Earning Release

Genpact Limited's (NYSE:G) 3Q 09 revenues came in as expected with modest y-o-y and q-o-q growth, led by an uptick in business from non-GE clients. Top-line performance was limited by the declining y-o-y and flattish q-o-q revenue growth from GE, which is a key client. Cost control measures adopted by the company to mitigate margin pressure arising from a mute business environment led the operating margin expansion in 3Q 09. However, high tax related expenses dampened reported earnings at net level. Management retained FY 2009 revenue guidance from 2Q 09, unlike its peer WNS Holdings, which raised guidance to the upper end of the previously guided range. Both the actions signal stability in the business environment. In addition, the company expects to effectively manage costs in order to boost margin and earnings expansion and has guided for higher adjusted operating income margin. At current levels we maintain our HOLD rating for Genpact’s NYSE common stock and will reassess our rating and our estimates in our next update report in the coming weeks. We had previously rated the Genpact European stock a SELL as we anticipated a negative currency impact from the depreciation of the USD against the Euro over the next 6-12 months. Although we continue to anticipate a negative currency impact, at current levels however, we upgrade the European stock rating to a HOLD until we reassess our rating and target price in our update report in the coming weeks.

Vivo Participações S.A.'s (NYSE:VIV) 3Q 09 revenues were above our expectations due to higher-thanexpected growth in Average Revenue Per User (ARPU). EBITDA and EBIT registered strong y-o-y growth and were significantly above our estimates due to higher-than-expected top-line performance and lower-than-expected selling expenses and handset costs. In light of strong 3Q 09 performance we are likely to revise our estimates and target price upwards. Until then we maintain our HOLD rating on the common stock. We will reassess our target price and rating in our 3Q 09 update report. Although we anticipate a negative currency impact on the ADR over the next 6-24 months and the target price supports a SELL at current levels, in light of possible upward revision in our estimates we maintain our HOLD rating on the ADR. We will reassess the target price and rating for the Vivo ADR in the coming weeks.

WNS (Holdings) Ltd's (NYSE: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.

The Governor and Company of the Bank of Ireland (NYSE:IRE) reported a y-o-y decline in Net Interest Income (NII) and bottom line in 1H 10; attributable to decrease in Net Interest Margin (NIM) and higher impairment charges, respectively. However, the bank reported a significant increase in non-interest income driven by investment gains at assurance business. Nonetheless, as we continue to anticipate higher impairment charges going forward, attributable to the downturn in the Irish property market and growth in unsecured consumer lending amid rising unemployment, we maintain our bleak outlook for Irish common stock and expect to trim our target price in our next update report. As a result, although the current target price suggests a HOLD we downgrade our rating from a HOLD to a SELL for the common stock. We will reassess our target price and rating in our next update report. As we now anticipate a marginal negative currency impact on the ADR over the next 6-24 months and given current price levels we maintain our HOLD rating for the ADR. We will reassess our ADR (1 ADR = 4 common shares) rating for Bank of Ireland in our next full update report.

Despite broad-based volume growth, Unilever Plc (NYSE:UL) reported a y-o-y decline in revenues, below our estimate. However, adjusted1 operating and net margin were significantly above our estimates due to lower-than-anticipated operating costs as a percentage of revenues, and effective tax rate. As the results were broadly above expectations we are likely to revise our estimates and target price upwards. However, as the target price currently supports a HOLD rating, we temporarily maintain our HOLD rating for the common stock. We will reassess our target price and rating in our 3Q 09 update report. We continue to anticipate a positive currency impact on the ADR over our 6-12 month investment horizon. Therefore, we maintain our BUY rating and will reassess our target price and rating in our 3Q 09 update report.

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