Syntel reports an 18pc surge during Q3

MUMBAI, INDIA: Syntel, Inc., a global information technology services and Knowledge Process Outsourcing (KPO) firm has announced financial results for the third quarter, ended September 30, 2008.  The company’s total revenue for the third quarter increased 18 percent to $103.8 million (Rs.460 crore), compared to $87.9 million (Rs.390 crore) in the prior-year period. The company's gross margin was 44.3 percent in the third quarter, compared to 39.8 percent in the prior-year period (450 bps increase).

Syntel's income from operations expanded to 25.2 percent in the third quarter, compared to 19.0 percent in the prior-year period (620 bps increase). Net income for the third quarter was $22.1 million (Rs.98 crore) or $0.54 per diluted share, compared to $18.3 million (Rs.81 crore) or $0.44 per diluted share in the prior-year period.

During the third quarter, Syntel added 10 new clients and two new "Hunting Licenses" or preferred partnership agreements, bringing the total number to 92 strategic relationships. Syntel has added 26 new clients in 2008.

Operational Highlights

“Syntel was able to post healthy earnings during the quarter.  Utilization levels were increased and employee productivity was improved.  We are most pleased with the fact that we were able to deliver this earnings performance without sacrificing the key investments necessary for the long-term health of our business.

Based on the current economic environment, we are cautious in our outlook for the upcoming quarter and early 2009, and have adjusted our guidance accordingly,” said Keshav Murugesh, Syntel’s President and Chief Operating Officer.  “We remain optimistic, however, about the health of our growing business pipeline and the overall positioning of the company.  We continue to invest in target markets, verticals and services to help our customers achieve their business objectives.”

Syntel will now invest close to $35M (Rs. 155 crore) in 2008 alone as it makes progress on construction of its new SEZ’s in Pune and Chennai. Phase 1 with 2,300 seats in Pune will be ready by Q4 2008 and Phase 1 of our new Chennai campus will be ready by Q2 of 2009.  

Guidance 2008

Based on current visibility levels and an exchange rate assumption of 48.8 rupees to the dollar, the company is updating 2008 guidance to reflect revenue of $408 (Rs.1991 crore) to $412 (Rs.2010 crore) million and EPS in the range of $1.88 to $1.93