Satyam Valuation

8/9/2019 Satyam Valuation

1/15

A REPORT

ON

VALUATION OF SATYAM COMPUTERSSERVICES LIMITED

Submitted by:

Amit Agarwal

Manish Bansal

Puneet Thakur

ICFAI BUSINESS SCHOOL

HYDERABAD


2/15

Table of contents

1. Economic analysis

1.1 Inflation & key rates movement..... .....4

1.2 Indias trade balance..........4

2. Industry analysis ......5

3. Investment rationale ...6

4. key risk.7

5. Financial forecast and Key Assumptions ...7

6. Company analysis....8

6.1 Company description. 8

6.2 Core capability.8

6.3 Growth driver... 8

6.4 Segmental analysis....8

6.5 Competition...9

7.Valuation

7.1 Dcf valution.... ..9

7.2 Relative valution ... .10

8. Technical analysis ...11

9. Conclusion and Recommedation....12

10. Financial statement

10.1 Balance sheet .....12

10.2 Profit and loss ...........13

10.3 Cash flow statement..14

10.4 Financial ratio15


3/15

Sector: ITSS CMP: 225 DEC 5, 2008 BUY

Expected price Range: 359 to 382

Satyam computers software limited

We expect to increase in the company sales in

FY 09 to Rs. 124.49 billion a 52.98% increase

over the previous year due to the continuous

adding of new clients and tapping new

markets.

The high point of FY 08 was the contract with

FIFA, the football governing body, to custom-

develop the event management and logistics

software for World Cup 2010 and 2014 as the

official IT.

The company has, over the past five to seven

quarters, been focusing on improving overall

margins with efforts to rationalize its employee

and other selling and administration costs. 52

high of company is 542 and low is 213.55. The

share of the company is trading at 225.15 as on

5 Nov. 2008.

Relative performance of satyam v/s nifty

From the graph it can be seen that the stock of the

satyam computers is moderately correlated with

nifty. Thus it can be said stock is more affected by

the economic news and market fundamentals. InApril 08-Jul-08 stock outperformed the nifty, this

is due its good quarterly results and also

depreciation in rupee. Company has added some

more new clients some of which are in fortune 500

companies.

Key Financials * FY 06 FY 07 FY08 FY09E FY10E

Net sales 46.34 62.28 81.37 124.49 182.71

%Growth 33.78% 34.40% 30.65% 52.98% 46.77%

EBITDA 11.94 15.29 18.29 29.33 43.05

EBITDA Margin % 25.75% 24.55% 22.47% 23.56% 23.56%

Adjusted PAT 12.40 14.23 17.16 27.29 40.06

%Growth -285.08% 14.80% 20.55% 59.04% 46.80%

Net profit ma rgin % 26 .75% 2 2.85 % 21.0 8% 21 .9 2% 2 1.92 %

EPS (based on Adj.Pat)* 19.13 21.96 25.53 40.61 59.61

Book value per share * 66.90 89.34 109.49 149.94 201.11

Return on equity 28.60% 24.58% 23.32% 27.08% 29.64%

Rs. in bln

Key ratios (%) FY 06 FY 07 FY08 FY09E FY10E

P/E 44.39 21.40 16.41 10.32 7.03

P/BV 12.69 5.26 3.83 2.79 2.08

EV/EBITDA 43.56 196.64 170.34 105.71 71.66

EV/Sales 11.22 48.27 38.28 24.91 16.88

0

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100

120

140

Relative chart satyam & nifty

nifty satyam

2

673.50

151537.50

542/220

500376NSE Code satyamcomp

Bloomberg Code SCS IN

Reuters Code SATY.BO

BSE Code

Key data

Face value (Rs.)

Shares outstanding (mn)

Market cap (Rs. In bln)

52 week high/low (Rs.)

Source: Bseindia.com


4/15

Share holding pattern:

The shareholding pattern indicates high instpublic holding of 62.04% .While promoters

have holding of 8.63%.

.

1. ECONOMIC ANALYSIS

Real GDP Growth Rate for FY 09 Q1 is 7.9% compared to 9.2% in 2006-07 Q1. MFs, insurance & banking institutions also shifted to short term part of yield curve due to

tight liquidity conditions

Industrial sector grew at 5% during April-May 08 as compared to 10.9% during Apri-May07.

Services sector performance on communication, logistics & tourism industry was largelyoffset by dismal performance in financial, business services & real estate industry.

