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VIRINCHI LTD BUY

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Financial Statements Rs Cr

Particulars FY16 FY17 FY18E FY19E

Revenue 218.34 286.68 335.42 385.73

Exp 187.22 222.90 257.43 293.15

Op Profit 31.12 63.78 77.98 92.57

OPM % 14.25 22.25 23.25 24.00

Other Income 2.13 2.01 2.35 2.70

Depreciation 12.07 24.76 25.56 27.66

EBIT 19.05 39.02 52.43 64.91

Interest 3.03 11.51 12.31 15.49

PBT 18.15 29.52 42.46 52.12

E/O item 0.00 0.00 0.00 0.00

PBT 18.15 29.52 42.46 52.12

Tax 1.95 5.91 12.74 15.64

PAT 16.20 23.61 29.72 36.48

Minority/Asso 0.00 0.00 0.00 0.00

Adjusted PAT 16.20 23.61 29.72 36.48

NPM % 7.42 8.24 8.86 9.46

4646 Sh Cap 17.99 26.67 26.67 26.67

Eq Shares (No) 1.80 2.67 2.67 2.67

EPS 9.01 8.85 11.14 13.68

Research Analyst :Astha Jain

Headquartered in Hyderabad, Virinchi Limited is a global consulting and technology services company specializing in industry-specific e-business solutions and strategic outsourcing. Co also owns hospital with existing 800 bed facilities across 3 locations in Hyderabad & aims to grow to 5000 beds in 5 years.

Virinchi commissioned a modern multispeciality hospital at Hyderabad in one of the shortest sectoral tenures in India. Most modern multi-speciality hospitals in India are commissioned in 30 months from zero date . Virinchi’s Banjara Hills hospital was commissioned in around 15 moths, one of the fastest commissioning tenures in India. Virinchi’s multi-speciality hospital in Hyderabad is virtually paperless; the extent of technology integration makes it possible to access a large number of reports on the smartphone, facilitating informed decision making by doctors; the configuration and quality of medical equipment is benchmarked with the best in the world.

Co has grown at CAGR of more than 30% in topline as well s bottomline during FY’12 to FY’17 .Co has posted strong return as well as margin ratio with ROE & ROCE of company standing at nearly 14% while net profit margin & operating profit margin of co standing at 8% & 23 % respectively in FY17.In Q2FY18,co has posted growth of more than 90% in net profit while revenues of co registered growth of more than 35% as compare to Q2FY17.

Company has worked in precisely the products and services niche of the digital domain in advanced geographies like US and Europe, enhancing its exposure to cutting-edge technologies and companies. With India likely to turn increasingly digital, Virinchi is attractively placed to provide business solutions to relevant digital players, its first-mover advantage likely to translate into attractive market presence.

Valuation

Virinchi aims to build a niche thought-leadership position in the international markets within the fintech and healthcare domains.Co with strong management team has shown robust financial performance. The company is currently trading at 15.40x of TTM eps of Rs 8.62 while it is trading at 11.91x of FY18E eps of Rs 11.14 & 9.70X of FY19E eps of Rs 13.68.Looking at strong management & financials with decent valuation ,we recommend “Buy” on the stock with price target of Rs 172 (appreciation of almost 30%) for long term investment horizon.

CMP (04th Jan 2018) 132.75

TARGET 172.00

INDUSTRY IT/Software

P/E 15.40

BSE CODE 532372

SHARES O/S (NO IN CR) 2.68

MARKET CAP 355.77

52 WEEK HIGH/LOW 132.75/66.70

Shareholding Pattern as on Sept’ 2017

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Revenues of co

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