We maintain our BUY rating on WNS following positive meetings with management confirming our belief that the turnaround story remains intact. WNS has a healthy pipeline that should continue to drive organic growth rates back to in line with industry average. We expect margin expansion to coincide as excess capacity gets absorbed. Investors have begun to realize some of the good news as the multiple has moved up to 13x, but there is still room to go to reach the industry average multiple of 18x. We believe WNS will get there. We have raised our fair value to $18 from $15, applying a forward P/E multiple of 16x our FY13 estimate.
For more information, please contact:
Joseph D. Foresi