Spotlight on Zensar Tech, Dish TV and Satyam

STREET CUES

Brokerage houses Angel Broking, SSKI, Enam Securities and Religare Securities see Zensar Technologies, Dish TV, Satyam Computer and Aventis Pharma as favourite picks.

Mumbai-based Angel Broking has recommended a 'buy' on Zensar Technologies.

"Zensar this quarter reported an impressive 15.8 per cent q-o-q growth in top line. This was a result of strong volume-led growth. The rupee appreciation during the quarter had an adverse impact of 1.75 per cent on the top line of the company.

The top line growth was driven by decent traction in all the major service lines of the company," said a report of Angel Broking.

Zensar has comfortably outperformed top line estimates by as much as 11 per cent, while the bottom line has outperformed the estimates by around 4 per cent.

However, the EBITDA has underperformed to the tune of 223 bps. "We expect revenues to rise at a CAGR of 32 per cent during the same period. We expect some amount of expansion in margins, with a 40-50 bps increase expected each year," the report. added.

Brokerage house SSKI believes Dish TV, an Essel group entity, which pioneered the DTH business in India, is fairly valued.

"The process of a structural change has kick-started in the Indian television distribution business. Interestingly, digitisation is simultaneously happening on multiple platforms, including DTH, digital cable and IPTV. We expect 37 million Indian households to be digitally connected by 2010, of which 16 million (43 per cent) are likely to be on the DTH platform. Unlike cable distribution, the DTH business would see organised players vying for a share, which implies a fierce battle. While Dish TV's first-mover advantage would let it retain leadership till at least FY09, we expect its market share to fall from 80 per cent currently to 32 per cent after FY09 on a subscriber base of 4.4 million. We expect Dish TV to turn profitable not before FY10," said an SSKI report.

Satyam Computer has been rated as an 'outperformer' by Enam Securities.

"Satyam's Q4FY07 top line with 7.2 per cent growth was marginally lower than our expectations. Higher offshore revenue share at 50.6 per cent is the key reason for the difference, which enthuses high confidence in earnings quality going forward. PAT with 15.8 per cent growth at Rs 400 crore was higher than our expectation, largely driven by lower depreciation and higher other income. We retain our sector outperformer rating on the stock," Enam Securities said in its report.

Religare Securities sees a good upside for Aventis Pharma.

"Aventis Pharma is one of the few MNCs in India whose product portfolio mirrors that of its parent company Sanofi-Aventis (SAL). This makes Aventis an ideal vehicle for the timely launch of SAL's products in the country and lends it a distinct edge over peers. The company's focus on the rapidly growing chronic therapy segment is expected to drive future growth. Aventis's focus on strategic brands in the chronic segment, powerful marketing network and close alignment with the parent company make the stock attractive from a long-term perspective," a Religare report said.