Allied Digital Services Ltd Stock Quotes and Charts
Buy@ Rs 800 For target of Rs 1411 In 1 Year.Allied Digital Services Ltd. (ADSL) is a growing IT Infrastructure management Services company. It has started its Remote Managed Service's (RMS) center in September 2007. ADSL's expertise in infrastructure management, set RMS infrastructure and technical understanding from e-cop, rightly positions it in the growing Remote Infrastructure Management (RIM) & IT Security management space. <br> <br>Transforming into a integrated service provider<br>ADSL, originally a system integrator & Infrastructure management company, is being transformed into a managed service provider. It has widened its service basket with offerings like RMS, tech BPO etc. Services like RIM are mission critical services and reflects higher client confidence and deepened relationship. These services are non discretionary spend for its client and hence assures consistent budget allocation for the same.<br> <br>Remote Management Services (RMS) Growth Driver<br>ADSL anticipates business from network operation center (NOC) and security operation center (SOC) to lead its future growth. Anticipating huge demand out of growing markets for RIM and IT security, ADSL is in the process of ramping up its RMS facility from current 100 seats to 300 seats by FY09. In addition to the given expansion, ADSL would further expand its RMS capacity to accommodate business, from the acquisitions it intends to make.<br> <br>Aggressive expansion plans<br>ADSL has acquired 51% stake in a third party RMA service provider, for Rs100 mn. ADSL has already allocated RS 300mn out of its IPO proceeds for acquisitions. It has further approved to raise USD 100mn (Rs 4Bn) through FCCB for funding its acquisitions. ADSL is looking at IMS companies in the US, Middle East, Europe region, serving BFSI, Healthcare verticals. In addition to increased IMS business, this would give ADSL, the required marketing network to access its target market for its SOC services. <br> <br>Outlook & Valuations<br>We anticipate a 100% CAGR in revenue over FY07-FY10E to Rs 12543mn. The increase in topline is complemented by improvement in EBIDTA margins from 21.16% in FY07 to 32.97% in FY10E.The stock is currently trading at a P/E of 11X & 5X on FY09E and FY10E earnings respectively. On an<br>EV/ EBIDTA valuation the stock is available at 7X on FY09E earnings. We have valued the stock at <br>Rs 1411, which works at 20X on FY09E EPS, an upside of 76% from CMP.
Hem Securities has recommended a buy rating on Allied Digital Services with a target price of Rs 580 in its September 30, 2009 research report. At 12:05 pm, the share was quoting at Rs 479.80, down Rs 0.5, or 0.1%.<br><br>"The company is well positioned to reap the benefits of its efficient acquisitions across the globe which entails its increasing global presence. Further, the company is expected to continue to post excellent financial performance on the back of its strong order backlog. In wake of the growth of the remote management services, Allied Digital Services Ltd. seems to be extremely attractive investment opportunity. Presently, the stock is trading at Rs 480.30 which is at 11.32 times to its earnings and 2.73 times to its book value of Rs 175.78. Since the stock offers good opportunity, we initiate a ‘BUY’ signal on the stock with a target price of Rs 580 in medium term investment horizon," says Hem Securities` research report
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