High ROA
reasonable valuattion
Syntel has some very attractive attributes when you look at it's history as a company: The return on assets is consistently 20-30%. Right now, you don't pay much of a premium for them. Their profit margins are increasing and they have a strong balance sheet. The stock pops up on multiple screens for value, magic formula and even growth. There appears to be an imminent let down that is discussed, a loss of 17% of revenue from a joint venture, and soft guidance of only a low $2ish. Management is selling their positions down. They filed an S3 in September to sell 5 million shares. That, and the fact their business is unpopular anti-American offshore call-centers, explains the attractive valuation.
Another concern is that this company could be making the nasty transition from "growth darling" to "you're not so special/value" stock. They don't buy back shares. They pay an inconsistent and small dividend. It's hard to see upside. Will call centers in India trade at the premium they may deserve? Short interest is around 800k shares, which is down significantly from 3+ million. There was obviously a strong bear case a year ago. One source said it had to do with key employees leaving the company.
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