Satyam Computer Services Q4 revenue at Rs.1,779 crore, beats the street

Satyam Computer Services Ltd (NYSE: SAY) has achieved an annual revenue growth of 35% and net profit growth of 43% under Indian GAAP consolidated basis for fiscal 2007. As per US GAAP, the revenue growth rate is 33% and net income growth is 40%.

B. Ramalinga Raju - Founder & Chairman of the company said the following on the results: The strong performance is a culmination of strategic initiatives taken by the company on several fronts notably in the areas of relationship management, deepening of competencies and associate delight.

We added 138 customers in fiscal 2007 including 7 Fortune 500 customers. The number of customers billing more than US$ 10 mn increased to 35 from 27 during the year, while the number of customers billing more than US$ 1 mn increased by 20% to 180. The revenue from consulting and enterprise business solutions grew 43% in the year, being indicative of our dominant position in this segment.

We continue to win the confidence of our prominent customers resulting in opportunities of significant size and criticality. Our recent win of a US$ 200 mn deal from Applied Materials in Q4 based on a managed services model is illustrative of this trend. This has been complemented by our successful execution capabilities resulting in higher growth of such accounts.

We continue to service our customers in areas of strategic importance such as delivering greater proportion of work from offshore. Significant progress was made in this area in fiscal 2007 leading to an increase in offshore contribution to 49% of revenue compared to 45% in fiscal 2006. This was driven by a double digit offshore volume growth in each of the quarters.

The net addition of associates during the year is around 11,000 taking the total organization strength to around 40,000 at the close of this year. A noteworthy feature of the year has been the reduction in associate attrition to 15.7% from 19.2% in fiscal 2006. Annualised quarterly attrition for Q4 was 13%. We are gratified by the fact that our People Practices have won several recognitions in the global and regional arena in the past few months - which is an attestation of our renewed focus and commitment in this area. The latest feather in the cap is being accorded the No. 2 position in the Hewitt ‘Best Employers in India’ survey. We have also featured amongst the Top 12 in the Hewitt ‘Best Employers in Asia’ Survey, making us the only IT services company from India in the Top 20 rankings.

Q1 of fiscal 2008 will be witness to Satyam’s completion of 20 years, an important milestone in the organization’s journey of value creation. It symbolizes the maturity and strength of our organization.

We continue to see a strong demand in the market and are well-positioned to address that demand. Against this backdrop, we look forward to a revenue growth rate of 28% to 30% in fiscal 2008 as per US GAAP. We expect to record revenue of US$ 1.9 bn in fiscal 2008 at the higher end of our revenue guidance. The EPADS is expected to grow in the range of 27% to 29%. Corresponding Indian GAAP consolidated guidance after factoring in a rupee appreciation of 6% would translate to revenue growth rate of 20% to 22% and an EPS growth of 18% to 20%.

The Board has proposed a final dividend of 125%. The total dividend for fiscal 2007 stands at 175% including the interim dividend of 50%.

I take this opportunity to inform you that Mr. V. P. Rama Rao, Director on our Board, has decided to step down from the Board of Directors due to personal reasons. I would like to place on record our appreciation for his contribution towards the growth of Satyam. I am pleased to inform you that Mr. T. R. Prasad, ex-Cabinet Secretary, Government of India and Member of the 12th Finance Commission and Dr. V. S. Raju, presently Chairman of the Naval Research Board, Defense Research and Development Organization, Government of India and Director, Bharti Airtel Limited, will join Satyam’s Board as Additional Directors with immediate effect. I am sure that the new members will contribute significantly to the company’s management, governance and technology leadership.

Source : Equity Bulls

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