Syntel reports 2008 revenue up 22 per cent

Source: Syntel

Syntel, Inc. (NASDAQ: SYNT), a global information technology (IT) services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the fourth quarter and full year, ended December 31, 2008. Despite a slump in global IT stocks and a slowdown in the economy, Syntel has shown a healthy growth in the last quarter.

The company claims the results are reassuring for the Indian IT industry and outsourcing businesses shaken by the recent Satyam Computers controversy.

Highlights:

  • Q4 revenue grows 11% yoy to $104.7M (Rs.516 crore) 
  • Q4 Net Income grows 68% yoy to $26.7M (Rs.132 crore)
  • Q4 EPS of $0.64 per diluted share 
  • Full Year revenue increase of 22% to $410.4M (Rs.2, 022 crore) 
  • Full Year Net Income increase of 38% to $86.7M (Rs.427 crore) or $2.10 per diluted share 
  • 2008 ending global headcount of 12,363

Syntel's total revenue for the fourth quarter increased 11 percent to $104.7 million (Rs.516 crore), compared to $94.0 million (Rs.463 crore) in the prior-year period. The company's gross margin was 48.3 percent in the fourth quarter, compared to 39.4 percent in the prior-year period (890 bps increase).Syntel's income from operations expanded to 28.9 percent in the fourth quarter, compared to 16.6 percent in the prior-year period (1230 bps increase).

Net income for the fourth quarter was $26.7 million (Rs.132 crore) or $0.64 per diluted share, compared to $15.9 million (Rs.78 crore) or $0.39 per diluted share in the prior-year period.During the fourth quarter, Syntel added 8 new clients and one new "Hunting Licenses" or preferred partnership agreements, bringing the total number to 93 strategic relationships.

Syntel's total revenue for 2008 increased 22 percent to $410.4 million (Rs.2, 022 crore), compared to $337.7 million (Rs.1, 664 crore) in 2007. The Company's operating margins expanded to 24.0 percent for 2008, compared to 18.8 percent in 2007 (520 bps increase).Net income for the year was $86.7 million (Rs.427 crore) or $2.10 per diluted share, compared to $62.9 million (Rs.310 crore) or $1.52 per diluted share in 2007, as seen in the annual report.Syntel has added 34 new clients during the year and ended 2008 with 12,363 employees globally.


Mr. Keshav Murugesh, President and COO, Syntel, said: “Given the difficult environment, Syntel is pleased with our overall financial performance for the year 2008. As anticipated, the effects of a difficult global economic environment continue to impact our business. A weak economy, increasing pricing pressure, delays in spending decisions and political uncertainty have reduced our visibility to top-line acceleration at this point in time. Our initial revenue guidance is reflective of the current business environment.

“Improved flexibility on the staffing side of our business will allow us to better manage operating costs and earnings without impacting top line opportunities. That being said, we will continue to invest for the future as we believe that when the economy recovers and customer confidence returns, the adoption of globalized services will re-accelerate.”

Syntel has invested close to $37M (Rs. 182 crore) in 2008 and has plan to invest approx. $35Mn (Rs.172 crore) in 2009 as it makes progress on construction of its SEZ campus in Pune and Chennai. Phase 1 with 2,300 seats in Pune is ready and operational and Phase 1 of our new Chennai campus having built up space of 650000 sq.ft. will be ready by Q3 of 2009. 2009 GuidanceBased on current visibility levels and an exchange rate assumption of 48.7 rupees to the dollar, the Company is providing initial 2009 guidance of $385 (Rs.1875 crore) to $425 (Rs.2070 crore) million and EPS in the range of $1.66 to $2.08.

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