Patni shares to fall - short says Morgan Stanley

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Patni Computer Systems (PTNI.BO)
Research Tactical Idea
We believe the share price will fall relative to the country index over the next 60 days.
This is because of an earnings release. Patni reported weak 3Q10 operating results. Revenues of US$178.8m and EBIT
margins of 15.3% (-94bps qoq, -155bps yoy). Further, revenue guidance for 4Q remains muted at +0.7% qoq to +1.2%
qoq. A 3-4% qoq revenue growth trajectory would lead to overall growth of 11-14% yoy in CY11e, still below the industry
average. Patni is currently trading at ~12x CY10e and CY11e EPS for flat earnings yoy in CY11e and is likely to continue
underperforming the market, in our view.
We estimate that there is about an 80%+ or "highly likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.