>Rolta (CENTRUM)

● 42% decline in stock price unwarranted: Rolta saw a sharp sell-off last week with the stock falling 42%. Our talks with the management indicate the fundamentals of the company remain intact and the sell-off is unwarranted.

● Management confident of 10% revenue growth in FY10 even in ‘worst-case’ scenario: The management exuded confidence of achieving a 10% revenue growth in FY10E even on a ‘heavens may fall’ scenario. In such a case, the company would deliver a fully-diluted EPS of Rs17.2 per share.

● Buyback of FCCBs a likely near-term trigger: Rolta has announced plans to buyback FCCBs of $150mn in part or in full. This is a likely near-term trigger for the stock.

● Order book to help achieve targeted growth: The company has an order book of Rs15,918mn, executable over the next 15 months. We believe this would help the company achieve its targeted 35%-40% growth in FY09.

● Maintain Buy rating: At CMP, the stock trades at a attractive P/E of 2.7x, despite having best in class return ratios and revenue growth. We maintain our Buy rating with a DCF-based price target of Rs124, which discounts our FY10E EPS of Rs18.8 by 6.6x. At the current price, the stock now delivers a dividend yield of 9%, with minimal risk in our view.

To see full report: ROLTA