BackPatni hunts for a buy in Europe, Asia Pacific
Patni hunts for a buy in Europe, Asia Pacific
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Mumbai: Mid-sized Indian software services firm Patni Computer Systems is looking to buy a company in Europe or Asia Pacific for $50 million to $200 million, a top official said on Wednesday.
Patni, which follows a January-December fiscal year, caters to industries such as insurance, telecom, energies and utilities and retail, had cash and cash equivalents of $317.8 million at the close of the September quarter.
“We are looking at 2-3 companies very closely," chief financial officer Surjeet Singh told reporters on a conference call. “The overall acquisition agenda remains strong."
Last quarter, chief executive Jeya Kumar had said Patni expects to spend $200 million to $300 million on acquisitions for the year ending 31 December.
Singh said Patni would be looking for acquisitions across all verticals, but mainly in the infrastructure management services space, a weaker portfolio it wants to shore up.
Cautious Q4
For the fourth quarter, Patni forecast net profit of $22.5 million to $23 million on a constant currency basis on revenue of $180 million to $181 million.
“Most of the volume growth would be back-ended in the fourth quarter, so we are guiding with caution," Singh said.
He expects Patni’s margins to be flat in October-December on absolute terms and dip slightly on an operating basis sequentially, dragged by lower capacity due to the seasonal holidays.
September-quarter gross margins were at 33.9%, compared with 35% in the previous quarter.
The company, which ended the quarter with a headcount of 16,556 people, plans to hire close to 1,000 employees in October-December, Singh said, adding he expects attrition to reduce in Q4.
Small and mid-cap IT companies have been grappling with tepid demand, high attrition rates and a rise in expenses, resulting in strain on margins and reduced profitability for some.
Earlier in the day, Patni posted a lower-than-expected decline in quarterly profit, partly on a boost from product engineering segment sales, which rose to 1.41 billion from 1.18 billion a year ago. The company, which added 13 new clients during the quarter, said its consolidated net profit fell 14.3% to Rs144 crore, while a Reuters poll of brokerages had forecast profit at Rs120 crore, a 28.6% drop.
Patni said it expects a mark-to-market foreign exchange gain of $1.5 million in the December quarter, but flagged the strongly appreciating rupee as an overall concern for the industry.
Patni’s larger peers, Infosys Technologies, Wipro and Tata Consultancy have also voiced concerns about a strong rupee crimping profits at India’s $60 billion software services sector, which gets more than half of its revenue from exports and counts costs in rupees.
At 1.23 pm, shares of Patni were trading down 0.29% at Rs463.90 in a weak Mumbai market.
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