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BANGALORE: Satyam Computer Services, India's No 4 software exporter, is
expected to report January-March sales jumped from a year ago, but the market
wants to see how its full-year outlook matches up to those of its rivals,
analysts said.
Infosys Technologies, the sector's No 2 exporter, cheered markets earlier
this month with a 17-20 per cent sales growth forecast for the year, at the top
end of market estimates.
Any news about Satyam's plans for selling all or part of its 52.5 per cent
stake in loss-making Satyam Infoway, a leading Internet services provider, will
also be keenly watched.
Last November, New York Stock Exchange-listed Satyam, which announces results
on Wednesday, said it wanted to sell out of its Internet arm and curb further
investments. "The progress on Satyam's stake sale in Satyam Infoway and its
own sales growth forecast are big triggers for the stock," said Pratish
Krishnan, analyst at Cholamandalam Securities.
A Reuters poll estimated Satyam's fourth-quarter net sales at a median Rs
4.53 billion ($92.5 million), up 18 per cent on the year but only about two per
cent higher than the preceding quarter. Satyam forecast sales of Rs 4.40-4.55
billion. The poll forecast net profit at a median Rs 1.12 billion, nearly flat
from a year ago but down slightly more than six per cent from the third quarter.
Satyam's estimated drop in quarterly profit is in contrast to small profit
rises at Infosys and Wipro. Analysts expect weaker results based on the
performance of the software business of Satyam's Internet arm and the merger of
Satyam's marketing subsidiaries.
"Our key area of focus for Satyam will be on its operating margins,
which have declined 700 basis points over the last four quarters," said J P
Morgan India said in an earnings preview. "Further, this is the first
quarter in which margins will take into account the cost structures of the
marketing subsidiaries."
Satyam serves more than 40 Fortune-500 clients, with General Electric and
Sony Corp among its top five clients. Based in the southern city of Hyderabad,
Satyam employs more than 8,500 people.
Best of the bunch?
Most analysts have a buy rating on Satyam's stock, which usually trades at a
35-40 per cent discount to Infosys' price-to-earnings ratio.
On Tuesday, Satyam's shares were flat at Rs 263.50 on the Bombay Stock
Exchange. Its shares have risen 11 per cent in 2002, outperforming the 4 per
cent gain on the Bombay infotech index.
For the past year, Satyam is expected to have been an industry leader in
sales, but it is seen underperforming its four-year compounded average rate of
81 per cent sales growth.
The company forecast software services sales will grow by 44 per cent against
Infosys' 30 per cent. Satyam's limited exposure to the battered telecom
equipment sector has helped it outperform its more telecom-linked rivals, such
as Wipro.