Satyam Computer Services today reported that its second quarter net profit has doubled to Rs 134.08 crore compared to Rs 66.94 crore in the corresponding quarter last year, but lowered its full-year software services income growth estimate to 30-33 per cent from 40 per cent.
On a sequential basis, the net profit has gone up by 10 per cent compared to the Rs 121.46 crore profit posted for the quarter ended June.
Total income, including the other income for the second quarter, has increased by 59.7 per cent to Rs 453.5 crore from Rs 283.92 crore. Other income has shot up by 135 per cent to Rs 26.87 crore from Rs 11.43 crore.
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Income on quarter-on-quarter basis has grown by 7.7 per cent. The company posted an income of Rs 421.02 crore for the quarter ended June. The board of directors have recommended an interim dividend of Rs 0.5 per share which works out to 25 per cent on par value of Rs 2 per share.
"The prevailing industry-wide uncertainty brought about by multitude of circumstances, including the tragic events of September 11 has enlarged the decision making cycle. The heightened uncertainty may have an effect on business prospects in the immediate quarters," Satyam Chairman Ramalinga Raju commented here while announcing the results.
" However, we shall strive to maximise opportunities and take appropriate steps to sustain growth in the medium to long term. We shall continue to invest in building competencies and strengthening customer relationships to achieve our objective of delivering solutions to customers' business problems," he added.
For the six months ended September, Satyam's net profit has gone up by 117.85 per cent to Rs 255.54 crore from Rs 117.31 crore posted in the first half of last fiscal. Total income was up by 67 per cent at Rs 874.52 crore.
For Q2, Satyam's income from software services has recorded a growth of 3.58 per cent in rupee terms (2.72% in US $ terms) over Q1 as against the guidance of a sequential increase of about 3 per cent in $ terms. The operating margin in Q2 was 34.51 per cent against guidance of 34 pc -- 35 pc. The earnings per share for the quarter were Rs 4.26 against the guidance of Rs 3.7 -- Rs 3.9.
For the third quarter ending December, the company expects income from software services between Rs 420 crore and Rs 430 crore, which means a growth prospect of 30 to 33 per cent against the earlier guidance of 40 per cent. Operating margin expectation is also lowered from the earlier 35 per cent level to 32-33 per cent.
"Satyam's performance is very good and very positive. But the only negative aspect of the results is the lower than expected out look for the quarter and the fiscal," said Sachin Mohindra, director and fund manager, Chescor.
The earnings per share for the quarter ending December is expected to be between Rs 3.2 and Rs 3.4. The growth in income from software services for the FY 2002 is expected to be between 30-33 per cent in dollar terms with operating margins being in the range of 32-33 per cent. The EPS for the current fiscal is expected to be between Rs 13.75 and Rs 14.25.
Satyam had added 24 new clients in the last quarter, which included prominent names such as Novartis, Hitachi Data, Emirates Bank International etc. The company has bagged a major order worth $48 million during the quarter for running a data center for TRW Inc. It can be recalled that Satyam has a joint venture with TRW. " We are successfully competing against or collaborating with the Big five global consulting firms and large system integrators with about 8.7 per cent of total revenues accruing from these accounts, Raju told investors in a conference call.
The top ten customers of the company contributed 52.03 per cent of Rs 453.5 crore revenues in Q2 compared to 48.38 per cent in Q1. While income from software design and development was 52.15 per cent of total revenues (58.82 pc in Q1), software maintenance contributed 32.15 per cent (29.76 pc), packaged software implementation contributed 11.75 per cent (7.08 per cent) and engineering design services contributed 3.95 per cent (4.34 per cent). The employee strength of the company has decreased by 185 to 8397 from 8582 in Q1.
US market occupied 77.96 per cent of geographical revenue break up, while Europe, Japan and rest of the world contributed 9.36 per cent, 1.99 per cent and 2.82 per cent respectively to the revenue.
The company intends to open offices in Malaysia and Hon Kong to increase geographical reach and handle business from China and Taiwan. Apart from this, it is also exploring the possibility of an office in Korea. The company has also finalised plans to set up two new solution centers in Australia, to be located in Sydney and Melbourne. These solution centers are expected to undertake on-site, off-shore and off-site software development, marketing and promotional activities.
Satyam has also decided to restrict further investments in VisionCompass, its another US based subsidiary to a maximum of $5 lakh. The subsidiary managed to obtain orders from global and domestic companies. The billing for Q2 was $247,000 against an earnings estimate of $400,000 with cash burn for the quartwer at $960,000. The subsidiary expects revenue for the current fiscal to be $1 million. The net cash burn is estimated at $3.3 million as against the cash burn of $13.8 million during FY 2001.