1.1 INFLATION & KEY RATES MOVEMENT

Inflation has declined from its peak to 8.4% due to the RBI earlier tight monetarymeasures taken by RBI and declined in the global commodity prices.

Petroleum prices went down from a maximum of US $ 147/ barrel on 11 th July,2008 to 41as on dec 5, 2008

RBI changed its monetary policy focus from inflation control to liquidity creation by CRRand Repo rate cuts.

RBI slashed repo rate to 6.5, reverse repo rate to 5.5 & CRR rate to 5.5 effective from dec-08

1.2 INDIAS TRADE BALANCE

The trade deficit of India has been burgeoning recently due to rising petroleum bills Non petroleum imports are also on a rise due to increased capital goods imports. Although there is depreciation in the rupee but there seems no increase in the export due to

the global recession and slowdown in the economies.

promoters

, 8.63

Inst public,

62.04

non

institutional ,

9.91

custodian ,

19.42

% share Holding


5/15

2. INDUSTRY ANALYSIS

Slowdown in IT due to subprime fallout in US. Its GDPcontribution is 5.5%. Employs 2 million people (IT/SS).

Domestic Revenues increased from $6.7 b in 2005-06 to$8.2 b in 2006-07. Annual revenue projections for Indias ITindustry are US $ 87 bn in the year 2007-08 (actual figurenot released till date).

Software services and exports grew by 29% to reach $40.4bn in FY 2007.

Growth to come from SEZ and European operations.Domestic segment to grow by 26% to $11.6 bn. Source : Nasscom report

Software & Services to contribute over 7.5 % of GDP growth.

IT industry will attract Foreign Direct Investment (FDI) ofU.S. $ 4-5 bn in future.

Major issues for the industry are appreciation in rupee, highattrition rate (14%), rising salaries, lack of talent,infrastructure and new technologies in business.Emerging competition from China, Philippines and Sri-Lanka.

IT sector has unorganized sector of 85%

Source: Nasscom report

49%

20%

14%

17%

Sales

IT Services

ITES

Engg Serv and RnD and Software

Hardware

15%

85%

organised and unorganised

organised

unorganised


6/15

3. Investment Rationale

3.1 Industry poised huge growth

The current and evolving role of IT/ITES industry in Indias economy is well established. The

sector is proving to be the major growth pole within the services sector, which in turn drivesseveral economic indicators of growth in the country. A few key indicators of direct contribution

are:

1.The sectors contribution to the countrys GDP has been steadily increasing from a share of1.2% in FY98 to 5.2% in FY08

2. Export earnings in FY08 stood at approximately USD 40.0 billion with a growth of 36% 3.Direct employment in the sector is expected to be 2.0 million by end of FY08. We expect ITsector to grow at 22 % in the coming years till 2017. Although there is slow down in theAmerican market but the new markets are also opening asthe European markets.

3.2 New clients increased salesThe company for the quarter ended JAS 2008 has witnessedrise in the compared to JAS 07. During the quarter June2009 Companys Sales witnessed growth of 8.94 to Rs25269 mn Compared to previous quarter. The strong growthwas due to company added 34 new customers in this quarterand won three large deals. One of them was with Cisco

Systems, Inc. The venture provides secure medical andemergency management services to local and nationalgovernments, among other segments.

3.3 Opm decreased due to increase in expenditureThe company for the quarter ended March 2008 haswitnessed dip in the margins compared to Dec 2007. This

is due to the increase in the expenditure .The operatingexpenses has increased by 15 % and also the personalexpenses increased by 7% and these are increasing year by

year as compared to sales.

4. Key Risks:

A slowdown in the US economy and the BFSIsegmentCurrency fluctuations

A more-than-expected hike in wages

A higher attrition rate

Increased competition in the global offshoring business

22.00

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O ND0 6 JF M0 7 A MJ0 7 JA S0 7 O ND0 7 JF M0 8

%

Rs,mn

Operating and OPM

PBDIT(LHS) OPM (RHS)

Source : Bseindia.com

0

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JFM07 A MJ07 JA S0 7 O ND0 7 JFM08 A MJ0 8

%RsMn

Sales and Sales Growth

Net Sales(LHS) Growth (RHS)

Source : Bseindia.com


7/15

Key Events

Satyam announced that its BPO unit COO, Vijay Rangineni, will assume the additional

charge of the interim CEO of the Satyam BPO, after the resignation of Venkatesh Roddam.

