ratsharp

Patni: Hot As Indian Curry

dont mix up analysis with experience.... i know of many analysts who do a much betterjob than Revolving ceo's by telling the ceo on what is strategically good for them!!!

Being a part of a company ..makes one biased .. not an insider.. and definitely not a automatically qualified good analyst. Insiders/experienced folks should focus on diffrentiating themselves through information and use that to make investment decisions only. Dont mix the two

Companies like sapient, kane, patni, polaris, niit, hexaware etc. will take years to bring a culture required for continuous success. Undoubedly they are great buys at trough .. but only at troughs ..not at peaks, so any form of relative valuation applies only at trough/near troughs... or in periods of excited bull runs .. the rest of the times ( like what we see now) is a time to ignore them.

Patni: Hot As Indian Curry

You have a long way to go before becoming a good analyst. period.

margins are key ... compare that and that makes up for the diffrence between headcount and the MCap multiple.

higher headcount entails an ability to reduce base fixed cost so dont directly compare a 12K headcount with 72 K headcount

look at the cash on patni's books and infosys books .. see what that can buy and at what margins.. see what it adds to current bottomline and then then make the conclusions.. they will be more robust.

compare peak margins and trough margins .. see the std deviation ... for both adjust the mean margins to see how time dependant and volatile that can be ...

just to enlighten you .. buying an offshore company even at cheap valuation is not the gratest PE investment considering the risks on margins ... look at eds/mphasis etc ... 10% is where it can go and settle

look at EV/S of larger firms with 10% margins ... jus at abt 2X sales ..thats the trough where a patni can go to

dont use a call/put analysis to make a longer term analysis .. its like trying to get nickels infront of a steam roller!!! And if you ever think about paired trades : learn the golden rule ::: do you have the dough to hold it till maturity!!!