India's fourth largest IT services provider Satyam Computer Services on Monday reported a 18.6 percent surge in net profit for the quarter ended March 31, 2008, but failed to beat market forecast.

Satyam announced profit-after-tax (PAT) at Rs.466.85 crore ($116.7 million) as against Rs.393.58 crore ($98.4 million) in the corresponding quarter a year ago, a year-on-year (YoY) increase of 18.6 percent.

The New York-listed company, which specializes in business software and offers back-office outsourcing services, missed market forecasts and sounded caution on a looming economic recession in the US, its key market. Indian IT firms depend on the US clients for major portion of their earnings.

However, Satyam chairman B.Ramalinga Raju noted that the company had achieved growth in the last two quarters in spite of the threat of weak global markets and impending US recession.

We continue to monitor some of our major markets, where lagging economic conditions are hindering customer spending in selected sectors - a challenge to growth. We have attempted to study the situation very closely after the dollar value declined and have been able to pin down guidance rate. We understand the implications on our business, Raju said.

The slowdown of the US economy has become an issue in the last two quarters. But our revenues are fairly good, he said.

[We] will explore ways to maintain growth, including expansion into different industries, regions, and services, he added.

Raju said Satyam would pursue 15 to 20 large deals during the present fiscal year and the company would expand its IT business operations in Latin American and the European markets, particularly in Continental Europe.

Raju also said the company expected to employ about 14,000 to 15,000 fresh graduates at the grassroot level while the salaries across different management levels would be raised by 12-14 percent.

However, it seems that the market failed to share his optimism as Satyam stock fell 2.13 percent to Rs.458.95 in a bullish market which rose 1.57 percent on Monday.

The company said it earned a revenue of Rs.2416.02 crore ($604 million) in the last quarter, posting a year-on-year (YoY) growth of 35.8 percent.

For the year ended March 31, 2008, revenue was recorded at Rs.8473.49 crore ($2118.37 million) , a growth of 30.7 percent over the corresponding previous year while the PAT was Rs.1687.89 crore ($422 million), a growth of 20.2 percent over the corresponding previous year.

Earnings per share (EPS) for the fourth quarter stood at Rs.6.97, a YoY increase of 16.6 percent, while for the year ended March 31, 2008, EPS stood at Rs.25.24, a YoY rise of 17.7 percent.

The company has announced a final dividend of Rs.2.50 per share on par value of Rs.2 per share (125 percent).

Accordingly, the total dividend recommended for the year is 175 percent (Rs.3.50 per share on par value of Rs.2 per share), including interim dividend of 50 percent (Re.1 per share on par value of Rs.2 per share), the company said.

As for future guidance, Satyam said its revenues for the year to March 31, 2009 would rise to Rs.10,500-10,670 crore ($2.625-2.667 billion), forecasting a growth of 23.9-25.9 percent, higher than a 22-24 percent growth forecast by some analysts. It also forecast Q1 revenues at Rs.2500-2512.5 crore ($625-628 million) while EPS were forecast to grow 17-19 percent.

Satyam counts General Electric, Nestle, Qantas Airways, Emirates Bank International and Fujitsu Services among its clients.

($1 million = Rs.4 crore)

India Mahindra Satyam