The Company announced that it will set up two special economic zone (SEZ) facilities, oneeach in Vishakhapattanam and Nagpur, in the next three to four years, to accommodatemore than 18,000 employees.

Satyam has reportedly given pink slips to 400 engineers and associates at its Hyderabad,Pune, and Visakhapatnam centres. Also, the Company has sacked 150 experienced

employees from the Hyderabad centre who were on the bench.

5. Financial forecast and Key Assumptions

Sales:Sales of Satyam Computers can be analyzed in two ways:1. Vertical wise2. Geographical wiseIn vertical wise there are mainly six areas from where the company gets its revenues. The growth

is calculated for each area on QOQ basis. Since the growth is not much volatile, the averagegrowth is taken for the future projections of sales of each area. Adding the sales of all area, thefuture vertical sales are calculated. Sales growth has been taken at 52% for the fiscal 2009 & 46%

for the fiscal 2010 as derived from the vertical wise revenue growth (average because of absenceof any trend) in past in the operating matrix sheet. . For the fiscal 2011, 2012 and 2013 the revenuegrowth has been taken at 22% which is the expected growth rate of IT industry according to theNascomm report.

Beta Calculation:For beta calculation, the last 1.5 yr data (from 29/08/2007 to 03/12/2008) of Nifty and Satyamcomputers has been taken. Risk free rate is taken at 8.09% (10 yr govt. bonds yield).

Balance sheet projection:

1. Gross assets are taken as a % of sales. But the % is declining every year by average 13%. So,the gross assets are taken as a % of sales with the % declining by 13% every year. Depreciation istaken as a % of Net assets which is around 34%. So, the same is taken for calculating future

depreciation.

2. Cash as a % of sales is declining every year. As it is a very high % of sales in the beginning, thedecline in the cash as a % of sales for last year which is 14% is taken for calculating future cash.Here the cash is projected and the capital employed will be the balancing figure

3. Investments & Deposits as a % of sales are increasing every year. So, the average increase of3.75% is taken for the future projections

Operational Expenses

1. Staff cost was 60% of sales in the last few years so for the year 2009, 2010 also the staff cost istaken 60% of sale.

2 .Operating and other expenses is taken at 15.71 of sales on the basis of past of years 2006,2007, 2008 and we have factor out future staff cut.

3. Depreciation is taken as a % of Net assets which is around 34%. So, the same is taken forcalculating future depreciation.


8/15

4. Dividend Distribution We have assumed company would pay dividend only for FY09 andFY10 and payout ratio would by 6% in 2009 and 17% in 2010.

6. COMPANY ANALYSIS:

6.1 Company descriptionSatyam Computer Services Limited is an IT service provider that uses a global infrastructure to

deliver value-added services to its customers to address IT needs in specific industries and tofacilitate electronic business. Company has its development centers in around 28 cities andoperation in 63 countries. It has 10 subsidiaries and two joint ventures .Satyam is Global ITSolutions provider of Consulting and Enterprise Business Solutions, Integrated EngineeringSolutions, Infrastructure Management Services, and BPO Services.

Date of incorporation: June 24 1987

Global headquarter: Hyderabad, INDIA

Promoter: Ramalinga Raju (Founder and Chairman)

6.2 Core capability

Infrastructure:

1..In 2008 Company created best in class infrastructure facilities to support growth strategiesand added 10000 spaces ( 25% increase from the last year)

2. Company has established base first time in tier 2 city Vishakhapatnam in A.P. Satyam has alsoestablished new development centers in Malaysia, Egypt, and Nanjing in china.

4. During the current year, company will develop infrastructure in the SEZ campuses at twolocations in Hyderabad and one location each in Chennai and Nagpur.

Quality:1. Companyhas set benchmarks by deploying simple, efficient and effective processes related toHealth Safety & Environment in accordance with ISO 14001.2. Company has received Payment Card Industry (PCI DSS1.1) certification for its banking sub-vertical operations. To reinforce the quality culture and customer Orientation Company hassuccessfully implemented Quality Management Systems (QMS) certification for all associates.

6.3 Growth drivers1. Satyam computers is now serving more clients among the Fortune 500 in more industries andmorecountries. Company entered in to a new venture with Cisco Systems Inc. The ventureprovides secure medical and emergency management services to local and national govt.

