Driven by rupee depreciation and improved margins, Mahindra Satyam has posted a 56 per cent growth in profit after tax for the first quarter ended June 30, 2012.

But it is down by 34 per cent when compared with the sequential quarter. The quarter-on-quarter profit gained largely by the rupee depreciation, while improved EBITDA margins at 22 per cent (17.5 per cent) too contributed to the higher profits.

The PAT stood at Rs 352 crore against Rs 225 crore the same quarter last year and Rs 534 crore in the previous quarter. Revenue came in dollar terms went up 3 per cent quarter on quarter, mainly led by volume growth. Forex gains stood at Rs 66 crore.

Alternative markets

The company saw headwinds in Europe, where it saw a ‘flat’ growth. The Asia-Pacific region reported a decline. With the US showing indications of a strain, the company said it would look at alternative markets such as Latin America, Africa and Australia to offset the pressures.

Announcing the results here on Thursday, Vineet Nayyar, Chairman of Mahindra Satyam, global business realities continue to be unpredictable. “This quarter marks the completion of three years for us here (Satyam). We are a healthy company now and ready to compete with the tier-I companies,” he said.

The company said it was pursuing 20 large deals and that 2-3 of such deals had already been tied up. On a query on the size of deals coming down, Mr Gurnani said it had not yet assumed a trend like situation, hinting that there were some instances.

Ankita Somani, research analyst of IT and telecom, said the company had beaten the street estimates. “The company’s growth was led by manufacturing vertical. Also, unlike peers, revenues from BFSI surprisingly grew by about 2 per cent. We remain positive on the stock,” she said.

Wage hikes

C.P. Gurnani, Chief Executive Officer, said the company would take a decision on wage hikes in a week. The company delayed the wage hikes for almost two months. They were to announce it in June. “We are discussing it. We told them (the staff) that the hikes would be implemented with effect from July 1,” he said.

The company added 2,600 employees in the first quarter to take the total to 36,000, with an attrition rate of 13.5 per cent. In the same quarter last year, it was 17 per cent.

On the growth plans, he said the focus cities for the year would be Chandigarh, Bhubaneswar and Visakhapatnam, while continuing capacity expansion at Hyderabad, Chennai and Bangalore.

Merger

Mr Nayyar said the merger process with Tech Mahindra has been progressing well. “We are awaiting the nod from the High Courts of Andhra Pradesh and Maharashtra,” he said.

kurmanath.kanchi @thehindu.co.in

(This article was published on August 2, 2012)
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