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Wednesday, April 21, 2010

Good mid cap IT stock to buy - KPIT Cummins Infosystems

A good mid cap stock to buy from IT sector with good valuations.

KPIT Cummins Infosystems provides business and technology solutions (Automotive, Semiconductor Solutions)through Business IT & Intelligence to BPO / KPO for the CTO, CIO and CFO of global customers from focused verticals.

In the last four-five months, the business environment and visibility for this company has improved a lot and even the dynamics and the way people look at this company has changed after acquisition of Sparta. KPIT is expected to have a good quarter ahead and expected revenue growth for KPIT is 7.7% quarter-on-quarter (QoQ) basis.

Market capitalization fir company is Rs 926.49 crore. The company touched its 52 week high Rs 142.15 and 52 week low Rs 32.40 on 18 Jan, 2010 and 08 Apr, 2009, respectively. Currently, it is trading -16.5% below its 52-week high and 266.36% above its 52-week low.

Company is likely to post an EPS of Rs 11.8 in FY10 and Rs 13.5 in FY11. At the CMP , the stock trades at a P/E of 9.8x on FY10E and 8.3x on FY11E.

The stock is moving along the upsloping support trendline. The strength of the stock’s uptrend is evident from the fact that it has not closed decisively below the trendline.

It is recommend to buy stocks of KPIT with a target price of Rs 140 in the short to medium term.

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