clients to drive growth.
• Lower roll-offs from the one-off client-specific events, improving deal wins and revival in growth are expected to drive revenues.
• Expect revenue CAGR of 16.7% over FY21-24E.

Buy eClerx Services With A Target Price of Rs. 2900 Says ICICI Direct

The brokerage has claimed that "eClerx' share price has grown by ~1.8x over the past five years (from ~Rs 1,357 in December 2016 to ~Rs 2,419 levels in December 2021). We remain positive on the stock and maintain a BUY rating. We roll overvaluations to FY24E and value eClerx at Rs 2900 i.e. 21x P/E on FY24E EPS."

ICICI Direct has also highlighted that "Apart from eClerx, in our IT coverage we also like Infosys. A key beneficiary of improved digital demand, industry-leading revenue growth and healthy capital allocation prompt us to be positive. BUY with a target price of Rs 2,060."

Disclaimer

The stock has been 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.