Monday, October 11, 2010

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

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1 comment:

Top Ten Classifieds said...

Nice and informative post…
Thanks,
Bisell.in

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