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Syntel Inc. Reports Operating Results (10-Q)

November 06, 2012 | About:
10qk

10qk

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Syntel Inc. (SYNT) filed Quarterly Report for the period ended 2012-09-30.

Syntel, Inc. has a market cap of $2.53 billion; its shares were traded at around $61.53 with a P/E ratio of 14.2 and P/S ratio of 4. The dividend yield of Syntel, Inc. stocks is 0.4%. Syntel, Inc. had an annual average earning growth of 17.2% over the past 10 years. GuruFocus rated Syntel, Inc. the business predictability rank of 3.5-star.

Highlight of Business Operations:

Net Revenues. The Companys revenues consist of fees derived from its Applications Outsourcing, Knowledge Process Outsourcing (KPO), e-Business and TeamSourcing business segments. Net revenues for the three months ended September 30, 2012 increased to $186.4 million from $167.6 million for the three months ended September 30, 2011, representing a 11.2% increase. Net revenues for the nine months ended September 30, 2012 increased to $536.1 million from $470.0 million for the nine months ended September 30, 2011, representing a 14.1% increase. The Companys verticalization sales strategy focusing on Banking and Financial Services; Healthcare; Insurance; Telecom; Automotive; Retail; Logistics and Travel has enabled better focus and relationships with key clients. Further, continued focus on execution and investments in new offerings such as our Testing and Center of Excellence have a potential to contribute growth in the business. The focus is to continue investments in more new offerings and geographical expansion. Worldwide billable headcount as of September 30, 2012 increased by 10.5% to 14,876 employees as compared to 13,458 employees as of September 30, 2011. However, the growth in revenues was much higher when compared with the growth in the billable headcount. This is primarily because of a better utilization of onsite and offshore resources. As of September 30, 2012, the Company had approximately 81.0% of its billable workforce in India as compared to 80.2% as of September 30, 2011. The Companys top five clients accounted for 63.9% of the total revenues in the three months ended September 30, 2012, up from 63.0% of its total revenues in the three months ended September 30, 2011. The Companys top five clients accounted for 63.7% of the total revenues in the nine months ended September 30, 2012, as compared to 63.4% of its total revenues in the nine months ended September 30, 2011. Moreover, the Companys top 10 clients accounted for 78.1% of the total revenues in the three months ended September 30, 2012 as compared to 76.9% in the three months ended September 30, 2011. The Companys top 10 clients accounted for 78.1% of the total revenues in the nine months ended September 30, 2012 as compared to 76.9% in the nine months ended September 30, 2011.

KPO Revenues. KPO revenues increased to $27.9 million for the three months ended September 30, 2012, or 15.0% of total revenues, from $24.3 million, or 14.5% of total revenues for the three months ended September 30, 2011. The $3.6 million increase was attributable primarily to revenues from new engagements contributing $3.1 million and a $1.4 million net increase in revenues from existing projects, largely offset by $0.9 million in lost revenues as a result of project completion. The revenues for the nine months ended September 30, 2012 increased to $81.5 million, or 15.2% of the total revenues, from $72.3 million or 15.4% of the total revenues for the nine months ended September 30, 2011. The $9.2 million increase was attributable primarily to revenues from new engagements contributing $7.2 million and a $3.3 million net increase in revenues from existing projects, largely offset by $1.3 million in lost revenues as a result of project completion.

e-Business Revenues. E-Business revenues increased to $14.0 million for the three months ended September 30, 2012, or 7.5% of total revenues from $13.5 million for the three months ended September 30, 2011, or 8.1% of total revenues. The $0.5 million increase was attributable primarily to a $4.9 million increase in revenues from new engagements, largely offset by $2.2 million in lost revenues as a result of project completion and a $2.2 million net reduction in revenues from existing projects. The revenues for the nine months ended September 30, 2012 increased to $41.6 million, or 7.8% of total revenues, from $38.7 million or 8.2% of total revenues for the nine months ended September 30, 2011. The $2.9 million increase for the nine months ended September 30, 2012 was attributable principally to a $16.0 million increase in revenues from new engagements, largely offset by $9.0 million in lost revenues as a result of project completion and $4.1 million of net decrease in revenues from existing customers.

TeamSourcing Revenues. TeamSourcing revenues increased to $4.0 million for the three months ended September 30, 2012, or 2.1% of total revenues, from $3.6 million, or 2.2% of total revenues for the three months ended September 30, 2011. The $0.4 million increase was attributable primarily to a $1.3 million increase in revenues from new engagements and revenue from the Skillbay web portal, which helps clients of Syntel with their supplemental staffing requirements and net increase in revenues from existing projects of $0.6 million largely offset by $1.5 million decrease in revenues as a result of project completion and conversion of staffing engagements into Syntel managed engagements. The revenues for the nine months ended September 30, 2012 increased to $11.2 million, or 2.1% of total revenues, from $9.1 million or 1.9% of total revenues for the nine months ended September 30, 2011. The $2.1 million increase for the nine months ended September 30, 2012 was attributable principally to a $2.6 million increase in revenues from new engagements, and $0.8 million increase in revenues from existing projects largely offset by $1.3 million decrease in revenue from project completion.

Net cash used in investing activities was $133.2 million for the nine months ended September 30, 2012, consisting principally of $22.9 million of capital expenditures primarily for the construction/acquisition of the Global Development Center at Pune, the Knowledge Process Outsourcing facility at Mumbai and an additional facility in Chennai, the acquisition of computers, software and communications equipment and the purchase of mutual funds of $204.3 million and purchase of term deposits with banks of $145.0 million, largely offset by $152.6 million from sales of mutual funds, $84.9 million from maturities of term deposits with banks and $1.5 million from the sale of assets. Net cash used in investing activities was $57.7 million for the nine months ended September 30, 2011, consisting principally of $37.4 million of capital expenditures primarily for the construction/acquisition of the Global Development Center at Pune, leasehold land at Tirunelveli, the Knowledge Process Outsourcing facility at Mumbai and an additional facility in Chennai, as well as for the acquisition of computers, software and communications equipment and the purchase of short term investments of $182.6 million and investment in term deposits of $91.0 million, largely offset by $181.0 million from the sale of short term investments and $72.3 million from maturities of term deposits.

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