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We see stable growth in H2

We see stable growth in H2
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First Published: Fri, Apr 30 2010. 12 27 AM IST

Turning tide: Chief executive at Patni Computers Jeya Kumar holds margin guidance for the year at around 15-17%. Abhijit Bhatlekar/Mint
Turning tide: Chief executive at Patni Computers Jeya Kumar holds margin guidance for the year at around 15-17%. Abhijit Bhatlekar/Mint
Updated: Fri, Apr 30 2010. 12 27 AM IST
Mumbai: Software exporter Patni Computer Systems Ltd has reported a consolidated net profit of Rs157 crore for the three months to 31 March, down from Rs168.6 crore in the preceding quarter. Its consolidated net sales declined to Rs781.6 crore from Rs801.7 crore.
In an interview, Jeya Kumar, chief executive of Patni Computer Systems, spoke about the results and his outlook for the company. Edited excerpts:
Can you talk about your numbers for the January-March quarter and how they measure against your guidance?
For the recent quarter, we grew at around 1.3%, (which) was within our guidance range. On the rupee front, it was healthy for us. We are hedged very effectively. At the PAT (profit after tax) level, this was a record quarter for us. At PAT we are around 19.3%, or $33.3 million (Rs148.5 crore).
Looking at it on a quarter-on-quarter basis, it shows pressure on net income. Revenues have also been flattish.
Turning tide: Chief executive at Patni Computers Jeya Kumar holds margin guidance for the year at around 15-17%. Abhijit Bhatlekar/Mint
I think the real pressure(s) are all unanticipated...I think attritions were much higher than what most of us had planned for; (it) was close to about 17% for the quarter.
In terms of clients, I think the projects are coming through, but larger the deal(s) are, the longer it takes and (it) also gets predictable in terms (of) closure timing. (We are) not seeing any significant pressures on the rates. We see the customer spends continuing, but we are seeing it more positive for us in the second half of the year.
Could you manage to have any increase in billing at all?
Billing is virtually running flat for us.
What about earnings before interest, taxes, depreciation and amortization (Ebidta) margins this time around? Last quarter, you did about 20%, but this time you have seen some slippage. Where do you hope to maintain that?
Over the last year, our fixed price contract has virtually grown from 37% of revenue; I think it’s getting to about 45%. So that’s a major operating lever for us. Other than that, it’s going to be (a) series of consolidations.
How are you exposed to various currencies in the six months to 30 September? How are you hedged for these two quarters?
For currencies, I think we are very happy with our hedging strategy itself. We are hedged at about 70% at close to about Rs48. So we don’t see any major currency risk for us.
Can you talk about some large deals that you are expecting to sign in the next couple of quarters, and how they would aid your revenue growth?
We just signed one with UAM (Universal American Corp.); I think we announced about two days ago, that’s a $200 million five-year deal. The closure will be closer towards June because part of it will also get to keep licences right across the US. So...some stages will take longer, which means all that will close by end of June.
You have guided for a fairly flat revenue of $172 million compared to what you did in the first quarter. When do you think you will be able to inch up further? What kind of earnings growth are you looking at?
We were fairly conservative with our guidance. I think the simple reason (is that) the larger the deal size is, it becomes more unpredictable in terms of the closure time. That’s one of the factors. Other than that, I think we will see relatively stable growth in second half.
What kind of margins can you guide us for the first half and, if possible, for the second half?
We have always guided for the year (at) around 15% to 17%. I think we will hold to it.
cnbctv18@livemint.com
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First Published: Fri, Apr 30 2010. 12 27 AM IST