Angel neutral on Satyam Computer Services

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Angel Broking has downgraded its rating on Satyam Computer Services to neutral in its April 21, 2008 research report. "Satyam reported an impressive 10% qoq growth in consolidated Top-line for 4QFY2008, primarily driven by volume growth of 8.8% qoq (standalone). Pricing also saw continued upside, with offshore rates growing by 0.5% qoq and onsite rates by 0.6% qoq. This is the seventh consecutive quarter in which Satyam has achieved 8%-plus sequential volume growth."

"Going ahead, we expect Satyam to maintain a CAGR growth of 22.7% in Top-line and 13.2% in Bottom-line over FY2008-10E. We expect EBITDA Margins to remain under pressure and decline by 50-60bp annually over the mentioned period. At the CMP, the stock is trading at 14.5x FY2010E EPS. We have assumed a 'best-case scenario' for Satyam in terms of volume growth, pricing and Margin performance. Even so, the stock is still trading at slightly high valuations and given the risks inherent in Satyam's assumptions for FY2009, we downgrade the stock to Neutral," says Angel's research report.

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