ICICI Securities 'suspends' its rating on Mahindra Satyam
ICICI Securities has ‘suspended’ its rating on Mahindra Satyam and has recommended booking profits in the stock.
By ET Bureau |
Mahindra Satyam
CMP: Rs 98.50
TARGET PRICE: NA
ICICI Securities has ���suspended��� its rating on Mahindra Satyam and has recommended booking profits in the stock, citing lack of clarity on revenue run rate and recent rise in stock valuations. ���Our channel checks indicate that Mahindra Satyam���s revenue run rate (calculation using recent history to projected revenues) has now reduced to $1-1.3 billion versus earlier indicated revenue of approximately $1.3 billion,��� the brokerage said in a report.
���Assuming revenues of $1.15 billion, we estimate that Mahindra Satyam would require laying-off another 5,000 employees to keep EBITDA (operating profit) margin at +15%, over & above its earlier announced Virtual Pool Programme,��� it said.
���Even with significant upgrade, the stock is still not cheap. Despite likely long-term improvement in financials, we do not foresee any major catalyst in the short term,��� ICICI Securities said. ���Hence, we believe that with the recent run-up in the stock, risk-reward is not wholly favourable, given lack of clarity on the revenue run rate,��� it added.
CMP: Rs 98.50
TARGET PRICE: NA
ICICI Securities has ���suspended��� its rating on Mahindra Satyam and has recommended booking profits in the stock, citing lack of clarity on revenue run rate and recent rise in stock valuations. ���Our channel checks indicate that Mahindra Satyam���s revenue run rate (calculation using recent history to projected revenues) has now reduced to $1-1.3 billion versus earlier indicated revenue of approximately $1.3 billion,��� the brokerage said in a report.
���Assuming revenues of $1.15 billion, we estimate that Mahindra Satyam would require laying-off another 5,000 employees to keep EBITDA (operating profit) margin at +15%, over & above its earlier announced Virtual Pool Programme,��� it said.
���Even with significant upgrade, the stock is still not cheap. Despite likely long-term improvement in financials, we do not foresee any major catalyst in the short term,��� ICICI Securities said. ���Hence, we believe that with the recent run-up in the stock, risk-reward is not wholly favourable, given lack of clarity on the revenue run rate,��� it added.
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