Sell Sasken, target of Rs 147: PINC

PINC Research has maintained its sell rating on Sasken Communication Technologies with a 12-month price target of Rs 147 in its April 23, 2008 research report. "Sasken Communication Technologies (SCTL) reported better than expected results as net sales increased by 11.3% QoQ to Rs 1.6 billion while OPM improved by 770 bps to 19%. This led to net profits seeing a huge jump to Rs 148 million versus Rs 39 million in Q3FY08."

"At the CMP of Rs 188, SCTL is trading at a P/E of 14.0x and EV/EBIDT of 6.7x FY09 estimates. The sustainability of Q4FY08 performance continues to be under threat due to the deteriorating economic conditions in key geographies which could further impact the growth outlook in key markets. Additionally, the poor outlook regarding the product division adds to the margins and earnings pressure SCTL faces. We do not believe that current valuations, which are at a premium to mid cap IT peers factor in the risk to earnings. Hence, we maintain our ‘SELL’ recommendation with a 12-month price target of Rs 147," says PINC's research report.

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