By far the most interesting news on Satyam for 3QFY01 was the US $ 200 m contract its JV, Satyam Manufacturing Technology Inc., got from TRW. Satyam Manufacturing Technology Inc., is a joint venture between Satyam and TRW (76:24). This would mean that the other income figure for Satyam could go up in the near future. The other major event was that it tied up with Ariba for implementing B2B solutions. This move was to consolidate its position in the enterprise applications integration market that has tremendous potential to grow.
ADM* (Legacy and Client Server)
*Application development and maintenance
Satyam has been increasingly changing its business mix in favour of e-business and telecommunications software since the last two quarters. Therefore, the portion of e-business and telecommunications software in 3QFY01 is expected to be higher.
Effort would be to de-risk the geographical revenue mix by decreasing exposure to the United States. Europe is an obvious choice. Satyam has a good presence in the Middle East, which it can hope to consolidate. Satyam’s revenues from Japan have been decreasing, which it claims, is on account of recession in the Japanese economy, but the real reason could be very few clients.
*Other income not included
We are expecting Satyam to continue to grow in line with its past growth rates in 3QFY01. The anomaly in 1QFY01 and 2QFY01 net profit figures are due to high other income figures in 1QFY01 on account of sale of equity shares of Satyam Infoway to the Singapore Investment Corporation.
The growth in topline YoY would be around 76% and that in bottomline is expected to be 105%. The figures on a QoQ basis would be 15% for topline and 11% for bottomline. Over the year Satyam has been able to hold operating margins, which are comparable to the best in the Industry.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407