Blue Star Infotech Ltd CMP: Rs 218 Target Price: Rs 264 Recommendation: HOLD Blue Star Infotech ltd witnessed a flat growth in sales QoQ which came in at Rs 64.7cr in Q2FY15 vs Rs 64.5cr in Q1FY15.Ebitda margins grew by 542bps QoQ mainly due to reduction in the cost of product and license expense. This growth in margins further supported the PAT margins which grew by 367bps and was recorded at Rs 5.5cr in Q2FY15 vs. Rs 3.1cr in Q1FY15. We expect the company to record a subdued growth in Q3FY15, in line with the industry but growth is expected to bounce back in Q4FY15. Long term outlook continues to remain positive. At CMP, the stock trades at 10.5x FY15E & 8.1x FY16E EPS and 5.8x FY15E & 3.9x FY16E EV/Ebitda. We recommend to maintain a HOLD rating with the target price of Rs 264 (10x FY16E EPS) suggesting an upside of 21.1%.
Posted on: Mon, 12 Jan 2015 05:52:35 +0000
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