Fundamental Call on May29, 09: Buy Accentia Tech

Dear All,
As like always, Today again I am with a new Fundamental Recommendation. Most of the time, I have come up with out of sight under valued stock not in list of nifty 50. And, almost all the time the picks have achieved the target and outperform the benchmark index NIFTY. You can take the review posted time to time and would be posted soon.

Fundamental call on May29, 09; By Praveen Kr Sevak
Co Name: Accentia Tech Reco: Buy
CMP: Rs 125-127 (Approx)
Best Buy Level: Dip around Rs 110-115 (Accumulate at this level)
Target: Rs 150 (1-2 month), Rs 225(6-12 months)

Investment Rational:
1. Fundamentally talking, Net profit of Accentia Technologies rose 26.51% to Rs 6.30 crore in the quarter ended March 2009 as against Rs 4.98 crore during the previous quarter ended March 2008. Sales rose 22.90% to Rs 20.93 crore in the quarter ended March 2009 as against Rs 17.03 crore during the previous quarter ended March 2008.
For the unaudited full year, net profit rose 85.08% to Rs 24.56 crore in the year ended March 2009 as against Rs 13.27 crore during the previous year ended March 2008. Sales rose 54.52% to Rs 78.71 crore in the year ended March 2009 as against Rs 50.94 crore during the previous year ended March 2008.
2. Not only value of TL (Top Line means Revenue ) or BL (Bottom Line means PAT) has risen, the company has remain successful in raising its operating profit margin as well as net profit margin also in the last over when other players margin has shrunk in the industry the company is operating.
3. Accentia’s core strength is focused in developing itself in the healthcare segment by providing services in HRCM(health Recivables Cycle Management), ITES / IT, Medical transcription, billing coding and various related client requirements. That has helped them develop a strong client portfolio, which includes some of the best-known names in the industry. In BPO segment, they have a client base of 312 firms and the number is increasing.
4. Some more pieces of information, A) Accentia is one of the few healthcare-outsourcing companies that provide HIPAA certified BPO services for medical coding billing and transcription. B) Accentia is the first IT company from Kerala to get clearance for a GDR issue.It has received a major boost with the Singapore Stock Exchange clearing a $15.75-million global depository receipt issue last year. C) Last year It took over three US based healthcare b=usiness process outsourcing companies for Rs 800 million.
5. Currently it is trading at a PE multiple of 6.8, and we give target of Rs 225 on the basis of EPS 20.5 for FY10E at a PE of 11X.

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