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PTC + Mphasis – Recommendation Follow Up

August 7, 2007

Power Trading Corporation – PTC was recommended by ICICI Securities Research. In a follow up report they have reiterated a BUY with a price Target of Rs 96 within 3-4 months.

We had recommended Mphasis last month. Citigroup in a report released just a while ago has recommended a BUY on the stock with a price target of Rs 400.

Mphasis reported consolidated numbers (Mphasis + EDS India) after the merger with EDS India. Revenue at Rs.5.32b was up 6% qoq (up 14% in US$ terms) while net profit was Rs.513m (-19% qoq) – negative swing of ~Rs.145 qoq in forex line. Mphasis (ex EDS) reported revenues and net profits of Rs.3.55b and Rs.410m as against our expectation of Rs.3.54b and Rs.297m.

Target price of Rs400 is based on 24x FY09E EPS. We believe P/E remains the most appropriate valuation measure given Mphasis’ profitable record and high earnings visibility.

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