Satyam Computer Services
Cluster: Apple Green
Recommendation: Buy
Price target: Rs 570
Current market price: Rs 533
Numbers ahead of expectations
Result highlights
- Satyam Computer Services' Q1FY2006 results were better than our expectations.
- The company's top line surged by 8.5% quarter on quarter (qoq) on the back of a good volume growth of 8.7%.
- The operating profit grew by 2.5% qoq.
- The operating profit margin (OPM) fell by 140 basis points in line with our expectations. The company expects its margins to improve in the coming quarters.
- The net profit declined by 3.7% qoq.
- The company plans to acquire Singapore-based data warehousing (DW) and business intelligence (BI) solution provider KDP soon.
- It has marginally revised upwards its guidance for FY2006.
- At the current market price the stock is quoting at 14.9x FY2007E earnings.
- We maintain our Buy call on the stock and upgrade it to the Apple Green cluster.
Geometric Software Solutions Company
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs 630
Current market price: Rs 545
Price target revised upwards
Result highlights
- Overall Geometric Software's Q1FY2006 numbers are slightly below our expectations.
- The company's top line fell by 2.6% on a quarter-on-quarter (q-o-q) basis. The top line numbers are marginally below our expectations.
- The decline in the top line resulted in a higher-than-expected fall in the operating profit margin (OPM).
- The operating profit fell by 36.1% quarter on quarter (qoq).
- A higher other income helped the company in controlling the fall in its net profit, which decreased by just 3.7% qoq.
- At the current market price of Rs545 the stock is quoting at 10.4x FY2007E earnings.
- We maintain our Buy call on the stock with a revised price target of Rs630