The Hindu Business Line : Satyam Q3 net rises 64 pc; ups guidance

REFLECTING the growth momentum of technology majors, Satyam Computer Services Ltd has announced robust numbers scaling up the year outlook, while indicating this trend would continue to take it past the $1 billion mark.

During the third quarter-ended December 31, 2005, Satyam software services revenue was up 39.44 per cent at Rs 1,265.29 crore and net profit increased by 63.60 per cent at Rs 269.73 crore over the corresponding period last year. Sequentially, while the revenue was up 9.55 per cent, net profit was higher by 13.65 per cent.

If the proceeds from the Sify stake sale of Rs 160 crore were to be added, the net profit would add up to Rs 430 crore.

Given the growth momentum, the company management has scaled up revenue guidance for Q4 in the range of Rs 1,301-1,307 crore, potentially ending the financial year with revenues of Rs 4,780-4,786 crore, reflecting an annual growth of 35.7 to 35.9 per cent. The earnings per share for fiscal 2006 is expected to be between Rs 30.31 and Rs 30.36.

Addressing a press conference to explain the numbers, the Satyam Chairman, Mr B. Ramlinga Raju, said, "customers are increasingly looking for globally diversified and integrated solutions, which are creating opportunities for us to partner with them across multiple geographies. Our European and Asia-Pacific business is benefiting from this trend, in addition to increasing penetration in their home markets."

Referring to divestment of stake in Sify, which fetched $63 million, Mr Raju said, "this was in line with Satyam's objective to emerge as a pure-play services and solutions company aimed at unlocking the value of investment, which multiplied 23 times over a period of 10 years."

The company management hinted that a new centre could potentially be in South Africa.

While subsidiaries contribute about 3 per cent of the company revenues, some of them, including Nipuna, continue to make losses. However, Mr Raju said, "Nipuna would achieve revenues of $18 million this year and is on course to break even."

Under the US GAAP, the consolidated revenue for fiscal 2006 is expected to be between $1,093-1,094 million, implying a growth rate of 37.7 to 37.9 per cent.

While referring to some media reports about the possibility of stake dilution with a global system integrator (IBM), Mr Raju said, "The company never considered this option and would not like to do so either in future. This is because Satyam is well positioned to win large contracts competing with system integrators and any effort to do so will only conflict with business models."

The company shares closed lower marginally today at Rs 742.30 (previous close Rs 748.25) on the Bombay Stock Exchange and Rs 739.60 (previous close Rs 748.10) on the National Stock Exchange.

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