Buy Aditya Infotech Ltd For Target Rs.5,200 by Motilal Oswal Financial Services Ltd
Strengthening market leadership; expanding avenues for growth
* Aditya Infotech (CPPLUS) reported revenue/EBITDA growth of 90%/2.8x YoY, driven by market share gains (42% as of Sep’26 vs. 30% in FY26), price increases and a favorable pre-STQC base, with operating leverage further supports.
* CPPLUS continues to gain market share, which is expected to reach 43- 45% by end-FY27, supported by reliable component sourcing and a broader brand portfolio. While higher component costs and gradual price increases are likely to moderate margins in 2HFY27, the commissioning of the housing/enclosures and cable facilities in 4QFY27 should support profitability from FY28. The rollout of CP Plus Pro and EYRA should strengthen its presence across premium and entry-level segments, while investments in cloud storage and AI analytics create longer-term opportunities for recurring service income.
* We largely maintain our FY27/FY28 estimates and reiterate our BUY rating on the stock with a TP of INR5,200 (premised on 50x FY29E EPS).
Strong earnings beat driven by operating leverage
* Consol. revenue grew 90% YoY/25% QoQ to INR17.5b (est. INR16.6b).
* EBITDA grew 2.8x YoY/49% QoQ to INR3b (est. INR2.3b).
* EBITDA margin came in at 17.4% vs. 11.8%/14.5% in 2QFY26/1QFY27. EBITDA margin expansion of 560bp was led by operating leverage (employee expense/other expense reduced 190bp/350bp YoY).
* Adj. PAT grew 3x YoY/47% QoQ to INR2.1b (est. INR1.6b).
* In 1HFY27, revenue/EBITDA/APAT grew 90%/3x/3.4x YoY to INR31.5b/INR5.1b/INR3.5b.
* Note: PAT is adjusted for losses of INR343.73m arising from a fire at wholly-owned subsidiary, AIL Dixon Technologies, which resulted in a loss of inventory and impacted PPE. The insurance claim remains under assessment, with no recovery recognized.
* In 1HFY27, CFO grew 2.9x YoY to INR5.2b. Gross debt stood at INR3.6b as of Sep’26 vs. INR1.1b as of Mar’26.
* NWC days improved to 72 from 78 in FY26, led by reduction in receivable days.
Valuation and view
* We expect CPPLUS to sustain its growth momentum, supported by reliable component sourcing, nationwide distribution and a broader brand portfolio. While higher component costs and gradual price increases could moderate margins in 2HFY27, backward integration into housing/enclosures and cables should support profitability from FY28.
* Further, capacity expansion, the CP Plus Pro and EYRA launch and investments in cloud storage and AI analytics should broaden its long-term growth opportunities.
* We expect a CAGR of 38%/48%/51% in revenue/EBITDA/PAT over FY26-29. We value the stock at 50x FY29E EPS to arrive at our TP of INR5,200; reiterate BUY
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH00000041
