Sasken recorded a sound 6.9% quarter-on-quarter (q-o-q) growth to Rs168 crore in its Q1FY2009 topline. This was a result of a healthy growth in its services business, which clocked a 7.4% q-o-q growth in revenues and rupee depreciation.
However, the products business grew at a relatively subdued rate of 3.3% q-o-q.
In dollar terms, however, the company recorded a relatively tepid 1.9% q-o-q growth in its services revenues, reflecting the challenging business environment. The company has stated that it continues to face uncertainty in its key networks business (telecom original equipment manufacturers).
EBITDA margins moved up 278 bps owing to lower operating costs and rupee depreciation. In terms of segment-wise Margins, services margins rose by 305bp q-o-q, while Products Margins rose by 84bp.
Going ahead, we expect the company to record a 23.1% and 36.6% CAGR growth in topline and bottomline respectively, over FY2008-10E. At the CMP, the stock is trading at 5.4x FY2010E EPS. We maintain a BUY with a 12-month target price of Rs201.