Mahindra Satyam shares jumped 10 per cent to Rs 91.85 in early trade, which is a new 52-week high for the stock. In contrast, the BSE IT index traded 0.6 per cent lower. Shares of Satyam, valued at about $1.8 billion, have risen almost 30 per cent this year, compared with a 7.6 per cent fall in the sector index, dragged down by Infosys.
Here are the key take away from the earnings:
1) Mahindra Satyam beat expectations with a 56.4 per cent rise in quarterly profit. Profit was buoyed by multi-million dollar order wins and gains of about Rs 58.5 crore on exchange rate fluctuations. Satyam said it had won at least three big orders this year including two in the June quarter, without naming the clients.
"Global business realities continue to be unpredictable. However we are confident of taking forward our momentum," Chairman Vineet Nayyar said in a statement.
2) Profits for the first quarter ended June 30 rose to Rs 352 crore from Rs 225 crore in the year-earlier period. That compared with analysts' estimate of Rs 270 crore.
"The numbers look very good," said Hitesh Shah, Director of Equity Research at IDFC Securities, who has an "outperform" rating on both Satyam and Tech Mahindra.
3) The biggest surprise was the sharp rise in ebitda margins, a key measure of profitability, which expanded 420 basis points at 21.7 per cent against 17.5 per cent quarter-on-quarter. Out of the 420 basis points, 300 bps was contributed by currency depreciation and the other 120 bps due to better utilization, the management told NDTV Profit.
4) The company's management told NDTV Profit that it was in the last lap for seeking nod for its merger with Tech Mahindra. Tech Mahindra, which owns close to 43 per cent of Satyam, is offering one share in itself for every 8.5 shares of Satyam to absorb the company.
Billionaire Anand Mahindra, who purchased Satyam in a government-sponsored sale in 2009 after the founder of the Hyderabad-based company admitted to one of India's largest accounting frauds, is seeking to create a consolidated IT services powerhouse by merging Satyam and Tech Mahindra, which provide software services to clients mostly in the United States, Europe and Australia.
5) Mahindra Satyam will not see any employee redundancy because of the merger, the management said.
(With inputs from Thomson Reuters)