Mahindra Satyam - Q4FY13 Result Update - Dolat Capital

View: Satyam has been delivering improved performance quarter after quarter. It has made commendable progress in its financial performance with 8 quarter Revenue CQGR of 4% and 1300bps improvement in the operating profitability. The pipeline continues to be robust with improved deal participation and success ratio both on the RTB and discretionary side. We maintain our positive stance on MSAT/TechM in view of impending merger and likely rerating on the stock.

Revenue Inline: Mahindra Satyam reported Q4 FY13 numbers broadly inline with our estimates with a 1% growth in USD revenues at USD 356mn inline with DE of USD 358mn. Volumes grew by 2% QoQ, however the realizations were soft owing to adverse cross currency movement.

Traction intact: IT services revenues were up by 1.2% in QQ in Rs. terms owing to sustained new deal addition. BPO degrew by 27% QQ as the revenues boosted by Holiday weekend revenues in Q3 were absent during the quarter. It has set up its large deals focus group to ensure better success ratio in the deal wins. It is confident of benefiting from likely pent up demand in the discretionary spending based on its strong positioning and expect to exceed NASSCOM 14% revenue growth outlook for FY14.

Exceptional item flares reported PAT: Operating profits degrew by 14% QQ (280bps decline QQ to 16.9%) owing to smoothening of BPO revenues during the quarter and on account of one time charge on change in policy on providing for leaves/gratuity contingencies. It has gained from a reversal of impairment provision of subsidiary of about Rs. 135bn as against outgo on Aberdeen settlement in Q3 leading to a growth of 468% in reported PAT. PAT for the quarter stood at Rs. 4.5bn. Adjusted PAT down 7% QQ and was below DE.

Source : Equity Bulls

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