Satyam Computer moved higher on Thursday on news that it has been appointed by Jurong Technologies to implement an end-to-end enterprise resource planning solution in the Asia-Pacific region.
The scrip of the software major rose by 1.47% to Rs 266.50 on BSE in mid-morning trades. It was trading at the day's high. Around 196,000 SCSL shares were traded on BSE in the first couple of hours of trading.
From Rs 258.75 on 13 January 2003, the scrip has gained 2.99% to the current Rs 266.50.
The recovery comes after the stock came sharply off a high. The scrip shed 11% to Rs 258.75 on 13 January 2003 from Rs 290.85 on 2 December 2002.
Prior to that, the scrip surged on a broad-based rally in IT stocks. From Rs 198.65 on 10 October 2002, the scrip rallied 46% to Rs 290.85 on 2 December 2002.
SCSL, after trading hours on Wednesday, said that it has been appointed by Jurong Technologies to implement an end-to-end ERP solution for the electronics contract manufacturer for all its four plants in the Asia-Pacific region.
The project is the first SAP systems contract that SCSL has secured from a Singapore-based ECM, it said. Through the SAP system, Jurong Technologies will be able to unify its ERP needs for logistics, financial management, sales distribution and administration.
Under Phase 1 of the project, to be completed by May 2003, SCSL will link Jurong Technologies in Singapore, Malaysia and Indonesia; and, in Phase 2 (July 2003), the company will complete the loop with the linking of the China operations.
IT analysts say there are not much expectations regarding the Q3 results unlike in the case of Infosys where expectations were high. This reckoning takes shape as there has been no news of major recruitments taking place in Satyam Computer. Other IT majors like Infosys and TCS have been actively recruiting. "Even if the company is able to meet its own guidance it will be consoling," says an IT analyst with a local brokerage. Satyam announces its Q3 results on 23 January 2003.
For Q3 ended 31 December 2002, Satyam Computer expects a rise in both revenues and earnings on a sequential basis. It has forecast income from software services of Rs 525-540 crore (Rs 5.25 to 5.4 billion) as against an income of Rs 499.13 crore (Rs 4.99 billion) in Q2. EPS is expected to go up to Rs 4-4.20 in Q3, from an EPS of Rs 3.76 in Q2.
Analysts say Satyam will be a big beneficiary of SAP migration work.
At the current Rs 266.50, the scrip trades at a PE multiple of 16.5 based on its projected FY 2002-03 EPS of Rs 16.06.
Early this month, SCSL and south-east Asia based business solutions provider BaaN formed a strategic alliance to deliver generation-next e-business solutions. Under this alliance, the companies will jointly deliver solutions that combine Satyam Computer's strategic consulting and implementation service with BaaN's iBaaN suite of business solutions in India and the Asean region.
The alliance with BaaN is set to create a strong synergy between the solutions that BaaN provides and the solutions delivered with powerful e-business solutions that help companies' transition to the Internet, Satyam Computer said.
General Electric is Satyam's largest customer.
Satyam Computer's strategy for future growth involves a focus on five major verticals including automotive, banking and financial services, insurance and healthcare, manufacturing and telecom.
Satyam Computer has identified the $29-billion business intelligence and data warehousing (BI & DW) global market as its future growth areas. It is sprucing up its offerings and developing value-added skills in these fields.
For Q2 ended 30 September 2002, Satyam Computer posted a 11.8% fall in net profit to Rs 118.15 crore (Rs 1.18 billion) on a 11.3% growth in total income to Rs 505.05 crore (Rs 5.05 billion). For the half year ended September 2002, it recorded a 15% rise in sales to Rs 962.95 crore (Rs 9.62 billion). Profit after tax declined by 11% to Rs 226.6 crore (Rs 2.26 billion).
At the time of announcing its Q2 results, Satyam Computer revised downward its full year (FY 2002-03) EPS guidance to between Rs 16.06 and Rs 16.26, from the earlier forecast of Rs 17.10 to Rs 17.50. It has, however, maintained the full year sales growth projection of 18-20%.
BSE Code: 500376
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