Target: ₹610
CMP: ₹641.90
Datamatics Global Services’ revenue beats our estimates, but EBIT misses. PAT rises on exceptional gain.
Datamatics Global Services has shown moderate sales growth (6-9 per cent) over the past two years and faced margin pressures (from 16.6 per cent in FY23 to 13 per cent now) due to its small market share in the competitive IT services market. Additionally, gradual dilution of the promoters’ stake since FY23 (from 74 per cent to 66 per cent) has moderated, remains a concern.
However, the strategy to drive topline growth through inorganic expansion highlighted by acquisitions of Dextara & TNQTech holds potential for positive outcomes. Successful integration of these acquisitions could lead to margin expansion, while innovations like Agentic AI powering platforms such as FINATO and TruBot, may further fuel growth.
We value Datamatics Global Services at a PE multiple of 14x (no change) implying target price of ₹610 based on FY27E EPS of ₹43.5. Datamatics Global Services is a potential candidate for rerating if the company meets industry matching sales growth, margin expansion with successful acquisition integration & no further dilution of promoter stakes.
Published on April 3, 2025
