Sasken Communications

Sasken Communications

Hexaware Technologies, Patni, Sasken, Persistent Systems, NIIT Technologies, Geometric

Hexaware Technologies, Patni, Sasken, Persistent Systems, NIIT Technologies, Geometric

Annual Report - Sasken Communication Technologies - 2009-2010

SASKEN COMMUNICATION TECHNOLOGIES LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

Your Directors have pleasure in presenting the report on the business and
operations of the Company along with the Audited Accounts for the financial
year ended March 31, 2010.

Sasken

Investors with a two-year horizon can consider buying the shares of Sasken Communication Technologies (Sasken), a telecommunications software provider. Significant improvement in key operating and cost metrics and a general pick-up in the outlook for mobile handsets and semiconductors is likely to improve revenue and earnings growth. In addition, Sasken's acquisition of the key assets of a company in the US is expected to contribute significantly to revenues.

Sasken

Sasken

Sasken

Sasken

Sasken Communication Technologies

We recommend a buy in Sasken Communication Technologies stock from a short-term perspective. It is evident from the charts of the stock that following a medium-term downtrend from Rs 184 to Rs 127 between August and early November, it found support in the range of Rs 130 and Rs 140 last week. Subsequently the stock bounced up resuming its intermediate-term uptrend that has been in place since March low of Rs 41.50. The stock conclusively breached its medium-term downtrendline as well as 50-day moving average recently and continued to rally by gaining 7 per cent on December 3. We notice that there is an increase in volume over the past two trading sessions. The daily and weekly relative strength indices have entered into the bullish zone from the neutral region. Besides, the daily moving average convergence and divergence indicator has signalled a buy and is on the brink of entering in to the positive territory. Our short-term outlook on the stock is bullish. We anticipate it to move upward until it hits our price target of Rs 184 in the approaching trading sessions. Trader with a short-term horizon can buy the stock, while maintaining a stop-loss at Rs 158.

via BL

Annual Report - Sasken - 2008-2009

SASKEN COMMUNICATION TECHNOLOGIES LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

Your Directors have pleasure in presenting the report on the business and
operations of the Company along with the Audited Accounts for the financial
year ended March 31, 2009.

Sasken Communication

We recommend a buy in Sasken Communication Technologies from a short-term trading perspective. This stock witnessed buying interest in line with the benchmark indices and jumped almost 13 per cent accompanied with good volume on July 14. It broke out of the symmetric triangle pattern (a continuation pattern), which was in formation since early June. The stock has been on an intermediate-term uptrend from its March low of Rs 41 and the uptrend-line is intact. In mid May, the stock conclusively broke through its 200-day moving average and is trading way above 200- and 50-day moving averages. The daily relative strength index has entered the bullish zone and the weekly RSI is already featuring in this zone. Taking into consideration the break-out of the symmetric triangle pattern, the short-term outlook appears to be positive for the stock. We expect it to move up until it hits our price target of Rs 128. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 109.

via Business Line

Sasken Communications

Sasken Communications

Sasken Communications

Sasken Communications

Sasken Communications

Sasken Communications

Ratnamani Metals, Sasken Communications, Hero Honda

Ratnamani Metals, Sasken Communications, Hero Honda

Sasken Communications

Sasken Communications

Sasken

Sasken

Bank of India, Binani Cement, HDFC Bank, EMCO, ICICI Bank, Sasken Communications

Bank of India, Binani Cement, HDFC Bank, EMCO, ICICI Bank, Sasken Communications

Great Offshore, Religare, Sasken, SBI, Tata Motors

Great Offshore, Religare, Sasken, SBI, Tata Motors

Sasken Communications

We recommend a buy in Sasken Communication Technologies at current market price. From the weekly chart of Sasken Communication Technologies it is clearly evident that it had been on a long-term downtrend between June and November 2007 (from a high of Rs 584 to a low of Rs 250). However, the stock found support around Rs 250 in mid of November 2007, which is a historically key support level and began to trend up. During the course of this up-trend, the stock crossed over th We 21-day and 50-day moving average line and later penetrated a significant resistance level of Rs 305 during end of December 2007. We notice that volumes are rising for the past one week. The daily momentum indicator is featuring in the bullish zone and the weekly momentum indicator has recovered for the oversold region. The daily moving average convergence divergence is progressively rising in the positive region. The immediate support for the stock is at Rs 310 and the next support is at Rs 250 levels. The short-term investors can buy the stock with stop at Rs 310. We expect the stock rally up to the resistance level of Rs 395 in the short-term.

