Mumbai: Patni Computer Systems, in which US-based iGate is buying a majority stake for $1.2 billion, expects operating margins to remain under pressure in year ending December 2011, its chief financial officer said on Wednesday.
The Mumbai-based company, which clocked operating margins of about 18% in 2010, sees margins locked in a 16-17% range in 2011, Surjeet Singh told a conference call.
“We would invest back in the business rather than improving the margins,” he said.
Patni, earlier in the day, reported a 6.38% drop in quarterly net profit on rupee appreciation, but still beat street estimates as sales continued to ride on two multi-million dollar contracts it won.
The software services firm clocked net income of Rs176 crore for Oct-Dec on net sales of Rs820 crore.
A Reuters’ poll of mid-cap IT firms had forecast a quarterly net profit of Rs124 crore for Patni.
Patni has decided to stop giving business guidance, Singh said, adding though “there is no reason why we should not beat the industry growth rate... which is seen in the ‘mid-teens´ (15%) in the current year.”
“The currency (Indian rupee) has appreciated almost 4-5% in the last year (2010) and that had an impact of about 2.5% on margins... but still, we have managed to post about 18% operating margins,” he added.
Singh refused to provide any details about the present status of Patni’s acquisition by iGate.
After the acquisition of Patni on 10 January, iGate has made an open offer to buy further 20.6% at Rs503.5 a share in the company and the offer is scheduled to open on 4 March.
“We have invested in all areas of the business and the platform is ready to capture market opportunities,” Singh said in a statement.
At 12:34 pm, shares of Patni Computer Systems were trading at Rs463, down 0.17% in a flat Mumbai stock market.