Sirma Group Holding: A better year is here (stays BUY)

We maintain our BUY rating on Sirma Group Holding (Sirma), but we have reduced our 12M price target (PT) from BGN 0.90/share to BGN 0.64/share (23% upside potential). Although the company did not manage to maintain its yoy EBITDA dynamics in positive territory in 2020 (-3% yoy), missing our forecast by 17%, we keep our positive stance on the name. The key arguments for BUYing the stock, in our view, are: i) a material improvement in the market outlook – between October 2020 and April 2021, Gartner hiked its growth forecast for the global ICT market significantly; ii) double-digit EBITDA growth over the next three years, on our forecasts, with a 2020-23E EBITDA CAGR of 11%; and iii) its moderate valuation, with its 2021E EV/EBITDA at only 3.2x, on our estimates, a 63% discount vs. its peers. On top of this, we note the large buyback (up to BGN 20m may be spent on the programme by the end of 2022E, with a cap price of BGN 2.0/share), which could be an additional sweetener in Sirma’s equity story, if executed on a larger scale, in our view.