Mahindra Satyam Higher other income drive profit beat HOLD ::Emkay

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Mahindra Satyam

Higher other income drive profit beat

HOLD

CMP: Rs 73                                       Target Price: Rs 80

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n     MSat’s Q2FY12 profits beat estimates aided by higher other income despite a relatively anemic revenue growth at ~3.1% QoQ ( INR rev bolstered by lower US$/INR conversion rate)

n     Revenues at US$ 330 mn(+3.1% QoQ) missed estimates while EBITDA margins improved by ~50 bps QoQ to 15.3% (V/s est of ~60 bps increase). HC increased by ~654 QoQ to 32,092

n     Growth within top clients impressive( top 5/10 client revenues up by 8%/4% QoQ) while US/BFSI/TIME drive growth with a 8%/16%/9% sequential increase

n     FY12/13E earnings raised by 15/17% to Rs 7.3/7.5 driven by lower currency resets despite moderation in our US$ revenue assumptions. Retain HOLD with a revised TP of Rs 80