Reduce Sasken: Angel Broking

Angel Broking has downgraded its rating on Sasken Communication Technologies from buy to reduce in its October 16, 2008 research report. "Sasken recorded a disappointing 4.9% qoq growth in its 2QFY2009 Top-line to Rs 176 cr. Going ahead, we expect Sasken to record a 19.0% and 17.6% CAGR growth in Top-line and Bottom-line respectively, over FY2008-10E. Given the disappointing performance recorded this quarter, we have downgraded our numbers for Sasken and consequently, our EPS estimates for FY2009E and FY2010E are 28% and 26% lower respectively, compared to our earlier estimates."

"Given that top-tier software companies are trading at P/E ratios of 7-11x FY2010E EPS, we expect a mid-sized player like Sasken to trade at 50-60% discount. Consequently, even though at the CMP, the stock is trading at 5.1x FY2010E EPS, we believe such a discount is warranted. We have given around 20% discount to other mid-sized software companies like Tech Mahindra as well. We downgrade the stock to Reduce from Buy," says Angel Broking's research report.