Mahindra Satyam Re-initiating Coverage; Hard toil ahead; REDUCE; Target: Rs 81

Mahindra Satyam

Reco: REDUCE

CMP: Rs86

Target Price: Rs81

Hard toil ahead

·      Reinitiate coverage on Mahindra Satyam(MS) with a REDUCE rating and a March'12 TP of Rs 81. We see hard toil ahead for the company as it tries to rebuild itself from the ashes.

·      Mahindra Satyam faces numerous challenges in the form of a weaker competitive positioning, loss of vantage position in core areas of strength (refer section below)

·      Forecast a strong 21% US$ rev CAGR over FY11E-13E (post a 6% YoY decline in FY11) along with improvement in OPM's to 17.1% in FY12( V/s 8.3% in FY10 reported recently) 

·      Reinitiate with a REDUCE rating and a DCF based March'12 TP of Rs 81, (implying ~11.5x 1 yr fwd P/E, in line with mid tier peers). Valuations appear rich despite ~15% fall in ~2 weeks

--
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.
 
You received this message because you are subscribed to the Google Groups "Investors Please Listen !" group.
To post to this group, send email to investorspleaselisten@googlegroups.com
To unsubscribe from this group, send email to
investorspleaselisten+unsubscribe@googlegroups.com For more options, visit this group at http://groups.google.com/group/investorspleaselisten?hl=en