The top five IT companies have released results for the June quarter. A comparative analysis shows that Satyam has performed relatively better than its peers.
MUMBAI: The top five IT companies have released results for the June quarter. A comparative analysis shows that Satyam has performed relatively better than its peers. Satyam’s revenues grew by 8.5% over March 2008 quarter and net profit by 17.3% . However, analysts are disappointed that Satyam’s numbers missed their guidance.
All IT companies, including Satyam, benefited from rupee depreciation in the June 2008 quarter. Revenue growth for Satyam was also helped by 3% sequential increase in volumes.
Harit Shah, analyst, Angel Broking, says, “Satyam has done the best in June 2008 quarter. This is the fastest volume growth recorded among the top four software companies (excluding HCL Technologies), making it the sixth consecutive quarter when the company has achieved this feat.”
On the pricing front though, both onshore and offshore billing rates of Satyam fell by 0.2% sequentially, proving that global IT business environment still remains challenging. Net profit growth of for the Hyderabad-based software company was boosted by 133 basis points improvement in the earnings before interest, tax, depreciation and amortisation (ebitda) margins and 44.2% increase in other income. Ebitda margins of Satyam improved because of lower personnel costs and other income increased due to lower forex losses and interest income.
As far as revenue growth is concerned, HCL Technologies posted the best growth among the top five players. HCL’s revenues grew by 11.5% but its profitability was hugely impacted due to foreign exchange loss of Rs 300 crore. HCL’s net profit declined by 58.8% sequentially. The company had disclosed in early July 2008 that it was likely to incur forex losses in the June 2008 quarter and that was already factored in HCL’s share price, say analysts.
The next best performer in terms of revenues as well as net profit is Infosys, the country’s second largest software services provider. Infosys’ revenues grew by 6.9%, sequentially and net profit by 4.2%. Revenue growth was mostly fuelled by rupee depreciation and net profit was helped by tax reversal of Rs 31 crore and lower effective tax rate of 10.7%. Infosys’ numbers too missed some analysts’ expectations, but what offered some comfort was the upward revision in rupee guidance by the company.
India’s largest software exporter, Tata Consultancy Services (TCS), posted a growth of 6% sequentially in its revenues and 3.7% in its net profit. TCS improved because the company increased its amortisation period in case of certain assets to four years from two years earlier. TCS also had a tax reversal of Rs 35 crore in the June 2008 quarter.
Last but not the least; Wipro Technologies posted a growth of 6.6% in its revenues while net profit de-grew by 7%. Wipro enjoyed good price realisations in the quarter. Its onsite billing rates rose by 3.9% sequentially and offshore by 3%.
Commenting on the overall results, Anurag Purohit, associate VP, Religare Securities, says, “It was quite expected that IT companies would see revenue growth on the back of rupee depreciation in June quarter. Overall, nothing great came out from the quarter. Volume growth though has been under pressure.”
What’s a concern now is that companies should be able to meet their guidance. Cognizant has already decreased its guidance to 32% from 38%, says Purohit. The fact that Satyam missed its guidance in June 2008 quarter does not augur well for investor confidence.
Valuations look reasonable now, say analysts while factoring in the negatives of the US economy.
p_pallavi@dnaindia.net
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