Research Calls

CLSA Asia Pacific Markets has maintained a 'buy' on Satyam Computers. It says the guidance for 5.5 per cent q-o-q revenue and 8.2 per cent q-o-q EPS growth in the September 2005 quarter indicates the beginning of margin expansion.

The firm's bullish call on the stock has been based on the company's improved performance, driven by business strengthening over the last two years. Valuations stay reasonable at a 30 per cent discount to that of peers.

The company's standalone net profit of Rs 206 crore is in line with expectations and 8.7 per cent q-o-q volume growth was the highlight of a strong June quarter, even as other tech majors posted disappointing volume growth. Satyam's growth was distributed across industries and clients.

"With eight of the last nine quarters recording an expansion of 8 per cent q-o-q volume, it is payback time for Satyam's efforts to build leadership in specific areas," it adds.

I-flex solutions (underperformer)
ENAM Securities has downgraded i-flex solutions to 'underperformer'. The company's June 2005 quarter results were a disappointment. It reported a 24 per cent sequential dip in consolidated topline to Rs 274 crore, while net profit declined 85 per cent to Rs 15.2 crore.

The company attributes its conservative revenue recognition in deferred revenues as a driver to the drop. It adds that the associated costs for this deferred revenue have been recognised this quarter, squeezing reported margins.

The report states, "Revenues have declined due to a drop in license revenues and the appreciation in rupee. But a 20 per cent growth in tank size indicates higher licensing revenues going forward. Moreover, i-flex added 20 new customers, even as q-o-q revenues from Citigroup fell 37.6 per cent in products and 23 per cent in services."

Crompton Greaves (buy)
SSKI has initiated coverage on engineering major Crompton Greaves with a 'buy' call. The firm notes that Crompton Greaves will be a beneficiary of the upturn in the capex cycle. Crompton has a diversified product range that covers power and industrial systems, and consumer products.

The rebound in the capex cycle coupled with the Accelerated Power Development and Reform Programme (APDRP) initiative is expected to drive revenues of both the power and industrial systems divisions.