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SATYAM Computer Services Ltd, in the process of a merger with parent Tech Mahindra Ltd, met expectations with a 17 per cent rise in second-quarter profit, as customers, aiming to cut IT costs, gave it more orders.
Profits for the September quarter rose to Rs2.78bn ($514m/£320m) from Rs2.38bn ($440m/£274m in the year-earlier period, Satyam said in a statement on Tuesday (October 30). That compares with analysts’ estimate of Rs2.73bn ($505m/£314m), a report says.
India’s $100bn (£62.23bn)-a-year software services industry earns about three quarters of its revenue from the US and Europe. Australia is also an increasingly important market for the sector.
Billionaire Anand Mahindra purchased Satyam in a government-sponsored sale in 2009 after the founder of the Hyderabad-based company admitted to one of India’s largest accounting frauds.
Mahindra is seeking to create a consolidated IT services powerhouse by merging Satyam and Tech Mahindra, which provides software services to clients such as BT Group Plc and SAAB.
Tech Mahindra owns close to 43 per cent of Satyam, now called Mahindra Satyam. It is offering one share in itself for every 8.5 shares of Satyam to absorb the company.
Satyam shares have gained about 39 per cent in value since March 21, when the company announced its plans to merge with Tech Mahindra. The stock closed up 0.65 per cent on Tuesday (October 30) ahead of the earnings report.
The NSE’s sectoral index lagged the broader market this year, but has rallied about 9 per cent since a July low as investors became more optimistic about some stability in the global economic environment.
Satyam’s quarterly sales rose 22.8 per cent to Rs19.38bn ($358m/£223m). Analysts were expecting sales of Rs19.24bn ($356m/£221m).
Earlier this month, top-ranked Tata Consultancy Services and fourth-ranked HCL Technologies beat expectations for second-quarter earnings. TCS reiterated it would beat the 11-14 per cent estimate for exports growth made by the National Association of Software and Services Companies, an industry lobby.
Second-ranked Infosys retained its July outlook for the current fiscal year ending March 2013. Infosys was yet to include revenue from the acquisition of a Swiss consultancy Lodestone Holding. Wipro, the No. 3 provider, will report second quarter earnings on Friday (November 2).
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