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Satyam Q2 net up 28 pct; rupee, wages worry

Tue Oct 23, 2007 3:13pm IST
 
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By Sumeet Chatterjee

BANGALORE (Reuters) - Indian software firm Satyam Computer Services Ltd beat forecasts with a 28 percent rise in quarterly profit and raised its full-year sales estimates on strong demand for outsourcing, sending its shares higher.

But the export-driven company, which got more than half its revenue from the United States in the September quarter, expects its margins to drop by 175 basis points in the year to March 2008 due to a firmer rupee currency and soaring wages.

"The business momentum is still there but the problem is the pressure on margins because of the rupee," said Dipesh Mehta, a sector analyst with Mumbai brokerage Khandwala Securities.

Chief Executive B. Rama Raju said there did not appear to be much sign of a slowdown in U.S. demand for outsourcing, despite evidence of problems in the housing market spreading to other parts of the economy.

"At least our experience shows that the customers are looking at offshoring ... not seen much of a slowdown there and I would say that it (business momentum) is positive," he told reporters.

Hyderabad-based Satyam, India's fourth-largest software services firm, said its revenue in the year to March would grow between 26.3 and 26.7 percent -- higher than 21.1-22.5 percent it had forecast in July.

Earnings per share were forecast to grow 16.5-17 percent, up from the 12.5-14 percent growth it projected in July.

New York-listed Satyam, which specialises in business software, said net profit for July-September, its fiscal second quarter, rose 28 percent to 4.09 billion rupees as per the Indian accounting system, from 3.20 billion a year ago.  Continued...

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