Buy Sasken Communication - PINC Result Review

Sasken recorded decline in revenue, but PAT was in-line with expectation. Although products grew 8.9%QoQ overall growth suffered due to 10%QoQ decline in IT services. Lower forex gains and higher taxes led to PAT falling 31.8% QoQ.

* Revenue declined on project delays
* Buy-back of Rs345mn announced at maximum price of Rs260/share
* Movement of clients to offshore impacted revenue
* Handset and semiconductor should grow in H2FY11

We expect flattish FY11 revenue growth due to decline in revenue from large clients and their movement to offshore; but profitability would be maintained. Sasken has cash of Rs2,050mn. At CMP, the stock is trading at 8.4x FY11E and 7.3x FY12E earnings. We maintain 'BUY' with a TP of Rs 255.

Source : Equity Bulls

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