Research firm Khandwala Securities has recommended collected rating on Satyam Computer Services.

Khandwala Securities report on Satyam computers:

Consolidated Results for quarter ended June 30, 2007

• Revenue was Rs 18, 302 million, YoY increase of 26.8% and a sequential increase of 2.9%.
• Net Profit after Tax was Rs 3,783 million, YoY growth of 6.9% and a sequential fall of 3.9%.
• EPS was Rs 5.7, a YoY increase of 4.4% and a sequential fall of 3.9%.

Growth across the service offerings: Engineering services, Consulting and Enterprise business solution and Infrastructure management services increase by 14%, 15% and 36.4%.

Billing Rate: Offshore billing rates were increased by 1.46% and onsites rates grew by 1.31% in the quarter resulted into 1.1% growth in blended rates.

Margin: During the quarter margin tuned down by ~64 basis points sequentially. Management guided 125 bps declines in operating margins for FY08 from FY07 levels. Management shown positive margin levers would be better price realization, growing offshore-onsite mix, grown subsidiary performance, operational efficiency, SG&A leverage and employee pyramid.

Company had net Forex loss of Rs 60 million, eluding gains of Rs 900 million and translation losses of Rs 960 million. Company has USD 750 million hedging position at the end of quarter.

Wage Hike: 16% offshore salary hike and 5% Onsite salary hike is expected in Q2 FY2008

Employee Details: Associates’ number including subsidiaries and joint ventures grew by 2,795 to 42,347. Management targets to add 15,000 – 16,000 employees in FY2008, increased from guidance of 14,000-15,000 employees.

CAPEX: Satyam will invest USD 80-100 million in FY2008.

Nipuna Result: The recorded revenue of USD 2.02 million in Q1 FY2008. For FY 2008, company guided revenue of USD 61 million, a growth of 60% over the last year.