Again bought more stocks in July-sept.2010 between 510-567 rs.

Before i write any further – consider these figures on a standalone basis – operating margins are 23.12%; Net profit margin – 15% (now this is good stuff)

Considering their first qtr. results i felt that their fair valuation is Rs.1500, but that did not happen.

Now their third qtr. results amply prove it.They are on a new and higher pleateau.

Their cash eps (source:(source:http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=532883))

on a standalone basis for the first 3 qtrs, is rs 76 and on a consolidated basis would around 27-28 so we can safely assume that their cash eps is Rs.110 (consolidate basis).

And going by what Mr. P. Srihari has said in a interview, without acquisitions they are going to grow at 10%-15% p.a. next year and with acquisition they are going to grow at 25%p.a. next year. so that gives a consolidated cash eps of more than Rs.120.

Now assuming a p/e ratio of 15, this company should be valued at more than 1800 per share.

So i feel fair valuation for this stock is betn. 1800-2400 rs. per share.

Also consider that- this company’s business model is different from the business model of other Mid tier IT companies, and over a period of time the subsidiaries will start contributing more to the bottomline and also increase the profit margins.

(logic for p/e-15: earnings yield would be 6.66%, 166 basis points more than the 5% inflation rate which by RBI is considered to be the right and comfortable inflation rate for India. And in normal circumstances also a usual FD rate- note: the present inflation rate & FDs are abnormal and unsustainable)

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