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JP Morgan Underweight on Mosear Baer

May 12, 2007

JP Morgan in a research report is bearish on the prospects of Moser Baer. Moser reported muted 4QFY07 results, with 5% Q/Q revenue growth and 6% Q/Q EPS growth – low given that Mar quarter is typically seasonally strong.

Management expects normal seasonal weakness in 1HFY08 with pricing pressure in both DVDR and CDR. Management expects PV revenues of US$80-100 million in FY08, slightly lower than our earlier estimates.

JP Morgan’s sum of parts valuation based Dec-07 price target remains at Rs325/share [CMP of Rs 370] and they expect weak performance in 1HFY08 to impact the share price negatively. Further, Moser has announced plans to raise US$150 million that will result in equity dilution or further deterioration of D/E ratios.

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