Satyam Computer an outperformer: Karvy

Karvy Stock Broking has maintained its outperformer rating on Satyam Computer Services with a revised price target to Rs 570 in its May 7, 2008 research report. "On top of 2 strong preceding quarters, Satyam for Q4FY08 reported a strong sequential revenue growth of 10%, with revenues from offshore surging by 21.5% QoQ. Over the last five quarters, Satyam has been steadily improving its offshore component and this has enabled it to report 51% of revenues from offshore as against 49% in FY07."

"Going forward the company expects some decent size offshore deals (in the range of USD 100–150 million) to materialize which would not only increase the revenue visibility of FY09, but would also to some extent improve the revenue visibility for FY10. Our take is that post the Q1FY09, the environment in US should improve and the offshore budgets should witness some serious increase, though it is difficult to quantify at this point of time. It breached the USD 2 billion in FY08 and by FY10 (if it maintains the momentum) it should breach the USD 3 billion mark, which would lead Satyam to participate in all the large profitable offshore deals. In terms of client concentration it has a fairly de-risked revenue portfolio. Since there is more upside to our earnings forecast we are revising our price target to Rs 570 (appreciation of 20%) from the Rs 520 levels. We continue to maintain with our Outperformer rating on the stock," says Karvy's research report.

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