Mphasis Ltd - Dismal performance writ all over:: Emkay

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Mphasis Ltd

Dismal performance writ all over

REDUCE

CMP: Rs 455                                       Target Price: Rs 450

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n     Mphasis’s results have sparked a sharp pull down in share price and we see no respite to co’s woes given 24% EPS cuts for FY12/13  given patchy disclosures in the recent past

n     We factor in 5.5%/16% YoY rev growth for FY12/13 (V/s 23.5/19.5% earlier)  and build in lower op mgns at 19.5%/19.6%(despite lower currency resets) driving a 24%/25% cut in Oct’11/Oct’12 EPS to Rs 37.8/41.3 

n     Mphasis’ s Jan’11 results vindicate our downgrade on stock in Nov’09 with co continuing to surprise both on revenues/margins in atleast 4 of the past 5 quarters

n     Lower ratings to REDUCE with a revised TP of Rs 450, based on ~11x Oct’12 EPS with a possible open offer from HP remaining a key upside risk to our call