Sasken reported good results in Q1 FY 2011 on a standalone basis. Sasken‘s revenue from software services, software products and other services stood at Rs. 104.10 crores, up 8% over the corresponding Quarter’s revenue of Rs. 95.63 crores. Sasken‘s gross profit stood at Rs. 37.20 crores, up 33.76% over last year’s Q1 GP of Rs. 27.81 crores. Sasken‘s profit after taxes soared to Rs. 24.63 crores, up 45% over last year’s Q1 net profit of Rs. 16.92 crores. Sasken‘s diluted EPS was Rs. 8.63, up 40% over last year’s Q1 EPS of Rs. 6.15.
Sasken Communications‘ consolidated results were also attractive. Sasken‘s Consolidated Revenues for Q1 FY 11 stood at Rs. 145.8 crores, down 5.2% sequentially over the previous quarter but up 4.5% YoY from Q1 FY 10. Sasken‘s consolidated EBIDTA for Q1 FY 11 stood at Rs. 28.2 crores up 3.4% sequentially over the previous quarter and up 17.3 % YoY from Q1 FY 10. Sasken‘s consolidated PAT for Q1 FY 11 stood at Rs. 23.1 crores, up 5.7% sequentially over the previous quarter and up 14% YoY from Q1 FY 10. Sasken’s PAT Margins for the quarter stood at 15.8%.
Sasken Communications appears to be on a strong growth trajectory. This is evident from the fact that in Q1 FY 2011 Sasken Communications added gross 465 employees.
Sasken Communications added 18 new customers during the quarter taking the total of Sasken‘s active customers to 116.
Sasken Communications is likely to benefit from the expected growth in the 3G and broadband wireless access (BWA) spectrum field. The auctions 3G and broadband wireless access (BWA) spectrum attracted a lot of attention and there are expected to be huge outsourcing opportunities arising from 3G and BWA which Sasken Communications can capitalize on.
The other healthy aspect is that Sasken Communications is not dependent on a particular geography. Sasken Communications derives about 48% of its revenue from Europe and Middle-Eastern Area while North-America contributes 18%. Sasken Communications derives the balance from the Asia-Pacific region. The result is that the debt crisis in Europe did not adversly impact Sasken Communications.
Why investment in shares of Sasken Communications makes sense:
From an investment perspective, the risk-reward ratio favours an investment in Sasken Communications. Sasken Communications‘ book value of Rs. 176 offers a lot of comfort given that the CMP is Rs. 198. Sasken Communications paid a dividend of 60% in FY 2010 which offers a dividend yield of about 3% which is not unreasonable. At the CMP of Rs. 198 and FY 2010 consolidated diluted EPS of Rs. 26.62 Sasken Communications is trading at a PE of about 7.43, which is quite reasonable. Sasken Communications has low debt of about Rs. 26.23 crores as of 30th June 2010 which is negligible compared to the shareholders’ funds of Rs. 373 crores. It is also evident from the results that Sasken Communications is on a strong growth trajectory in the telecom sector. So, there’s not much to lose and lots to gain.
About Sasken Communications:
Sasken Communications is a global provider of software and support services for the communications industry. Sasken Communications works with Network OEMs, semiconductor vendors, Terminal Devices OEMs and Operators across the world. Global Fortune 500, Tier 1 companies in each of these segments are Sasken Communications‘ customers.
Sasken Communications was established in 1989. Sasken Communications employs over 3,000+ people at its offices in India, China, Finland, Germany, Japan, Mexico, Sweden, UK and the U.S.