Visit http://indiaer.blogspot.com/ for complete details �� ��
Patni Computer Systems
Deal wins remain key
Improved deal wins; trim EPS/PO for recent 1-time div
Q3 rev beat our est by 1% while EBIT margin was 100bps ahead likely due to
currency and tighter operations. Three deal wins of ~USD30m TCV each was the
main highlight. Deal momentum remains critical for Patni to improve its relatively
modest 15% rev growth trajectory. Trim est and PO to mainly factor in recent 1-
time div payout. We believe our PO of INR495 at 12x PE ex cash is fair given
similar 2-yr EBITDA growth (ex-forex). Maintain neutral.
A relatively strong quarter
Patni’s revs grew 7% QoQ (~5% volume growth, ~2% from CHCS acquisition) in
USD terms, 1% ahead of BofAMLe. EBITDA margin (excl forex) declined 100bps
qoq due to project transitions and lower onsite utilization. Net income declined 9%
qoq on lower treasury income and was 16% ahead of our estimates.
Management strengthening over last year appears to be paying off, as reflected
by the deal closures this qrtr. New deal wins remain critical to Patni delivering
growth above our ~15% growth forecast over CY10-12. It continues to actively
work on inorganic options to grow BPO/IMS. On the supply side, after being
constrained in early part of year, co grew its headcount by ~20% over past 2 qtrs.
Muted 4Q guidance; Attrition still high
4Q rev guidance of 1% growth qoq is muted vs. peers and management’s target
of a sustained 3-4% growth. As per co, this is owing to lower billing days & timing
uncertainty around revs from projects under transition. Attrition rates remain high
(26% LTM) but mgmnt expects this to come down on qrtrly basis, starting Dec.
No comments:
Post a Comment