Mphasis - No end to operational struggles, downgrade to SELL - Emkay

- QApril'13 results continue the trend on op challenges. Reported rev growth was bolstered by consolidation of Digital Risk as organic rev declined by 3.5% QoQ

- EBITDA margins decline by ~130 bps sequentially ahead to 17.2%. See several margin headwinds ahead with favorable hedges being the only tailwind in our view

- Cut FYOct'13/Oct'14E EPS by 2/4% each to Rs 34.6/37.4 respectively on lower revenue/margin assumptions(refer table below) despite lower currency resets

- Downgrade to SELL (V/s REDUCE earlier). 30%+ upmove in in the past 1 month aided by news of possible HP stake sale. We see no end to Mphasis's fundamental woes ahead.

Source : Equity Bulls

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