Patni Beats Handily

Patni Computer Systems Ltd. (PTI - Snapshot Report) reported earnings from continuing operations of 46 cents per ADS for the fourth quarter of 2009, compared to the Zacks Consensus Estimate of 38 cents.

Revenue during the quarter rose 1.8% sequentially to $170.2 million (INR 7,896.1 million), from $ 167.2 million (INR 8,040.2 million) in the preceding quarter. Number of active clients was 272 at year end as compared to 331 at the end of 2008. New clients acquisitions during the quarter were 20. On calendar basis, we have acquired 56 new clients.

Gross Margins were at 37.9% or $64.5 million (INR 2,995.1 million) against 37.1% or $62 million (INR 2,983.5 million) in the previous quarter. Gross Margin adjusted for Extra Ordinary Items was at $60.9 million at 36.4% during the previous quarter. Improvement in Gross margin is primarily on account of higher utilization and impact of cost rationalization measures.

Sales and marketing expenses during the quarter were at $14.2 million (INR 660.1 million) at 8.4% as compared to $14.2 million (INR 680.8 million) at 8.5% in the previous quarter. G&A expenses during the quarter were at $18.4 million (INR 852.8 million) or 10.8% as compared to $18 million (INR 865.7 million) at 10.8% during the previous quarter.

Operating Income including foreign exchange gain/loss was at $33.3 million (INR 1,545.6 million) or at 19.6% during the quarter as compared to $27.1 million or at 16.2% during previous quarter.

The revaluation and mark to market foreign exchange gain for the quarter were at $3.2 million (INR 148.5 million) as compared to foreign exchange loss of $2.3 million (INR 108.6 million) during the previous quarter.

For fiscal fourth quarter, other income (including interest and dividend income net of interest expenses, profit/loss on sale of investments and other miscellaneous income) stood at 2.5% or $ 4.3 million (INR 197.4 million) during the quarter as compared to 3.5% or $ 5.9 million (INR 283.4 million) during previous quarter.

During the quarter, against net income of $40.5 million (INR 1,878.4 million), cash from operating activities was at $48.1 million (INR 2,231.2 million) net of changes in current assets and liabilities of $ (-) 0.8 million and non cash charges of $8.5 million. These non cash charges comprise of depreciation and amortization including compensation cost of $9 million and other charge of $ (-) 0.6 million.

Receivables at the end of fourth quarter 2009 were at $109.4 million as compared to $105.6 million at the end of the third quarter 2009. Number of days outstanding (Including unbilled) for current quarter was 69 days as compared to 75 days in the third quarter of 2009.

Guidance

Revenue for fiscal first quarter is expected between $170 million and $174 million and net income (excluding the hedging gain/loss) is projected to be in the range of $28 million to $29 million.

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