MUMBAI: Patni Computer Systems, a mid-size IT company, reported better than expected results for the quarter ended June 2009. Growth in volume
coupled with significant cost rationalization measures resulted in a quarter-on-quarter growth of 92% in net profit to Rs137 crore. The stock market reacted positively with the stock shooting up 15% compared to 1.7% rise in BSE IT Index during the initial trading hours.

The company has managed to increase its business volume by 2.2% (Q-o-Q) in spite of challenging environment around. The dollar denominated revenue increased sequentially by 3.3% to $162 million, mainly coming on the back of a robust volume growth. However, the management continues to remain cautious about the future growth.

The company has managed to utilize its human resources much better. The employee utilization rate has increased by 400 basis points to 74.4%. Its cost control measures taken earlier are also showing results now. Its sales and marketing expenses which is mainly in US dollar terms declined by around 10% sequentially. The appreciation in rupee also lowered down its foreign exchange loss to $4 million. All these factors along with improved collection of its revenue from its clients increased the operating profit to Rs 116 crore, a sequential jump of more than 50%.

Some of the company’s fixed income investments usually get matured in June quarter and result in higher other income. Its other income almost got tripled on a sequential basis. Almost all the factors remained in favour of the company during June 2009 quarter. Sequentially, the net profit got almost doubled to Rs137 crore.

The company, however, added only seven clients during the quarter, which is slightly lower. The management expects this to improve going forward. The cost control measures will continue and the operating margin is expected to be in 100 basis point range from the current level.

source: Economictimes

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