Thursday, August 12, 2010

Patni Computers; Inexpensive valuations limit downside; NOT RATED

Patni Computers

Reco: NOT RATED

CMP: Rs453

Target Price: N. A.

Inexpensive valuations limit downside

·         Interactions with CEO indicate inherent organic revenue growth challenges persist. Sep'10 quarter QoQ rev growth at 5.6-5.8% helped by acquisitions 

·         Despite credible cost controls over the past few quarters, we do not rule out margin pressures ahead driven by another round of compensation increases led by increasing attrition

·         Potential Promoter's stake sale buzz hurting business's prospects as well as leading to increased employee churn  

·         Cut CY10E/CY11E by ~4.5%/3% to Rs 41.2/42.5 (despite a lower US$/INR reset) as we cut rev estimates. Inexpensive valuations (cash at ~Rs 180/share) provide downside support

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Safe Harbor:

The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
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