The Hindu Business Line : Listing is big advantage for e-serve International

DESPITE the outcry against outsourcing and the loss of American jobs to India, there continues to be high interest in the onlylisted business process outsourcing (BPO) company. The scrip of e-serve International gained over 4 per cent on Wednesday to close at Rs 630.

Mutual fund interest in the scrip is also quite high. Franklin Templeton India's Templeton Prima Fund had bought 1.5 lakh shares on Tuesday. Alliance Capital Mutual Fund was a seller on Tuesday, but continues to have a "huge holding" in the company, according to Mr Dhawal Mehta, Head-Equities.

Analysts and fund managers feel that the biggest advantage of e-Serve International is the fact that it is the only listed scrip in the high-growth BPO sector. However, Datamatics Technologies would get listed later this month and e-Serve International would be forced to share that advantage.

"e-Serve International is a steady, moderate growth story posting about 30 per cent growth in revenues and around 28 per cent growth in profits over the next two years," said Mr Apurva Shah, Senior Research Analyst, Prabhudas Liladhar.

The threat of loss of business due to the political issue of America losing jobs to India is not deemed to be a long-term problem for the company and the sector. "Once the presidential race is over, the political rhetoric against offshoring is likely to reduce and in any case, increasing number of studies done by US think tanks and trade bodies are helping in highlighting the benefits of outsourcing to the US economy and corporate America. The future of the BPO industry in India is positive over the medium to long term", said Mr Sukumar Rajah, Director & CIO - Equity, Franklin Templeton Investments. However, the fact that Citicorp is the only customer of e-Serve International is viewed as a distinct disadvantage. "The company should have been valued higher had it been a multi-client operation. In fact, the effective control of the company is with Citicorp and it is the only client as well," said Mr Shah.

Brokers expect volumes to pick up once the comparative scrip of Datamatics gets listed.