Patni surpassed the upper range of revenue guidance (USD176-177mn) to achieve USD178.8mn (6.7%QoQ growth) in line with expectation (PINCe USD178.4mn). For Q4CY10, it has guided for muted revenue growth (0.7-1.2%QoQ) and ~5.8-3.7%QoQ decline in PAT (excl forex gain).

Revenue in-line expectation; driven by volume growth Product Engineering Services positively surprise; BPO grew due to acquisition APAC leads growth, US growth lower compared to peers Highest net addition of 1,663 employees, attrition shot up

Outlook–Revenue growth outlook for Q4CY10 is muted at 0.7-1.2%QOQ to USD180-181mn and PAT of USD22.5-23mn(excl. forex gain). Hiring in Q3 and guidance of 1,000 net add in Q4 is encouraging for growth, however in short term margin will dip as utilisation is expected to fall. High cash & equivalent (Rs14,161mn) support valuation and also open opportunities for inorganic growth. We maintain ‘HOLD’ rating with a target price of Rs500 based on 12x CY11E earnings.