Indra Sistemas: Q1 13 results roughly in line, FY13 guidance reiterated, and dividend cut
SELL, Fair Value EUR8.8 vs. EUR8.6 (-17%)
We reiterate our Sell rating but raise our DCF-derived fair value to EUR8.8 from EUR8.6 following Indra’s board decision to cut the dividend by 50% in 2013, which will reduce net gearing by an est. 12ppt and have a 3% positive impact to our fair value. Q1 13 results reported yesterday evening were roughly in line with expectations and management reiterated FY13 guidance. While the decision to cut the dividend is a sensible one in our view, we consider this is not a positive signal to shareholders who were holding Indra shares just for the high dividend yield it used to offer until now (7%).
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