Reduce MphasiS Ltd - Emkay Global

MphasiS Ltd
CMP: Rs325
Target Price: Rs325

- Op performance missed exp with below par rev growth (-4% QoQ in US$ terms) while mgns declined by ~150 bps QoQ to 17.9% aided by weak currency, improvement in utilization

- Profits at Rs 1.8 bn (-5.5% QoQ, -35.4% YoY) missed est. driven by lower op performance and lower than expected forex gains ( Rs 199 mn V/s est of ~Rs 459 mn)

- Raise our Oct'12E earnings by ~9% to Rs 35.4 aided by lower currency resets( to Rs 48/$ V/s Rs 45/$ earlier) despite further cut to modest rev growth expectations

- Retain REDUCE with an unchanged TP of Rs 325. Cash at ~27% of mkt cap will limit sharp downsides post ~ 50% fall in price in last 1 yr, however see no end to co's woes.

Source : Equity Bulls

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