ECLERX - Fundamental Analysis: Financial Health & Valuation
Last Updated Time : 05 Nov 25, 7:43 am
Back to Fundamental ListEclerx Services Ltd earns a rating of 4.1 out of 5 for its strong ROE/ROCE, consistent profitability, and strategic positioning in IT-enabled services. Entry zone recommended around ₹4,400–₹4,600 for long-term accumulation.
Fundamental Rating: 4.1
📊 Financial Overview: Eclerx Services Ltd showcases strong operational efficiency with a ROE of 23.6% and ROCE of 28.8%. The company maintains a healthy balance sheet with a debt-to-equity ratio of 0.18. EPS stands at a robust ₹80.5, and quarterly PAT rose by 12.8% to ₹110 Cr, indicating consistent earnings growth.
💰 Valuation Metrics: The stock trades at a P/E of 58.9, significantly above the industry average of 34.3, suggesting premium pricing. The P/B ratio of ~15.85 (₹4,739 / ₹299) is high, and the PEG ratio of -55.1 reflects valuation distortion due to earnings volatility. Dividend yield is minimal at 0.02%.
🏢 Business Model & Competitive Edge: Eclerx is a mid-cap IT-enabled services firm specializing in business process management, analytics, and automation. It serves global clients across financial services, retail, and digital domains. Its focus on high-margin segments and digital transformation gives it a competitive edge in a fragmented market.
📉 Entry Zone Recommendation: With an RSI of 65.6, the stock is nearing overbought territory. A favorable entry zone lies between ₹4,400–₹4,600, slightly below its 50 DMA of ₹4,228. MACD at 149 signals strong bullish momentum, but investors should wait for a minor pullback before accumulating.
📈 Long-Term Holding Guidance: Eclerx is a solid long-term candidate for investors seeking exposure to digital operations and analytics. Hold with a 5+ year horizon, focusing on margin expansion, client retention, and global delivery capabilities.
Positive
- High ROCE (28.8%) and ROE (23.6%)
- EPS of ₹80.5 supports earnings strength
- Quarterly profit growth of 12.8%
- FII holding increased (+0.79%)
- MACD indicates strong momentum
Limitation
- High P/E (58.9) and P/B (~15.85)
- PEG ratio of -55.1 suggests valuation distortion
- Low dividend yield (0.02%)
- DII holding declined (-0.32%)
Company Negative News
- Stock near 52-week high, limiting short-term upside
- Volume below weekly average, indicating reduced investor interest
Company Positive News
- Strong long-term forecast with targets exceeding ₹5,200 by 2026
- Consistent profitability and strategic expansion in digital services
Industry
- Operates in IT-enabled services and digital transformation
- Industry P/E of 34.3 reflects growth optimism
- Sector benefits from global outsourcing and automation demand
Conclusion
Eclerx Services Ltd is a fundamentally strong company with high returns, consistent earnings, and strategic positioning in digital operations. While current valuations are elevated, long-term prospects remain attractive. Investors may consider accumulating near ₹4,400 for exposure to India’s IT-enabled services growth.
Sources: MarketWatched
MarketWatched
, DailyBulls
dailybulls.in
, Trendlyne
Trendlyne
.
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