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Satyam profit takes a dip

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CIOL Bureau
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HYDERABAD: Satyam Computer Services Limited suffered a 30.36 per cent dip in net profit for the quarter ended December 31, 2006 while experiencing an improved margin of 205 basis points sequentially.

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The net profit stood at Rs 343.3 crore from Rs 493.07 crore posted for the year-ago period.

At the BSE Ltd, the scrip was trading 5.1 per cent lower at Rs 488.8 from the previous day’s close, staging a marginal recovery from the lows of Rs 476 when the results were first declared. The results also prompted Satyam to come up with a reduced guidance for FY `07.

The total income saw a 5.67 per cent increase at Rs 1604.60 crore as compared to Rs 1518.49 crore reported for the quarter ended December 31, 2005.

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Addressing media persons here today, B Ramalinga Raju, chairman of the company, said that Satyam recorded 7.7 per cent sequential growth in dollar terms and 3.7 per cent in rupee terms.

Putting up a brave face he carved out a positive from a poor quarter. "A significant positive in Q3 is the expansion of EBITDA margins by over 200 basis points. We enhanced our margins despite the exchange rate issue with the rupee becoming expensive. Our margins are higher compared to few other competitors,’’ said Raju.

Chief financial officer Srinivas Vadlamani credited increased offshore and operational efficiencies as the factors that drove the operating margins.

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EPS stood at Rs 5.14 as compared to the guided Rs 5.11.

After the revised guidance, the company now expects revenues for FY07 to be in the Rs 6434-6442 crore range as against their earlier estimate of Rs 6452-6476 crore.  The annual growth rate in the topline is now 34.3 – 34.4 per cent from from 34.6-35.1 - 34.3-34.4 per cent.

"Our guidance is for stable prices. We expect an enhanced priced era in the next 2-3 years,’’ Raju added.

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Raju also said that the company’s European business now contributes 19 per cent. ``This will enhance our business in a desired way,’’ said Raju.

He also said that Satyam has 10-15 large deals in the pipeline and expects to get a couple of them within the next two months.

During the quarter, Satyam added 34 new customers taking the total to 541. The total strength of the company at the end of the quarter stood at 34405 after the addition of 2746 employees.

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Nipuna to be fully-owned: Satyam plans to make Nipuna its wholly owned subsidiary by buying out the stake of the investor by May this year. Satyam plans to buy out the stake for a value ranging between $35-45 million.

During the quarter ended December 31, 2006 the company entered into an agreement with the investors for redemption of 50 per cent of the preferential shares. The rest 50 per cent would be converted into equity shares, the company stated.

Expressing shock:  Satyam chairman B Ramalinga Raju expressed shock over the market reaction. Ram Mynampati, seconded Raju’s thought. ``We didn’t expect the market to react in such a way. We think we have done a good job. I think people will soon realize this,’’ he opined.

No talks with IBM: Satyam also reiterated its stance on rumors circulating in the market of a possible acquisition bid by IBM. Without mentioning IBM, Raju maintained that the company is not in talks with any large system integrator.

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