Satyam Computer Services Ltd. ADRSAY

Stock Research and Analysis

by Swami Shanmugasundaram

Satyam Computer Services, the smallest of the India's big four IT services companies, is finally living up to its potential. Its performance in the past few years is on par with or better than its larger peers', a marked difference from when it lagged Read more

Bulls Say

Satyam derives more than 90% of its revenue from existing clients, and the company continuously focuses on enhancing its client relationship, giving it substantial recurring revenue opportunities.

Satyam's operating margins have held up well in the face of heightened competition, wage inflation, and currency fluctuations.

Satyam's unleveraged balance sheet gives it the flexibility to use acquisitions to expand its service offerings and plug gaps in its portfolio of offerings. Read more

Bears Say

The tax holiday scheme for export-driven software companies in India is set to expire in 2010, and this may lead to a notable uptick in the tax rate.

Satyam, which has a large number of clients in the U.S., could face problems in attracting and retaining highly skilled foreign workers in the U.S. because of restrictions in H1B Visa availability.

Foreign currency fluctuations can wreak havoc with operating results. Although Satyam uses financial instruments to hedge this risk, it doesn't completely shield the company from currency risk. As per management, any 1-percentage-point appreciation in the rupee lowers the operating margin by 30 basis points. Read more

Strategy

Satyam's growth strategy is centered on its RightSourcing delivery model. An offshoot of outsourcing, RightSourcing adds a new dimension called near-shoring, which offers delivery capability from locations Read more

Management

In light of the ongoing investigations and pending more information, we give Satyam failing marks for stewardship. The Indian government dissolved the board of embattled Satyam, including the company's interim CEO Ram Mynampati, on Jan. 9 and appointed Read more

Profile

Hyderabad-based Satyam Computer Services is the fourth-largest Indian IT services firm, with strong competencies across a number of industries such as manufacturing, financial Read more

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