Satyam beats estimates on new orders, currency gains

Aug 02, 2012 |

Reuters

Bengaluru

Tags:

Satyam

Satyam Computer Services Ltd, in the process of a merger with parent Tech Mahindra Ltd, beat expectations with a 56.4 per cent rise in quarterly profit, as it won new business and got a boost from currency effects.

Profit was buoyed by multi-million dollar order wins and gains of about 585 million rupees on exchange rate fluctuations. Satyam said it had won at least three big orders this year including two in the June quarter, without naming the clients.

Profits for the first quarter ended June 30 rose to 3.52 billion rupees from 2.25 billion rupees in the year-earlier period, Satyam said in a statement. That compared with analysts' estimate of 2.7 billion rupees, according to Thomson Reuters I/B/E/S.

"Global business realities continue to be unpredictable. However we are confident of taking forward our momentum," Chairman Vineet Nayyar said in a statement.

The company added 2,643 employees in the June quarter, taking its total workforce to 35,996. Satyam and Tech Mahindra together had 372 active clients as of June 30, including SAAB AB and BT Group Plc.

"The numbers look very good," said Hitesh Shah, Director of Equity Research at IDFC Securities, who has an ‘outperform’ rating on both Satyam and Tech Mahindra.

Billionaire Anand Mahindra purchased Satyam in a government-sponsored sale in 2009 after the founder of the Hyderabad-based company admitted to one of India's largest accounting frauds.

Mahindra is seeking to create a consolidated IT services powerhouse by merging Satyam and Tech Mahindra, which provide software services to clients mostly in the United States, Europe and Australia.

Tech Mahindra, which owns close to 43 percent of Satyam, is offering one share in itself for every 8.5 shares of Satyam to absorb the company.

Shares of Satyam, valued at about $1.8 billion, have risen almost 30 percent this year, compared with a 7.6 percent fall in the sector index, dragged down by Infosys.

Last month, Infosys, which has lost about one-fifth of its market value this year, cut its sales growth forecast for the current fiscal year.

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