Patni Computers

PATNI COMPUTERS - PAST PERFORMANCE  WINDOW (CMP: 460)
This company has been one of the best employers in the country for a number of years. Business concentration in US and japan remains a risk. Conservative growth company w good fundamentals
	2006	2007	%	2008	%	2009	%	2010	%	REMARKS
EQUITY	27.56	27.66		27.8		25.62	25.8	10.52		Absolutely no dilution. Great indicator in itself abt mgmt
SALES	876	998	14	1172	17	1541	31	1734	13	In line with industry
PROFIT	194	205	6	387	89	389	1	542	39	Consistent growth in profits
DIV	125	150	20	150	0	150	0	150	0	Consistent but on a FV of 2, this is peanuts
EPS	14.11	14.88		28	88	30.4	9	42	38	Growth
DEBT	0	0		0		0		0		Absolutely no cause of concern
RES	2013	2180	8	2530	16	2495	-1	3165	27	High reserves. Bonus candidate
BOOK VAL	148	159	7	184	16	196	7	247	26	Consistently increasing Book value.
DEBT/PR	0	0		0		0		0		Absolutely no cause of concern
O MARGIN	22.1	20.5		33.0		25.2		31.3		Clearly improved efficiencies yoy
CASH FLOW - OPS	340	242		419		451		617		Consistently increasing
ROIC		9.3		15.1		15.4		17.1		Exceptionally High ROIC
OBSERVATIONS AND CONCLUSIONS
Summary	1. This is an example of a very good company , with excellent management - no dilution, regular dividend and available at a PE of 9 in an industry where PE is around 25. It is not in the league of Infosys but cannot be relegated to the level of Sonata or others.
Negative	Even though Patni Computer System’s September 2010 quarter performance was in line with the Street’s expectations, it lagged behind the growth reported by its bigger peers during the current results season. The company’s volume growth and client additions were slower than its peers’. Moreover, its December quarter revenue and profit guidance doesn’t hold any promise either.
Dividend	Yield is meaely. Not a div stock
Conclusion	The compnay is returning 10 Rs / 100 as EPS. This is a good return. Wait for drops till 400 and then enter is my recommendation. Do not enter now as the charts also show it is bearish. In addition, strengthening of the dollar is a big negative for the industry as a whole
Target	If we assume a growth in EPS of 10%, the forward EPS for the year will be around 42 and at a PE of 10, the stock could command a MP of 420 . Good  for a conservative portfolio
Booster	Also could be a prime bonus candidate bcos of reserves