Core Projects & Technologies Ltd 

Price: Rs. 329 Target Price: Rs. 412

Core Projects & Technologies Ltd (CPTL) is an emerging player in IT-Education space. Historically CPTL has grown via the acquisition route and reported strong growth in revenue and net profit. We believe CPTL’s entire business portfolio is well balanced and offers strong potential growth in the IT-Education space. CAVE 3D, a technology developed by Center of Higher Learning, U.S.A., (CHL) for writing content for the global education market has opened up many gateways for CPTL and it has recently signed a MOU with IGNOU to set up 100 visualisation education centers by FY10E. CPTL is also betting big on the opportunities opened up by Sarva Shiksha Abhiyan(SSA) Scheme by the government. CPTL along with IL&FS through a JV is targeting the State Governments which are initiating various education programmes under the SSA. We believe these projects have a three year payback period and would offer significant boost to consolidated profitability of CPTL. We estimate CPTL’s revenue to report growth at a CAGR of 111% over a period of FY07A-FY10E to Rs.18.9bn. We value CPTL at Rs.412 based on a SOTP valuation of its various businesses. CPTL offers strong revenue visibility for next three years (FY08E-FY10E) and the stock currently trades at an attractive valuation of 6x EV/EBITDA on FY10E. We recommend a BUY with 12 to 18 months target price of Rs.412.

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