Buy Satyam Computer, target of Rs 456: KRChoksey

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KRChoksey Research has maintained its buy rating on Satyam Computer Services with a target price of Rs 456 in its July 22, 2008 research report. "While rupee revenue was above guidance, the company has missed its USD guidance(US GAAP) after adjusting for rupee benefits. Since last 8 quarters Retail/Transportation sector has been growing at 15% q-o-q. EBITDA increased 14.8% q-o-q to Rs 623.3 crore in Q1FY09. Visa costs impacted EBITDA margins negatively by 80bps. In comparison to the previous 2 quarter volume growth of 8.8% and 9.4%, Q1FY09 volumes grew by merely 3.01%."

"At the CMP of Rs 368, Satyam is trading at 13.3x is TTM earnings of Rs 27.7 and 11.3x FY09E EPS of Rs 32.56. We maintain a BUY on the stock with a target price of Rs 456 based on a 30% P/E discount to Infosys. At the target price, the stock would be valued at 14.0x FY09E EPS of Rs 32.56, implying an upside potential of 23%," says KRChoksey's research report.

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