Via BL

Insurance Sector, Lupin, Opto Circuits, Sasken, Telecom Sector

Insurance Sector, Lupin, Opto Circuits, Sasken, Telecom Sector

Sasken: Hold

Shareholders can hold on to the shares of Sasken Communications with a two-year perspective. The stock, at its current price of Rs 301, trades at 20 times its trailing 12-month earnings.

At this valuation, the stock price appears to capture Sasken’s near-term growth prospects. The share trades at a discount to other telecom software companies such as Subex Azure or Tanla Solutions but at a premium to Tier-2 software companies such as Hexaware Technologies and iGate Global Solutions.

The margin growth for the company has been steady, but slow. EBITDA (earnings before interest, tax, depreciation and amortisation) margin at 17 per cent is lower than Subex Azure, Tanla Solutions and Hexaware Technologies.

Sasken has hedged $46.6 million, around 40 per cent of its revenues, at Rs 43.02 to the dollar. This and the fact that Sasken’s US exposure is restricted to 35 per cent of its revenues, the lowest among Tier-2 players, may provide some cushion against margin erosion due to rupee appreciation.

When Sasken’s product business, a high-margin one, starts making higher contributions to revenues over the next 12-18 months, there would be scope for a higher profit margin profile. The volume growth and the highest contributor to revenues will continue to be the services business for the next few years.

Business

Sasken is a pure-play telecom software vendor. The company caters to requirements across the telecom business span — network equipment vendors, mobile handset vendors, semiconductor companies, telecom services companies and test and measurement companies.

However, the prime mover at this point in time appears to be the handsets business which provides services, develops protocols and multimedia applications for a variety of vendors. This is accomplished through a strong working relationship with Texas Instruments and Symbian for smart-phones chipset and operating systems. These help Sasken leverage on the middleware and application development capabilities.

Prime Movers

Sasken derives 44 per cent and 19 per cent of its revenues respectively from the EMEA (Europe and Middle-East Asia) region and India.

This is significant for a few reasons. Europe is the largest market for high-end telecom services and Sasken has strong relationship with clients such as Nokia which are looking to expand market share there. This may help Sasken tap a potentially sound market in the next few years.

In West Asia, some countries such as Qatar are inviting applications for second or third telecom player licence, thus opening a vista of opportunity for telecom players. Sasken works with Nokia, Nortel, Motorola, Lenovo and Samsung which are potential suppliers of network equipment and other infrastructure to players who may win the licences.

This again presents a potential opportunity for Sasken to deliver on its R&D capabilities and services business as well.

This geographical diversification also means that Sasken’s exposure to the US markets and any potential slowdown is lower.

The company’s revenue model with respect to its handsets business is based on a royalty/licensing component and a services component. This gives Sasken a sustainable revenue stream linked to the sale of handsets.

This model is working reasonably with NTT DoCoMo. The shipment of Motorola phones is to start from the third quarter and is expected to contribute to revenues in the medium term.

The shipment of Lenovo mobile phones has been delayed but is expected to contribute significantly to revenues, as Lenovo phones are targeted at the Chinese market, which is the second fastest growing telecom market.

In the handsets business, the company works across technologies such as 2G, 2.5G and 3G. This diversity is important for a market such as India that has requirements across the low- and high-end phones.

Working with clients which have India and China as their top priority markets is a good augury for the company.

Risks

The mobile handset products business and royalty model depend on offtake for these handsets in the various target markets of clients.

The top five customers contribute over 74 per cent of Sasken’s revenues, representing concentration risk. The semi-conductor and network equipment segments of the company are witnessing relatively slower growth and may not contribute significantly to the margins.

Attrition, at over 23 per cent, among the highest in the IT industry, poses execution risks.