September 8, 2008

HTMT Global Solutions

Current market price: Rs 242
Target price: N.A.
Brokerage: Edelweiss Securities

HTMT Global Solutions (HTMT), a part of the Hinduja group, is the twelfth-largest BPO player in India, based on NASSCOM’s ranking for FY08. In customer contact services, HTMT focuses on after-sales service across verticals such as telecom, consumer electronics, and BFSI among others. On the back-office processing side, it provides claims processing services for insurance customers.

HTMT has, with its organic and inorganic initiatives, acquired an onshore presence in the US, near-shore presence in Canada, and offshore presence in Mauritius, the Philippines, and India that provides it with a fairly diversified delivery base.

With cash on hand of close to Rs 500 crore, the company is actively looking for inorganic growth opportunities to strengthen its delivery and domain capabilities.

HTMT has grown its revenue and net profits at a CAGR of 68 per cent and 101 per cent, respectively over FY06-08, while EBITDA margins also have steadily improved from 12.7 per cent to 15.8 per cent.

The stock is currently trading at a P/E of 5.2x and 4.2x its FY09E and FY10E earnings, respectively. HTMT has huge net cash balance equivalent to Rs 229 per share; almost the price at which the stock is currently trading. The brokerage has not rated the stock.