Silverline Q2 net jumps on other income

By : |October 31, 2000 0

MUMBAI: Indian software firm Silverline Technologies on Tuesday reported a
178 per cent rise in net profit for the quarter to September 30, helped by hefty
foreign exchange gains.

Analysts said the growth was below industry standards for a company of its
size, but Silverline shares were up Rs 8.15, or 2.8 per cent, at Rs 302.60, on
the Bombay exchange in Tuesday afternoon deals, while the benchmark index was up
0.17 per cent.

The firm said its net profit was Rs 481.92 million ($10.3 million) in the
three months to September compared to Rs 173.49 million in the year-ago period.

The financial year runs from April to March for most Indian companies.

Its other income jumped to Rs 212.58 million from Rs 9.22 million, with Rs
113.20 million coming from exchange differences on the translation of foreign
currency assets maintained abroad from its issue of American Depositary Shares
(ADS).

The ADS are listed on the New York Stock Exchange.

He company’s net sales rose to Rs 717.90 million from Rs 464.31 million.

Analysts said the performance after discounting the other income was not very
impressive.

"If you exclude other income the profit growth is only 64 per
cent," said Cholamandalam Securities research head in Chennai K Sivakumar.
"Sales has grown by just 55 per cent."

"This growth is certainly less than the industry standards for a
software company of this size," he said.

Acquisitions to drive growth
Analysts said the firm’s recent acquisitions would help drive its future growth.

"The company is progressing well in scaling up its operations and its
recent acquisition of SeraNova Inc will augment its presence in emerging
technology areas," said an analyst with a local brokerage.

Silverline announced the acquisition of Nasdaq-listed SeraNova Inc in an
all-stock deal worth $99 million, last Friday.

The firm expects the deal will create a highly competitive global software
development and Internet consulting firm.

Analysts said there was some concern about the equity dilution of 14 per cent
after this deal, but the longer term benefits would drive the share price.

Earlier, it announced the acquisition of Hong Kong-based SKY Capital
International in a $22 million all-cash transaction, which is expected to
increase its presence in the Asia-Pacific region.

"Looking ahead, their announcement of the two acquisitions should have a
clear positive impact in the coming quarters and there should be some upside for
this stock at these (current) levels," said Sivakumar.

(Additional reporting by Suresh Seshadri in Chennai)

(C) Reuters Limited 2000.

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