Opto Circuits

ANALYSTS' CORNER

HDFC Securities rates Opto Circuits as an "outperformer". The report states that the company is a leading supplier of non-invasive medical sensors for patient monitoring. It is primarily engaged in the manufacture of oxymeter probes and pulse oxymeters.

The report expects 40 per cent growth in topline and 47 per cent growth in bottomline over the coming two years. Patent expiry of one of the primary oxymeter sensor technologies offered by Nellcor is set to drive demand for Nellcor compatible SPO2 probes in the US.

The company achieved a major milestone during the first half of FY05 with the US FDA approval of its SPO2 probes. It is the only company in India to have an FDA approval for exporting medical sensors. The report expects the export of SPO2 probes to grow at a rapid pace in the coming years.

Infosys

Enam Securities, in its IT report, states that Infosys' revenues are expected to scale $2.8 billion in FY07E, backed by higher client transition rates and growth in new service offerings including consulting.

The company ranks the highest with respect to client transition rates, resulting in highest realisation per active client base. This ensures higher return on S&M investments.

The report considers the breakeven of Infosys China and Infosys Consulting, large deal wins and better volume growth leading to high q-o-q run rates as major triggers. Robust global delivery model and higher composition of fresh recruitments ensures sustenance of margins, but for rupee appreciation.

Additionally, with highest utilisation rates and higher billing rates vis-a-vis peers, Infosys requires lower employee base to achieve similar revenues. The company's valuations are reasonable vis-a-vis growth expectations. With 28.5 per cent CAGR (FY05-07) in PAT, the company trades at P/E of 23.8x FY07E.

Satyam

Enam Securities, in its report, states that Satyam has been showcasing consistent volume growth. Its revenues are expected to hit $1.3 billion in FY07E, backed by its leadership in package implementation services and higher growth in non-GE business (Q2 FY06 growth rate in non-GE business was nine per cent q-o-q and 37.3 per cent y-o-y).

The company's entry into $ one-billion revenue league is considered to be strategic. Other points that augur well for the company are higher client additions, improvement in clientele quality and lower offshore composition vis-a-vis peers (44 per cent in Q2 FY06). They offer scope for margin increase. Volume growth is critical for margin sustenance.

The company has seen consistent volume growth (up 7-9 per cent q-o-q and 35-40 per cent y-o-y). The report expects the net margin to expand and EPS to grow by 3-5 per cent in FY07E as subsidiaries break even.