Satyam Computer Services Limited's (Satyam's) Q2Y08 results surpassed expectations; the company's revenues increased by 11% QoQ to Rs 20.3bn, and net profits grew by 8.2% QoQ to Rs 4.1bn. On account of the better than guided Q2FY08 and improved visibility, Satyam increased its FY08E revenue and EPS guidance by 3.5% and 2.6% respectively.
In line with the better than expected Q2FY08 results and increased guidance, we are increasing our FY08E estimates by 1.8% to Rs 25.5. However, we are maintaining our FY09E EPS at Rs 30.9 to take into account rupee appreciation. This implies a two-year EPS CAGR of 20.4%.
Currently, the stock is quoting at FY08E and FY09E PER of 18.1x and 14.9x; this is at a 22.5% and a 36.1% discount to Infosys' PER respectively. We believe that this discount could narrow, going forward, as Satyam is expected to post higher growth than Infosys. Therefore, we maintain an 'Accumulate' rating on the stock with a one-year price target of Rs504, 19.8x and 16.3x of FY08E and of FY09E earnings respectively.
No comments:
Post a Comment