Buy Sasken Communication - PINC Result Update

Sasken reported a modest Q1FY11 with better than expected profit but a 5.9%QoQ decline in revenues to USD31.7mn. This was due to company's move to exit non-strategic accounts, cross currency impact and very high attrition. PAT grew 5.7%QoQ (higher than expectation).

* Revenue slowed down – weak performance
* EMEA declined due to cross currency
* Handset and Semiconductor business showing traction
* Margin headwinds ahead

Q1FY11 quarter was good in terms of profitability but growth was hampered. Sasken has contained costs well but has to control rising attrition. It has cash and equivalents of Rs1,960mn.

We maintain 'BUY' with a target price of Rs255.

Source : Equity Bulls

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