CMC Ltd

CMC Limited, 51.12% subsidiary of Asia’s largest software firm TCS, has declared Q2FY14 consolidated revenues of Rs. 561 crore, up 15% QoQ and 22% YoY, as international business grew 23% in the quarter, with 19 new client additions in Q2. Second quarter net profit of Rs. 67 crore was 27% higher sequential and 36% annually, on account of favourable exchange rate, helping the company maintain its margins despite salary hikes, which resulted in 9% QoQ rise in employee cost to Rs. 141 crore from Rs. 129 crore in Q1.

The two segments which accounted for most of the increase in revenue were systems integration and IT enabled services, at 24% and 16% QoQ respectively. These are the segments which together accounted for 80% of revenues and garnered margins of 20% and 30% respectively.

With Q2 clocking EPS of Rs. 22.21, EPS for H1FY14 stands at Rs. 39.75 versus Rs. 75.98 in FY13. Like peers, company remains debt-free with surplus cash per share of Rs. 75. Cash adjusted PE multiple, based on annualized H1FY14 EPS is 14 times, which is attractive given the company’s growth rate and consistent performance. Results are expected to get a positive market response this morning, wherein share price can breach the 1,400 mark.