Ventura Assigns Buy Rating to Black Box Ltd, Anticipating 27.3% Upside Potential
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Mumbai, Jan 2 (NationPress) The stock of Black Box, a digital infrastructure firm, is expected to see an upside potential of 27.3% from its current value of Rs 649 to Rs 826 within the next 24 to 30 months, as reported by brokerage house Ventura on Thursday.
The report indicates that despite a slow sales growth in FY24, primarily due to delays in project execution and decision-making processes, Black Box is gearing up for its next growth phase. The company anticipates its pipeline to expand to $3 billion with a target conversion rate of approximately 25%, an increase from the current 20%.
In a strategic overhaul, Black Box has chosen to focus on its top 300 customers while discontinuing service to less profitable long-tail customers, which do not significantly impact margin growth, as per the report.
Furthermore, the company is set to refresh its Go-To-Market strategy by implementing a matrix-based approach that integrates industry verticals and product portfolio horizontals, aimed at delivering industry-specific solutions and improving customer engagement.
According to Ventura, "We project revenue growth at a CAGR of 8% from Rs 6,281.6 crore in FY24 to Rs 7,996 crore by FY27E."
Black Box intends to focus its efforts on data centres, especially in North America and India. With a clientele that includes major hyperscalers like Meta, Amazon, and Microsoft, which are projected to invest heavily in data centre expansions, revenues from this sector are expected to rise significantly, increasing from Rs 1,256 crore to Rs 1,994 crore by FY27E at a CAGR of 15%.
Meanwhile, the Technology Products Solutions (TPS) segment currently accounts for 12% to 13% of total revenues and is forecasted to gain momentum, with revenues estimated to grow at a 9% CAGR from Rs 758 crore to Rs 982 crore by FY27E. Additionally, the consulting division is expected to contribute positively to overall growth, increasing from Rs 106 crore to Rs 112 crore by FY27E at a CAGR of 2%.
Regarding margins, the company has set an ambitious goal of achieving 10% EBITDA margins, driven by enhanced negotiations with customers, technology vendor partners, and improved operational efficiency. The report predicts that EBITDA and net margins will expand by 240 basis points from 6.8% to 9.2% and by 250 basis points to 4.7%, respectively.
Black Box provides a wide array of digital infrastructure solutions, including Connectivity Solutions, Data Centre solutions, Enterprise Networking, Modern Workplace Solutions, Cybersecurity Solutions, Technology Products Solutions, and Consulting Services.
