BSEIndia: All Stock Market News: [sharetrading] 9AM with Emkay

Tuesday, February 23, 2010

[sharetrading] 9AM with Emkay - 24 February, 2010

stock9AM with Emkay - 24 February, 2010

The Morning Meeting Notes as on 24^th February, 2010.

n Research Views

Mphasis reports Jan'10 Quarter results today. Our expectations

n We expect Mphasis to report US$ revenues at US$ 250 mn (+6.5% QoQ). Note that Jan'10 quarter will also include full impact of AGG captive unit (revenue run rate of ~US$ 24 mn p.a). Revenues in INR terms expected at Rs 11.7 bn (+3.7% QoQ) (includes Rs 150 mn benefit from hedging).

n EBITDA estimated at Rs 3,123 mn (+6% QoQ) driven by ~60 bps sequential expansion in operating margins to 26.6%.

n Profits estimated at Rs 2,505 mn (+2.3% QoQ). Interaction with some clients indicates that they are looking at net profits coming in at ~Rs 2,700 mn ahead of our estimates.

n Key things to watch out for (1) ITO revenue growth outlook (~50%+ YoY revenue growth in the segment in the last year), (2) Business flow from the parent HP (~67% of revenues from HP-EDS channel)

At CMP of Rs 727, Mphasis is trading at 14.5x/13.5x on our Oct'10E and Oct'11E earnings of Rs 50 and Rs 53.8 respectively. We have a HOLD rating on the stock with a price target of Rs 650.

n Technical Comments

Pattern under making:

After choppy session, finally Nifty ended the day on a positive note indicating that the slant of the day was in the corner of the bulls. Further the chart of Nifty reveals that a symmetric triangle is under making. Additionally, this triangle is a part of the right shoulder of inverse Head and shoulders pattern. So the break above 4912-4930 range will trigger fresh buying on account of pattern breakout, which eventually will lead Nifty to higher targets in the coming session. However we will see a pattern failure on the break of 4805 mark, on account of which Nifty will see a southward slide for the retest of 4675 mark.

BSE Auto:

BSE Auto index continued its downward journey with its series of falling highs and finally closed at 6879 with a loss of 1.82%. Going forward this index has also broken the support of 6938, and is still looking weak, thus in the coming days we will witness further downside in this index and it will test its recent low of 6721.

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Regards,

Emkay Research

Emkay Global Financial Services Ltd.

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Worli, Mumbai - 400 013.

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E-mail: emkayresearch@emkayglobal.com

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