Satyam's net profit up 45 per cent

Satyam Computer Services, India's fourth largest software and IT services exporter, announced on Friday a net profit of Rs 5.48 billion for the first quarter ended June 30, registering a growth of 45 per cent over the corresponding period last year.

The net profit, which was Rs 3.78 billion in the first quarter of 2007-08, grew 17.3 per cent sequentially.

The revenues during the quarter were Rs 26.21 billion, a growth of 8.5 per cent sequentially and 43.2 per cent on year-on-year basis.

The earnings per share (EPS) for Q1 were Rs 8.16, reflecting a year-on-year increase of 43.9 per cent and a sequential increase of 17.1 per cent.

"We were able to deliver this performance on the back of three per cent volume growth, helped, in part, by rupee depreciation," Satyam Chairman B Ramalinga Raju told a news conference.

He said the company won three large deals of $40 million to $50 million during the quarter and was chasing 20 big deals worth $40 to $100 million.

"The quarter witnessed increased business activity in Asia Pacific and Middle East. Further, companies in Europe that were slow to embrace off-shoring are showing increasing interest to capitalise on our global delivery model. These regions continue to promise significant growth," he said.

The company added 34 new clients during the quarter, taking the total number to 631. It also added 651 employees. The total number of employees of the parent company and all subsidiaries now stands at 51,643.

Raju said the company planned to raise salaries of offshore employees by 12-14 per cent and the onsite wages by 3 to 4 per cent, which will impact on margins by 3 per cent.

Buoyed by the better performance, the company revised the guidance for the whole fiscal year. The revenue for 2009 is expected to be between Rs 111.81 billion and Rs 113.63 billion, implying a growth rate of 32 to 34.1 per cent over fiscal 2008.

EPS for the full year is expected to be between Rs 31.83 and Rs 32.35, implying a growth rate of 26.1 per cent to 28.2 per cent.

For Q2, the revenue is expected to be between Rs 27.43 billion and Rs 27.69 billion, implying a growth rate of between 4.7 per cent and 5.7 per cent. The EPS for the quarter is expected to be between Rs 7.71 and Rs 7.78.

"We remain positive and confident about our ability to deliver the stated guidance, notwithstanding the operational environment. For instance, in Q1, we had a loss of animation business in BPO, which led to lower-than-expected growth. Despite this, we delivered 3 per cent volume growth. We believe that this loss of business was transient, and is limited to Q1," he said.

Raju said the banking, financial services and insurance sectors did not do well during the quarter but this was managed with the good performance in the telecom, media, entertainment, retail and logistics space.

"We are yet to see clear and consistent signals emanating from the banking and financial services sector, which continues to be fluid. Moreover, the US economy has been impacted by high energy costs and rising inflation. This impacts sectors such as retail and transportation, where there is greater need for higher operational efficiency in the near term," he said.