ECLERX - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.2

🧠 Fundamental Analysis of eClerx Services Ltd (ECLERX)

✅ Strengths

Exceptional Profitability

ROCE: 29.1%, ROE: 23.8% — elite capital efficiency, ideal for compounding

EPS: ₹116 — strong earnings base, supports valuation

Strong Technical Momentum

Price above DMA 50 & 200 — bullish trend

MACD: +75.7, RSI: 62.5 — strong momentum, but not overheated

52w Index: +89.0% — outperforming broader market

Consistent Earnings Growth

Qtr Profit Var: +26.8% — robust quarterly growth

PAT Qtr: ₹142 Cr vs ₹152 Cr — slight dip but still strong

Low Leverage

Debt-to-Equity: 0.16 — conservative capital structure

Institutional Confidence

DII Hold ↑ 0.92%, FII Hold ↑ 0.04% — positive sentiment from smart money

⚠️ Concerns

PEG Ratio: 3.41 — indicates overvaluation relative to growth

Dividend Yield: 0.03% — negligible income generation

P/E: 32.0 — fair, but no valuation edge vs industry

Volume Drop — current volume well below weekly average, low conviction

📉 Ideal Entry Price Zone

Entry Zone: ₹3,300–₹3,450

Near DMA 50 and offers better valuation comfort

Wait for PEG compression or earnings acceleration before aggressive buying

🧭 Long-Term Investment Outlook

eClerx is a high-quality long-term candidate, especially for investors seeking high ROE/ROCE and digital transformation exposure. Despite a high PEG ratio, its earnings consistency and capital efficiency justify a premium.

Holding Period: 3–5 years

Reassess if ROE drops below 18% or PEG remains above 3.5

Monitor client wins, automation-led margin expansion, and offshore delivery growth

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹3,850–₹3,900

Near all-time high and psychological resistance

Full Exit

If PEG ratio remains elevated without earnings growth

If price breaks below ₹3,200 with RSI < 40 and MACD reversal

If ROE drops below 16% for 2+ quarters

Reinvest: On dips near ₹3,300 if PEG compresses below 2.0 and growth outlook improves

Would you like a peer comparison with companies like Tata Elxsi, LTI Mindtree, or Coforge to evaluate relative positioning and valuation dynamics?

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