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Satyam posts excellent showing. - Views on News from Equitymaster
 
 
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  • Apr 11, 2000

    Satyam posts excellent showing.

    The Hyderabad based Satyam Computer Services Ltd has shown a marked increase in net profits and revenue for the year 1999-00.

    While revenue has jumped from Rs 4,138 m to Rs 6,790 m (64% increase) in the year 1999-00, net profits have increased from Rs 800 m to Rs 1349 m (68% increase). It has declared a dividend of 15%.

    (Rs m) 4QFY99 4QFY00 Change FY1999 FY2000 Change
    Sales 1070 2057 92.2% 3,781 6,771 79.1%
    Other Income 1.5 11 633.3% 3 19 533.3%
    Expenditure 643.2 1328 106.5% 2,317 4,262 83.9%
    Op. Profit (EBDIT) 427 729 70.8% 1,464 2,509 71.4%
    Op. Profit Margin (%) 39.9% 35.4%   38.7% 37.1%  
    Interest 78.00 114.00 - 264.00 409.00 -
    Depreciation 145 190 31.0% 429 710 65.5%
    Profit before Tax 205 436 112.4% 774 1,409 82.0%
    Tax 12 15 25.0% 45 60 33.3%
    Profit after Tax/(Loss) 193 421 117.8% 729 1,349 85.0%
    Net profit margin (%) 18.1% 20.5%   19.3% 19.9%  
    EPS (Rs) 29.7 29.9   28.0 24.0  

    Satyam Computers Ltd is one of India’s largest software majors with a presence in areas of systems engineering, systems integration, software solutions, enterprise resource planning, system implementation and CAD CAM.

    Although the net profits of the company have increased significantly, there has been a decline in the EPS. This can be attributed to the company’s declaration of a 1:1 bonus during the course of the year.

    The increase in net profits and sales have primarily on account of realigning of its product mix by the company. The company has been deriving the bulk of its revenue from high end areas such as telecom, digital communications, e-commerce and internet. It entered into business partnerships with Siebel (world leaders in customer relationship management) and I2 (world leaders in supply chain management). This has boosted and will continue to boost the company’s top line because there is tremendous potential for growth in these segments.

    What is significant to note is that the company has posted such excellent results despite following the accelerated depreciation model, which has led to incremental depreciation of Rs 124 m. During the year the company managed to add on 50 large customers, deriving as much as 30% of revenue from them. This is an excellent indication of the company not being overly dependent on the same clients in today’s dynamic market.

    The company continues to be heavily reliant on the US with 76% of revenues being derived from it, 8% from Japan and 6% from Europe. The joint venture with General Electric is adding to the bottomline. Thus the company has lived up to the expectations of analysts which saw its share price hit the upper circuit in today’s trading.

    The only disconcerting factor is the continuing losses posted by its subsidiary Satyam Infoway Ltd, (Sify) in which it has a 59% stake. Sify, which is an internet services provider that is listed on the NASDAQ has posted losses of Rs 280 m on revenues of Rs 580 m . The showing however is in line with the general internet business which is expected to break even only after three years of operation.

     

     

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