Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q1-FY11 earnings update on MphasiS Ltd.
MphasiS Ltd. (MphasiS) has disappointed the market with inconsistent financial disclosures. Apparently, financial transition had a significant negative impact, with sudden irreconcilable changes in reporting, affecting the granularity of forward estimates. Accordingly, the forecasts mentioned in this update may be subjected to pre-quarter revisions.
Key highlights of Q1FY11 business performance
Ø Growth determinants:
§ Seasonal impact on business due to holidays, taking out ~3.5% q-o-q.
§ Demand side shocks, milestone achievement, removing ~3.0% from topline q-o-q
§ HP price revisions knocking out ~1.0% from topline q-o-q (effective from
1st Dec 2010).
1st Dec 2010).
§ Currency movements amounting to -0.7% topline q-o-q
Ø Client additions look muted with significant change in the HP-channel makeup, possibly on account of price-cuts, translating to ~9.8% revenue decline q-o-q. Significant acquisitions include:
§ 2 ITO UID projects
§ Payment solutions venture, contributing 2 wins.
Ø Hiring schedule (equivalents; q-o-q):
§ Applications:
• Onsite: +5.1%
• Offshore: +4.4%
§ BPO (non-HP internal): +6.4%
§ ITO: -0.2%
§ Attrition at uncomfortably high levels; Applications: 29%, ITO: 25%
Ø DSO's have spiked by +13.3% q-o-q.
Ø Overall we consider the Q1FY11 business performance to be transition-robust.
Outlook
Business outlook looks robust with 1252, 471 open positions in Applications and ITO service-lines resp. We reiterate our confidence in governance @ MphasiS and, expect the company to step up SG&A spend post the recent ‘HP-price cut’ episode.
Though our earlier target was achieved, we restate valuations at 13.0x FY12E earnings, arriving at Rs512 per share.
No comments:
Post a Comment