CMC - an IT company which was previously owned by Govt of India and now owned by TCS has a good hold in Govt projects across the country. Off-lately, with the backing of TCS, the company now also has some decent projects into Systems Integration and Customer Servicing from overseas.
The company now has a much bigger portfolio of services and offerings which can be leveraged for future growth. Also, the company doesn't have debt in its balance sheet which makes it further more attractive and less prone to factors such as Interest rates, Inflation or even global slowdown (though marginal impact is there).
In FY12, the company earned EPS of 50 Rs and was trading at PE of 17-19 times. In Q1 of FY13, it is able to achieve the EPS of 19 Rs which is quite a decent figure. Major growth is seen in Systems Integration and Customer Servicing segments which are again a higher margin segments.
If the given momentum is sustained, CMC is likely to earn EPS of 80-85 Rs for FY13. Given PE of 15X, the minimum target price arrives at 1250 Rs which is around 15% growth in next 6 months.
Thus, the stock can be accumulated on dips around 1000-1050 with given target prices.
Reference Links - http://www.cmcltd.com/downloads/Q1FY13.pdf
Wishing you a successful and profitable investing!!
Grow Your Paisa
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