Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
O v e r w h e l m e d b y N o k i a u n c e r t a i n t i e s …
Sasken reported its Q1FY12 revenues/earnings, which were modestly
ahead of our estimates. For a change, revenues grew 1.2% QoQ to | 130
crore vs. our | 122.7 crore estimate. The company reported profit after
tax of | 10.7 crore vs. our | 10.6 crore estimate. However, EBITDA margin
was below our estimates due to higher onsite revenue contribution and
increased sales & marketing investments. Though the company continues
to fine tune its operating metrics, Nokia uncertainties continue to
overwhelm valuations and would take precedence. Consequently, we are
reducing our estimates and price target. We maintain our HOLD rating.
ƒ Earning summary
Sasken reported sequential revenue growth of 1.2% led in part by
higher onsite contribution of 33% vs. 31% in Q4FY11. The
consolidated EBITDA margin was at 12.4% vs. 13.3% in Q4FY11
while services and products EBITDA margins were 12.1% and
27.1% vs. 13.1% and 35.8%, respectively. Top 5 customer
contribution was flat sequentially at ~55.8% while active customers
increased by two to 129. The company has bought back ~21.62 lakh
(~7% of equity) shares at an average price of | 159.3 and has
completely exhausted its buyback limit of | 34.43 crore.
ƒ Q2FY11 should be impacted by wage hikes
Sasken has announced wage hikes effective from July 1. Quantum
of wage hikes stands at 11-12% offshore and 5% onsite. Sasken
continues to operate at sub 70% utilisation including trainees and
could be one of the levers to improve operating margins.
V a l u a t i o n
Though Sasken is trading at compelling multiples of 5x its FY11 diluted
EPS of | 25.8, 0.6x on Mcap/FY11 sales and provides an attractive FCF
and dividend yield of ~15% and ~5%, respectively, Nokia uncertainties
prevail. Consequently, we have lowered our price target to | 134 vs. | 170
earlier. We have valued Sasken's core IT business ex-cash at 4.4x its
FY12E EPS estimate of |14.2 (4.96x earlier) plus cash/share of | ~71 to
arrive at our price target of | 134.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
O v e r w h e l m e d b y N o k i a u n c e r t a i n t i e s …
Sasken reported its Q1FY12 revenues/earnings, which were modestly
ahead of our estimates. For a change, revenues grew 1.2% QoQ to | 130
crore vs. our | 122.7 crore estimate. The company reported profit after
tax of | 10.7 crore vs. our | 10.6 crore estimate. However, EBITDA margin
was below our estimates due to higher onsite revenue contribution and
increased sales & marketing investments. Though the company continues
to fine tune its operating metrics, Nokia uncertainties continue to
overwhelm valuations and would take precedence. Consequently, we are
reducing our estimates and price target. We maintain our HOLD rating.
ƒ Earning summary
Sasken reported sequential revenue growth of 1.2% led in part by
higher onsite contribution of 33% vs. 31% in Q4FY11. The
consolidated EBITDA margin was at 12.4% vs. 13.3% in Q4FY11
while services and products EBITDA margins were 12.1% and
27.1% vs. 13.1% and 35.8%, respectively. Top 5 customer
contribution was flat sequentially at ~55.8% while active customers
increased by two to 129. The company has bought back ~21.62 lakh
(~7% of equity) shares at an average price of | 159.3 and has
completely exhausted its buyback limit of | 34.43 crore.
ƒ Q2FY11 should be impacted by wage hikes
Sasken has announced wage hikes effective from July 1. Quantum
of wage hikes stands at 11-12% offshore and 5% onsite. Sasken
continues to operate at sub 70% utilisation including trainees and
could be one of the levers to improve operating margins.
V a l u a t i o n
Though Sasken is trading at compelling multiples of 5x its FY11 diluted
EPS of | 25.8, 0.6x on Mcap/FY11 sales and provides an attractive FCF
and dividend yield of ~15% and ~5%, respectively, Nokia uncertainties
prevail. Consequently, we have lowered our price target to | 134 vs. | 170
earlier. We have valued Sasken's core IT business ex-cash at 4.4x its
FY12E EPS estimate of |14.2 (4.96x earlier) plus cash/share of | ~71 to
arrive at our price target of | 134.
No comments:
Post a Comment