2. To make its position in Europe, Asia Pacific and Latin America Company entered into apartnership with FIFA, footballs governing organization. Satyam is now the official IT ServicesProvider to the 2010 and 2014 World Cups, to be held in South Africa and Brazil, respectively

6.4 Segmental analysisIn the segmental division company is getting maximum revenue from America which is

60%.According to services maximum revenue is coming from enterprise business solution andapplication and development. In the year 2007-08 manufacturing, times and technology are sharingaround 63% of revenue.


9/15

TCS, 19.7

WIPRO,15.5

INFOSYS

TECHNOL

OGY ,

14.5

HEWLETT

PACKARD

, 14.2IBM , 9.4

INGRAM ,

7.9SATYAM ,

7.2COGNIZE

NT , 5.8REDINGT

ON , 5.8

Other,

36.1

6.5 CompetitionAccording to revenue satyam is on 7TH rank withmarket share of 7.2%. Tcs is market leader with marketshare of 19.7%.Value of Herfindahl index of IT

industry is 1310.462. It means there is moderate

concentration of pricing power and competition. Themajor player in IT sector is Tcs, Wipro, Infosys, with

19.17%, 15.15%, 14.47%, 14.14%.

7. VALUATION :

7.1 DCF VALUTION:


10/15

7.2Relative Valuation

Share undervalued with respect to industry.

Minimum price of share coming at Rs. 359.69 when the various industry multiples (both

mean and median multiples) are considered.

Minimum share price coming at Rs. 513.85 if calculated by multiple of individual

companies.

C O M P A N Y M A R K E T C A P T . SA L E S E B IT D A E B IT P A T E P SINFOSYS 649033.56 50660.00 17950.00 16340.00 13900.00 24.29

WIPRO 332358.06 54050.00 12293.00 10982.00 8525.00 5.83

TCS 509855.81 55207.90 14220.70 13192.10 11730.40 11.99

S A T Y A M T E C H N O L O G I E S 151312.5 27005.00 7326.50 6747.5 5974 8.8833

( in M N Rs . )

C O M P A N Y SA LE S E B IT D A E B IT P A TINFOSYS 12.81 36.16 39.72 46.69

WIPRO 6.15 27.04 30.26 38.99

TCS 9.24 35.85 38.65 43.46

MEAN 9.40 33.02 36.21 43.05

MEDIAN 9.24 36.16 39.72 46.69

S A T Y A M T E C H N O L O G I E S MEAN 253809.56 241890.01 244333.72 257168.42MEDIAN 249396.48 264910.55 268014.32 278944.35

S A T Y A M T E C H N O L O G I E S MEAN 377.41 359.69 363.32 382.41MEDIAN 370.85 393.92 398.53 414.79

C O M P A N Y SA LE S E B IT D A E B IT P A TINFOSYS 514.46 393.92 398.53 414.79

WIPRO 246.92 294.55 303.65 346.33

TCS 370.85 390.60 387.78 386.11

IM P LIE D V A LU E ( b y ta k i n gindiv idua l f i rms in indus t ry) S H A R E P R I C E

M arket Va lue o f share a s a mult ip l e o f

I M P L I E D V A L U E ( b y ta k i n gm u l t i p l e s o f th e i n d u s t ry ) M A R K E T C A P I T A LI Z A T I O N

I M P L I E D V A L U E ( b y ta k i n gm u l t i p l e s o f th e i n d u s t ry ) S H A R E P R I C E


11/15

8. Technical analysis

14 day RSI of the stock suggest that stock is in theoversold region i.e. its value is less than 30, and it

is expected that soon investor will realize thatstock is available at very cheap price or lowvaluation. So we can see buying in the coming

days in the stock at the current level. Also lookingat the past 3 month trend we find that extreme ofoversold and overbought region is never break bythe stock.

Satyam MACD

From the MACD graph we find that stock is inhighly oversold region, and it stabilizes at -20 point,

so we can see trend reversal from here. So would

recommend buy at this price level looking at thecompany fundamental value.

Trend AnalysisFrom the graph we find that stock is trading at oneof the major support level of 200 which I think

would not be broken down in short term atleast,there seem to be huge upside potential if stockbreaks it 300 resistance level. Also expected target

price comes out to 373-384 which is expected toachieve by the stock next 4-6 months. So a investorcan enter at this level of 215 and wait till its

resistance of 300 is broken. Then can accumulatemore stock after confirmation of trend reversal.

