Anand Rathi has given Buy recommendation for Intellect Design Arena with a target price of Rs. 850 in its research report issued on May 18, 2022
Anand Rathi’s research report on Intellect Design Arena
Lower License revenue meant a soft Q4 for Intellect (flattish sales, lower margins). Advanced-market sales in FY22 grew slower than the company average (India was the fastest). Intellect expects the Microsoft partnership to correct this and is adding senior sales people in advanced markets. The deal funnel ($725m, up 27% y/y) suggests a better performance (company aspiration: 20%). The Q4 EBITDA margin was down to 23.7% on strong hiring, rising wages and weaker license sales.
On operating leverage, we expect margins to trend to 29% by FY24 (FY22: 25%, FY21: 24%). We retain a Buy, with a lower TP of Rs.850 (from Rs.940), 23x FY24e EPS.