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N o k i a o v e r h a n g r e - e m e r g e s …
Sasken reported its Q3FY12 numbers, which were below our estimates.
Revenues declined 1.6% QoQ to | 128.8 crore vs. our | 138.7 crore
estimate. The sequential revenue decline was led by a drop in Nokia
revenues. Though demand pick-up from Android led platforms was able
to marginally offset the fall in Nokia revenues, the management indicated
that Nokia revenues could be under pressure for the next four or five
quarters. Sasken’s valuations remain attractive (62% Mcap in cash) but
offsetting top client revenues remains a challenge and would continue to
create an overhang on the stock. Consequently, we are lowering our
FY13E revenues to | 492 crore vs. | 557 crore earlier and maintain our
HOLD rating on the stock.
ƒ Earning summary
Sasken reported revenues of | 128.8 crore (I-direct estimate: | 138.7
crore) with revenues declining 1.6% QoQ from | 130.9 crore in
Q2FY12. Consolidated EBITDA margins were at 14.5% vs. 12.8% in
Q2FY12 while services and products EBITDA margins were at 12.4%
and 43.3% vs. 12.6% and 30.1%, respectively. Reported PAT of
| 18.6 crore was higher than our | 15.7 crore estimate led by higher
other income of | 8.7 crore (I-direct estimate: | 7 crore). Top 10
customer contribution was at 72% vs. 73% in Q2FY12 while active
customers increased by six to 125.
ƒ Operating metric highlights
Sasken gets 18% of its revenues from the American market, 45%
from the EMEA, 25% from the Indian market and 12% from the Asia
Pacific region. Attrition levels have decreased to 32% from 33.8% in
Q2FY12. Top 10 revenue contribution stood at 72% while that of the
top 5 stood at 53%. Total employee (consolidated) headcount stood
at 3,060. Sequentially, it increased by six heads.
V a l u a t i o n
We model rupee revenue/EPS growth of -5.8%/-10.1% for FY12E and -
4.4%/-12% for FY13E, respectively. Offsetting Nokia revenues remains a
challenge and could lead to YoY decline in FY13E revenues. We value
Sasken's core IT business ex-cash at 2.3x its FY13E EPS estimate of | 20.5
plus cash/share of | ~68 and maintain our price target of | 115.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
N o k i a o v e r h a n g r e - e m e r g e s …
Sasken reported its Q3FY12 numbers, which were below our estimates.
Revenues declined 1.6% QoQ to | 128.8 crore vs. our | 138.7 crore
estimate. The sequential revenue decline was led by a drop in Nokia
revenues. Though demand pick-up from Android led platforms was able
to marginally offset the fall in Nokia revenues, the management indicated
that Nokia revenues could be under pressure for the next four or five
quarters. Sasken’s valuations remain attractive (62% Mcap in cash) but
offsetting top client revenues remains a challenge and would continue to
create an overhang on the stock. Consequently, we are lowering our
FY13E revenues to | 492 crore vs. | 557 crore earlier and maintain our
HOLD rating on the stock.
ƒ Earning summary
Sasken reported revenues of | 128.8 crore (I-direct estimate: | 138.7
crore) with revenues declining 1.6% QoQ from | 130.9 crore in
Q2FY12. Consolidated EBITDA margins were at 14.5% vs. 12.8% in
Q2FY12 while services and products EBITDA margins were at 12.4%
and 43.3% vs. 12.6% and 30.1%, respectively. Reported PAT of
| 18.6 crore was higher than our | 15.7 crore estimate led by higher
other income of | 8.7 crore (I-direct estimate: | 7 crore). Top 10
customer contribution was at 72% vs. 73% in Q2FY12 while active
customers increased by six to 125.
ƒ Operating metric highlights
Sasken gets 18% of its revenues from the American market, 45%
from the EMEA, 25% from the Indian market and 12% from the Asia
Pacific region. Attrition levels have decreased to 32% from 33.8% in
Q2FY12. Top 10 revenue contribution stood at 72% while that of the
top 5 stood at 53%. Total employee (consolidated) headcount stood
at 3,060. Sequentially, it increased by six heads.
V a l u a t i o n
We model rupee revenue/EPS growth of -5.8%/-10.1% for FY12E and -
4.4%/-12% for FY13E, respectively. Offsetting Nokia revenues remains a
challenge and could lead to YoY decline in FY13E revenues. We value
Sasken's core IT business ex-cash at 2.3x its FY13E EPS estimate of | 20.5
plus cash/share of | ~68 and maintain our price target of | 115.
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