From the 5 day EMA graph we find that price issatyam is not able to break the EMA and is justtouching. Price Line is hovering around 5 day EMA

line anytime there can be breakout from that. So wesuggest that investor should invest at this level andtake the benefit out of this breakout.

Source: Bseindia.com

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TRENDLINE

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14 DAY RSI SATYAM

Series1

050

100150200250300

350

SATYAM 5 day EMA

PRICE(A) EMA+D


12/15

9. Conclusion and Recommendation

Looking at the current economic condition and market condition we see there is huge risk involved

in the market, but a profit cant be made without taking risk. Satyam computer is good bet for the

medium investor who want to make handsome profits. Stock is trading at P/E of 10.32x for 2009

earning and 7.03x for the 2010 earnings estimates. Fundamental value of stock both by the DCF

and Relative valuation comes out in the range of 359-382 while current stock price which is 225

available at very cheap valuations. Also looking at the technical charts of the stock we find that

stock is already in its oversold region and hovering around its long term support of 200. A investor

can accumulate the stock around 215 trade and hold stock keeping stop loss of 190. Major

resisitance of the stock comes at 300, if it is broken with high volumes investor can accumulate

more stock for the price target of 380.

10. FINANCIAL STATEMENT

10.1 Balance sheet

Particulars FY05 FY06 FY07 FY08 FY09(E) FY10(E)

Gross Asset 9,377.00 11531.60 12804.00 14,865.30 19,762.65 25,206.96

Accumulated Depriciation 6,854.10 8037.40 9304.50 10,620.40 12915. 03 16270. 61

Capital WIP 646.80 768.40 2900.50 4,586.30 7,106.51 10,641.77

Net Fixed Asset 3,169.70 4,262.60 6,400.00 8 ,831.20 13,954.14 19,578.12

Investments & Deposits 784.80 1557.40 2011.50 4,938.00 4,665.91 6848.29

Current Asset 32,728.20 44,689.70 59,362.60 73,577.40 100,361.45 135,015.65

Cash 23,633.10 30523.30 39598.20 44,616.80 58, 866. 16 74513. 79

Inventories 0.00 0.00 0.00 0.00 0.00 0.00

Trade Debtors 7,651.70 11228.10 16498.60 22,234.10 31,753.54 45,348.68

Other Current Assets Interest Accrued o 244.50 1105.90 648.30 2,724.50 3,757.70 6,205.43Loans and Advances 1,198.90 1832.40 2617.50 4,002.00 5,984.05 8,947.74

Current Liabilities 4,516.40 7072.70 10176.20 14,410.00 19,235.39 27,830.36

Provisions

Net Current Asset Excluding Cash 4,578.70 7,093.70 9,588.20 14,550.60 22,259.89 32,671.49

Miscellaneous Items 0.00 0.00 0.00 0.00 0.00 0.00

Deffered Tax (Net) 107.10 42.90 433.60 876.50 1, 340. 89 1, 968. 07

Capital Deployed 32,273.40 43,479.90 58,031.50 73,813.10 101,086.99 135,579.76

Non-Current Liabilities

Secured Debt 98.70 125.70 137.90 236.70 325.20 436.17

Non-secured debt & Trade deposit 0.000.00 0.00

0.00 0.00 0.00Deferred Paymaent Credit 0.00 0.00 0.00 0.00 0.00 0.00

Total Liabilities 98.70 125.70 137.90 236.70 325.20 436.17

Contingent Liabilities

Share Capital 638.50 648.90 1334.40 1,341.00 1,345.00 1,345.00

Share application money, pending allotm 4.50 17.80 78.50 18.30 0.00 0.00

Reserve and Surplus 31,531.70 42687.50 56480.70 72,217.10 99416.79112 133798.59

Total Stock Holder's Equuity 32,174.70 43,354.20 57,893.60 73,576.40 100761.79 135143.59

Capital Employed 32,273.40 43,479.90 58,031.50 73,813.10 101,086.99 135,579.76


13/15

10.2 PROFIT AND LOSS STATEMENT

Particulars FY06 FY07 FY08 FY09(E) FY10(E)

