Satyam 4Q net up 164% - Views on News from Equitymaster

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Satyam 4Q net up 164%

Apr 10, 2001

Satyam has posted a 88% growth in topline for 4QFY01 compared to 4QFY00. The rise in net profits is 164% YoY. On a sequential (Quarter on Quarter) basis the topline growth for 4QFY01 is 18% and the growth in the net profit figure is 27%. Satyam has beaten market expectations with the superb performance. In 4QFY01 Satyam has managed to cut employee cost down to 39.6% of revenues from 41.6% in 3QFY01. But the operating & administration expenses have gone up to 23.1% compared to 21.2% in the third quarter. Thus the company has seen a decline of 50 basis points in its operating margins. Another interesting point to note in the fourth quarter result is that the effective tax rate has come down to 0.9% from an average of about 10%.

(Rs m) 3QFY01 4QFY01 Change
Sales 3,276 3,866 18.0%
Other Income 52 (24) -145.8%
Expenditure 2,039 2,425 18.9%
Operating Profit (EBDIT) 1,237 1,441 16.5%
Operating Profit Margin (%) 37.8% 37.3%
Interest 76 66 -13.5%
Depreciation 242 228 -5.9%
Profit before Tax 971 1,123 15.7%
Extraordinary item - -
Tax 95 11 -88.9%
Profit after Tax/(Loss) 876 1,113 27.1%
Net profit margin (%) 26.7% 28.8%
No. of Shares (eoy) 281 281
Diluted Earnings per share* 12 16 27.1%
*(annualised)
P/E (x) 27 15
Source:Company web site 3:30 pm(IST)

The total employee strength as on March 31, 2001 was 8,370. The number of new employees added for the quarter was 229 of which 189 were technical. For the second quarter and the third quarter of FY01 Satyam had recruited aggressively the number of associates added were 1,339 and 1,093 respectively. The decline in the hiring rate could be due to the large numbers hired previously. However, this could be an indication of the impact of the US slowdown. Due to a tough business environment the company might have reduced its intake.

(Rs m) FY00 FY01 Change
Sales 6,771 12,200 80.2%
Other Income 20 217 984.4%
Expenditure 4,263 7,750 81.8%
Operating Profit (EBDIT) 2,508 4,450 77.4%
Operating Profit Margin (%) 37.0% 36.5%
Interest 409 345 -15.6%
Depreciation 710 965 35.8%
Profit before Tax 1,409 3,357 138.2%
Extraordinary income (49) 1,701
Tax 60 196 226.3%
Profit after Tax/(Loss) 1,300 4,863 274.1%
Net profit margin (%) 19.2% 39.9%
Profit after Tax/(Loss)** 1,349 3,162 134.4%
Net profit margin (%)** 19.9% 25.9%
No. of Shares (eoy) 281.2 281.2
Diluted Earnings per share** 4.8 11.2
P/E (x) 21
**Excl extraordinary income

The extraordinary income of Rs. 1,701 m was realised on sale of shares of Satyam Infoway to Govt. of Singapore Investment Corporation in 1QFY01.

The company has recorded a growth of 83% in revenues and 134%* in profits for the year ended March '01. Does not include extraordinary income of Rs. 1,701 m realised on sale of shares of Satyam Infoway to Govt. of Singapore Investment Corporation in 1QFY01.

At the current market price of Rs 233 the stock is trading at a P/E multiple of 21 times its FY01 earnings.

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