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Improving travel demand to drive growth…

About the stock: Accelya Solutions (Accelya) is a global provider of technology platforms, software and services to the travel and transport industry

* The company generates 32% revenues from Americas, 18% from Europe, 36% Asia Pacific and rest from Middle East & Africa

* Healthy dividend payout, debt free, four year average RoCE of 66%

Q1FY22 Results: Accelya reported robust Q1FY22 results.

* Revenues increased 15.6% QoQ to | 85.7 crore

* EBITDA margin margins increased from 27.1% to 37.3% in Q4FY21

* PAT increased 68.6% QoQ to |18.4 crore

What should investors do?

Accelya share price has grown by ~1.2x over the past five years (from ~| 1,203 in August 2016 to ~| 1,450 levels in August 2021).

* We remain positive and retain our BUY rating on the stock

Target Price and Valuation: We value Accelya at | 1700 i.e. 23x P/E on FY23E EPS.

Key triggers for future price performance:

* Improving travel demand led by vaccination drive across countries, improved volumes in airline segment and easing of lockdowns across countries to drive revenues

* We expect revenues to increase at ~29% CAGR in FY21E-23E

* Pick-up in revenues and operating efficiencies will help the company in improving its margin from 29% in FY21 to 39% in FY23E

Alternate Stock Idea: Apart from Accelya, in our IT coverage we also like Mastek.

* Growth in new logo acquisition, increasing deal size, expansion of sales & marketing and market share gains to drive revenues

* BUY with a target price of | 2,900

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