Mahindra Satyam - Margins surprise positively:: Emkay

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Mahindra Satyam

Margins surprise positively

HOLD

CMP: Rs 71                                       Target Price: Rs 80

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n     MSat’s performance continues to be strong with US$ rev up 5.3% QoQ while mgns improved by ~160 bps QoQ to 14.6%( note that mgns have improved by ~820 bps over past 2 qtrs)  

n     Net Profits at Rs 2250 mn (-8% QoQ, +113.5% YoY) beat est driven by higher margin show and aided further by lower taxes and higher other income

n     Growth within top clients impressive( top 5/10 client revenues up by 5% QoQ) while ROW/Manufacturing/TIME drive growth with a 14%/5%/11.6% sequential increase

n     Raise FY12/13E EPS by 29/5.3% to Rs 6.4/6.7 driven largely by higher mgn assumptions (14/14.2% V/s 12.7/13.7% earlier) and lower taxes. HOLD, TP of Rs 80 (Rs 76 earlier)