Satyam Computer slumped immediately after declaring a net loss for Q4, but the market soon got back on the counter after reckoning that the loss was due to an extraordinary write-off.
With that firm backing, Satyam Computer Services soared 9.4% to Rs 164 on BSE in just an hour-and-a-half of trading. This seemed a solid recovery from the low of Rs 138.25 (down 7.6%) that the scrip had tumbled to no sooner trading commenced on Thursday.
Volumes matched the volatility in Satyam Computer, as over 10 million shares were traded on the counter on BSE. After adjusting for extraordinary expenses, the company posted a net profit in the fourth quarter, in line with market expectations.
The stock had witnessed volatile trading over the last few sessions. And as the negatives were largely factored in already, the scrip was poised to gain today. The scrip had plunged 5.6% to Rs 149.75 on Wednesday, close to its 52-week low of Rs 144.20 (reached on 17 April 2003).
For Q4 ended 31 March 2003, Satyam Computer reported a tiny 0.55% growth in net profit to Rs 115.79 crore (Rs 1.15 billion) on a 17.6% growth in net sales to Rs 538.43 crore (Rs 5.38 billion). Net profit came in on the lower side of expectations - a capitalmarket.com poll had concluded that net profit would rise 0.3% to 10% to between Rs 115.50 crore (Rs 1.15 billion) and Rs 127 crore (Rs 1.27 billion). Analysts had projected sales in the range of Rs 526.5 crore (Rs 5.26 billion) to Rs 558 crore (Rs 5.58 billion) for MQ 2003, a growth of 15% to 22%.
The final loss of Rs 35.91 crore was the result of a write off of an extraordinary item amounting to Rs 152 crore (Rs 1.52 billion). The market seems cheered by the fact that the company has conducted this 'cleaning up of balance sheet' exercise by providing the one-time investment write-off. The Rs 152-crore (Rs 1.52 billion) provision goes towards diminution in value of investments and mainly includes Rs 126 crore (Rs 1.26 billion) related to VisionCompass.
For the year 2003-2004, income from software services is expected to grow between 15% and 17% in US dollar terms. Accordingly, income from software services is expected to be between Rs 2,278 crore (Rs 22.78 billion) and Rs 2,318 crore (Rs 23.18 billion) and the EPS for the fiscal is expected to be between Rs 15.65 and Rs 16.00. For FY 2002-03, EPS stood at Rs 14.62, including a gain of Rs 0.46 from the Satyam GE joint venture. The projected earnings growth for FY 2003-04 works out to between 7% to 9.4%.
For FY 2002-03, Satyam witnessed the addition of 100 customers which included 23 Fortune 500 clients. Q4 contributed 26 new clients and 5 Fortune 500 names to this list.
"The trend towards increasing reliance on offshore providers, presents a large opportunity for a mature and visible player like Satyam. Our strategy to leverage this opportunity has several facets," said B Ramalinga Raju, chairman.
General Electric is Satyam Computer's largest client.
BSE code: 500376
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