Despite one of the toughest times facing the Indian IT
sector, Satyam Computer Services managed to meet its targets for the second
quarter ended September 2001. While revenues were up 57% to Rs. 426.63 crore,
net profit jumped 100% to Rs. 134.08 crore. Compared to the immediate previous
quarter, Satyam’s revenues were up 4% and net profit was up 10%. The company
achieved 52% of the revenues from software development, 32% from maintenance,
12% from packaged software implementation and 4% from engineering services.
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Fact Sheet |
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Satyam added 24 new clients during the quarter, which
included Novartis, Hitachi Data, Unocal, H&R Block, IEC-Thailand, Emirates
Bank International, Holden (GM) — Australia as well as Applera. While revenues
from existing clients increased from 81% to 85%, the overall growth in revenues
were aided by a 3.5% jump in volumes and 0.8% decline in billing rates.The
company’s operating margins dipped from 36% in the first quarter to 34.50% in
the second quarter.
Moreover, the onsite business grew from 41% to 45% with a
corresponding decline in the offshore business. The fall in the billing rates
(the company has indicated further fall given the current business environment)
is a cause for concern. Moreover, the company’s employees have declined from
8582 in the previous quarter to 8397 in the second quarter.
On the positive side, it bagged a US$ 45 million order from
TRW for running its global data center in India. It expanded its relationship
with US based Healthaxis Inc and also partnered with Computer Sciences
Corporation as an offshore vendor.
Satyam’s NASDAQ listed, 52.54% subsidiary Satyam Infoway (Sify)
closed the quarter ended September 2001 at US$ 10.90 million. Going ahead,
Satyam is open to divesting its entire stake in Sify after buying out Sify’s
software services business.
Satyam’s share currently trades at Rs. 145 discounting the projected March
2002 EPS by 11 times and March 2003 EPS by 10 times. While Satyam has so far
managed to outperform its peers, the next two quarters would be very
challenging. We believe the negative news emanating from the US and the poor
expected performance would keep the share price under pressure.
Financials | |||||
(All figures in Rs crore) |
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 | 2000 | 2001 | 2002* | 2003* | |
Sales | 672.8 | 1220.1 | 1653.0 | 1768.6 | |
Other Income | 6.2 | 21.7 | 61.0 | 65.0 | |
Operating Profits | 246.6 | 438.8 | 540.6 | 518.6 | |
OPM (%) | 36.7 | 36.5 | 32.1 | 29.3 | |
Net Profit | 134.9 | 316.2 | 430.9 | 473.6 | |
Equity | 56.2 | 56.2 | 62.9 | 62.9 | |
EPS (Rs.) | 4.8 | 11.2 | 13.7 | 15.1 | |
*Projected |
Year ended March 31 |
Sushanto Mitra is
the founder of Technology Capital Partners
The views reflected here are of the author and not of this
publication. No liability is accepted for losses based on the information
presented here