MUMBAI (Dow Jones)--Patni Computer Systems Ltd. (532517.BY) Wednesday reported a 7.3% rise in net profit for the second quarter thanks to a foreign-exchange gain, but its shares fell as revenue missed the company's estimate.
The Indian software services company said net profit for the April-June quarter rose to INR1.47 billion ($31.5 million) from INR1.37 billion a year earlier according to U.S. GAAP accounting standards.
It booked a foreign-exchange gain of INR197.6 million in the quarter, recovering from a INR197.2 million loss a year earlier.
Revenue grew a tad to INR7.78 billion from INR7.73 billion.
The average of estimates in a Dow Jones Newswires poll of 17 analysts was for Patni to post a consolidated net profit of INR1.37 billion on revenue of INR7.93 billion.
In dollar terms, Patni posted a net profit of $31.7 million. Revenue was $167.6 million, below its expectations of $172.0 million.
"This (revenue) has been the major negative surprise in our view," said a local analyst, who didn't wish to be named.
Chief Executive Jeya Kumar told reporters in a post-earnings call that the lower-than-guided revenue doesn't reflect any underlying changes but a one-off deferral in projects and their inability to scale up in the second quarter, combined with cross-currency changes.
Patni shares fell after the results announcement. At 0930 GMT, the stock was trading 6.8% down at INR476 in a Mumbai market that was 0.7% higher.
Outlook, Attrition Concerns
The company said it expects third-quarter revenue to be between $176 million and $177 million, and net profit excluding hedging gains or losses to be between $22.5 million and $23.0 million.
The guidance is based on an exchange rate of INR46 to a U.S. dollar and assuming a mark-to-market foreign-exchange gain of $1 million.
The company said also that the attrition rate, excluding business process outsourcing workers, surged to 21.5% in the second quarter from 17.7% in January-March and 13.2% a year earlier.
Analysts have been worried that Patni's attrition will handicap it against capitalising on demand for outsourcing services.
Patni said it added 934 employees in the second quarter, taking its staff count to 14,893 at the end of June.
CEO Kumar said also that Patni is looking at acquisitions to aid growth and may acquire a company by the end of this year.
He added that Patni is hopeful of winning one or more deals in the third quarter with a value of more than $25 million.
Chief Financial Officer Surjeet Singh said the company will try to maintain the operating margin in a 15%-17% range for the year.
The operating margin for the second quarter was 18.8%, compared with 21% in the first quarter and 17% a year earlier.
-By Kenan Machado, Dow Jones Newswires; +91 22 6145 6107; kenan.machado@dowjones.com
The Indian software services company said net profit for the April-June quarter rose to INR1.47 billion ($31.5 million) from INR1.37 billion a year earlier according to U.S. GAAP accounting standards.
It booked a foreign-exchange gain of INR197.6 million in the quarter, recovering from a INR197.2 million loss a year earlier.
Revenue grew a tad to INR7.78 billion from INR7.73 billion.
The average of estimates in a Dow Jones Newswires poll of 17 analysts was for Patni to post a consolidated net profit of INR1.37 billion on revenue of INR7.93 billion.
In dollar terms, Patni posted a net profit of $31.7 million. Revenue was $167.6 million, below its expectations of $172.0 million.
"This (revenue) has been the major negative surprise in our view," said a local analyst, who didn't wish to be named.
Chief Executive Jeya Kumar told reporters in a post-earnings call that the lower-than-guided revenue doesn't reflect any underlying changes but a one-off deferral in projects and their inability to scale up in the second quarter, combined with cross-currency changes.
Patni shares fell after the results announcement. At 0930 GMT, the stock was trading 6.8% down at INR476 in a Mumbai market that was 0.7% higher.
Outlook, Attrition Concerns
The company said it expects third-quarter revenue to be between $176 million and $177 million, and net profit excluding hedging gains or losses to be between $22.5 million and $23.0 million.
The guidance is based on an exchange rate of INR46 to a U.S. dollar and assuming a mark-to-market foreign-exchange gain of $1 million.
The company said also that the attrition rate, excluding business process outsourcing workers, surged to 21.5% in the second quarter from 17.7% in January-March and 13.2% a year earlier.
Analysts have been worried that Patni's attrition will handicap it against capitalising on demand for outsourcing services.
Patni said it added 934 employees in the second quarter, taking its staff count to 14,893 at the end of June.
CEO Kumar said also that Patni is looking at acquisitions to aid growth and may acquire a company by the end of this year.
He added that Patni is hopeful of winning one or more deals in the third quarter with a value of more than $25 million.
Chief Financial Officer Surjeet Singh said the company will try to maintain the operating margin in a 15%-17% range for the year.
The operating margin for the second quarter was 18.8%, compared with 21% in the first quarter and 17% a year earlier.
-By Kenan Machado, Dow Jones Newswires; +91 22 6145 6107; kenan.machado@dowjones.com
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