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| Patni Computer: Uninspiring numbers |
| Vishal Chhabria & Puneet Wadhwa / Mumbai Feb 17, 2010, 00:42 IST |
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Net profit growth in the December quarter was boosted by better-than-expected margins and forex gains
 Patni Computer Systems posted consolidated revenues of $170 million, which were in line with expectations, for the quarter ended December 2009, reflecting a sequential growth of 1.8 per cent. The growth was driven by higher volumes, wherein verticals like manufacturing, retail and product engineering did well. While pricing was stable, the rupee’s 3.5 per cent appreciation against the dollar meant that rupee-based revenues were lowered by 1.8 per cent sequentially at Rs 789.6 crore.
Earnings before interest, tax, depreciation and amortisation (Ebitda) margins at 20.3 per cent were higher by 32 basis points sequentially. Margins were aided by a 40 basis points increase in the employee utilisation to 77.4 per cent. Patni also reported foreign exchange gains of Rs 14.9 crore, as against a loss of Rs 10.9 crore in the September quarter, which was partly offset by a decline in other income. Thus, consolidated net profits grew by 9.5 per cent to Rs 187.8 crore. Going ahead, analysts say Patni has about $300 million of outstanding hedges (booked at Rs 48 to a dollar), which should result in forex gains over the next two quarters.
After adjusting write-back of provisions and taxes, the company’s consolidated net profit increased 21.1 per cent sequentially at $29.44 million for the quarter. Likewise, its net profit for the year ended December 2009 was higher by 17.5 per cent at $97.8 million.
However, unlike most bigwigs in the domestic sector, Patni was not able to extract higher work from its top clients; its share in revenues declined 80 basis points sequentially to 11.1 per cent. Positively, Patni is pursuing large deals ranging $100-200 million. If it successfully closes these, revenue visibility and growth rates should improve. Meanwhile, the management expects revenues at $170-174 million and net profit (excluding hedging transactions) at $28-29 million for the March 2010 quarter, indicating a marginal uptick sequentially.
Post-results, Patni’s stock has slipped 1.6 per cent against Sensex’s 1.9 per cent gains over three sessions. It has also underperformed the Sensex and BSE IT indices in the last one and three months periods, respectively. At Rs 464.25, it trades at a P/E of about 11 times its estimated CY2010 earnings.
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