WNS (Holdings) Ltd's (WNS) 2Q 10 results came in marginally higher than our and consensus expectations. However growth performance was mute, as expected, on account of unfavorable currency movements as well as tightened business conditions. Sequential profitability at the operating and adjusted net levels were severely impacted by higher costs and operating expenses. However, y-o-y was a significant improvement, led by lower cost of services emerging from acquisition synergies and tax related expenses. Although WNS has revised its FY 2010 revenue guidance towards the higher end of the previously guided range, it continues to reflect mute growth performance. This we believe is led by factors such as a weak British Sterling against the US dollar and volume reductions the company has seen from clients in the travel and insurance sectors over the past year. Considering 2Q 10 operating and net performances we expect to revisit our estimates in the coming weeks. However, at current price levels and considering a challenged operating environment for BPO services, we do not expect a change in our rating for the WNS ADR. We maintain our current rating for the European stock as we now anticipate a negative currency impact on the European stock over the next 6-12 months.

From September 2009, the Research Oracle will begin to accept research submissions from readers – whether amateur or professional analysts – from around the globe. To receive notification of the launch and rules, contributors may register now at
http://www.iirgroup.com/researchoracle/researchoracleaward