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Company Report

SATYAM

Satyam’s total income for the last fiscal rose 14 per cent to Rs 2,051.51 crore (Rs 1,803.10 crore). Its total spending went up by a comparatively higher margin (21 per cent) over the preceding year. Thus its net profits skidded by 6 per cent over the corresponding previous period to Rs 459.88 crore (Rs 490.12 crore).

Its overall income from operations was up by only 17 per cent over the preceding year at Rs 2,023.65 crore (Rs 1,731.94 crore).

Revenues from the North American region, which accounted for 77 per cent of the total operational income, grew by 17 per cent over the year-ago period.

But revenues from the European region have shown a good growth of above 40 per cent, probably because it accounts for just about 10 per cent of the total income.

Japan, India and the rest of the world together accounted for the rest 13 per cent of the revenues with both India and the rest of the world revenues declining.

As we have been pointing out, Satyam has been getting business only at the cost of its margins, which have fast been declining. For the current year its operating profit at Rs 618.53 crore (Rs 581.16 crore) managed to rise by just about 6 per cent against the 31 per cent growth it had reported during last year.

OPM at 31 per cent was a shade lower than the 34 per cent it reported during the same period last year. Other income, which had witnessed a quantum jump during the preceding year went down 61 per cent to Rs 27.86 crore (Rs 71.15 crore), while depreciation went up 6 per cent to Rs 124.18 crore (Rs 117.46 crore).

The tax provisioning having gone up by 75 per cent over last year, Satyam reported a net profit of Rs 459.88 crore (Rs 490.12 crore) down 6 per cent from the year-ago period. The company has made a provision for diminution of its investment, which, if considered, would bring down the net profit to Rs 307.42 crore (Rs 449.37 crore) down 32 per cent from last year.

The stock hit a miserable low of Rs 127, the day after Infosys declared its results. But having recovered from there it currently trades at Rs 170 discounting its full year EPS of Rs 14.62 by 12 times. Still costly compared to the growth rates it has thrown in. With no incremental growth in sight, the stock is likely to stagnate at these levels.

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