Net Sales 46343.08 62284.70 81372.80 124486.27 182712.11

% Growth 33.78% 34.40% 30.65% 52.98% 46.77%

Total Revenue 50122.17 64100.80 83944.80 128128.79 187870.63

% Growth 41.32% 27.89% 30.96% 52.63% 46.63%

EXPENDITURES

Staff Costs 27006.72 37060.40 50455.50 75592.39 110949.14

% of Net Sales 58.28% 59.50% 62.01% 60.72% 60.72%

Other Manufacturing/Operating costs 7401.26 9933.10 12632.00 19562.00 28711.72

% of Net Sales 15.97% 15.95% 15.52% 15.71% 15.71%

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

% of Net Sales 0.00% 0.00% 0.00% 0.00% 0.00%

Total Expenditures 34407.98 46993.50 63087.50 95154.39 139660.86

% of Net Sales 74.25% 75.45% 77.53% 76.44% 76.44%

EBITDA 11935.10 15291.20 18285.30 29331.88 43051.25

EBITDA Margin % 25.75% 24.55% 22.47% 23.56% 23.56%

Growth % -324.79% 28.12% 19.58% 60.41% 46.77%

Depreciation & Amortisation 1228.14 1298.90 1379.40 2307.02 3010.72

EBIT 10706.96 13992.30 16905.90 27024.86 40040.53

Financial Charges 27.20 76.10 59.40 81.60 105.62

Other Income 3779.09 1816.10 2572.00 3642.47 5158.46

PBT 14458.85 15732.30 19418.50 30585.73 45093.37

Pre-tax Margin % 31.20% 25.26% 23.86% 24.57% 24.68%

Tax 2061.30 1500.00 2261.10 3298.14 5034.70

Effective Tax Rate % 14.26% 9.53% 11.64% 10.78% 11.17%

Adjusted PAT 12397.55 14232.30 17157.40 27287.59 40058.67

Net Profit Margin % 26.75% 22.85% 21.08% 21.92% 21.92%

Growth in Adjusted PAT % -285.08% 14.80% 20.55% 59.04% 46.80%

Extrodinary Income 0.00 0.00 0.00 0.00 0.00

Reported PAT 12397.55 14232.30 17157.40 27287.59 40058.67

Shares In Issue 648.00 648.00 1345.00 1345.00 1345.00

Adjusted EPS 19.13 21.96 12.76 20.29 29.78

Growth % -113.73% 14.80% -41.92% 59.04% 46.80%

Profit And Loss Statement - SATYAM

Rs in million


14/15

10.3 CASH FLOW STATEMENT :

FY05 FY06 FY07 FY08 FY09(E) FY10(E)

PAT -6468.49 12397.55 14232.30 17157.40 27287.59 40058.67

Depreciation 6854.10 1183.30 1267.10 1315.90 2294.63 3355.58

Interest Expense 7.57 27.20 76.10 59.40 81.60 105.62

Other Non-Cash Charges 0.00 0.00 0.00 0.00 0.00 0.00

Direct taxes paid 1167.43 2061.30 1500.00 2261.10 3298.14 5034.70

Operating Profit Before WC Changes 1560.61 15669.35 17075.50 20793.80 32961.95 48554.57

Changes in Current Assets (excluding cash) (9095.10) (5071.30) (5598.00) (9196.20) (12534.69) (19006.57)

Changes in Current Liabilities 4516.40 2556.30 3103.50 4233.80 4825.39 8594.97

Changes In WC (4578.70) (2515.00) (2494.50) (4962.40) (7709.29) (10411.60)

Cash Generated From Operations -3018.09 13154.35 14581.00 15831.40 25252.66 38142.97

Taxes & Provisions 1167.43 2061.30 1500.00 2261.10 3298.14 5034.70

Others 107.10 -64.20 390.70 442.90 464.39 627.17

Net Cash Generated From Operations -4292.62 11157.25 12690.30 13127.40 21490.13 32481.10

Capital Expenditure (CAPEX) (10023.80) (2276.20) (3404.50) (3747.10) (7417.56) (8979.56)

Investments (784.80) (772.60) (454.10) (2926.50) 272.09 (2182.38)

Others 0.00 0.00 0.00 0.00 0.00 0.00Net Cash Used In Investing Activities (10808.60) (3048.80) (3858.60) (6673.60) (7145.47) (11161.94)

Change in Debt 98.70 27.00 12.20 98.80 88.50 110.97

Change in Equity 643.00 23.70 746.20 -53.60 -14.30 0.00

Dividends Paid 0.00 (2283.30) (2324.10) (2345.20) (1566.57) (6705.79)

Interest Paid (7.57) (27.20) (76.10) (59.40) (81.60) (105.62)

Others 38000.19 1041.55 1885.00 924.20 1478.68 1028.92

Net Cash used in Financing Activities 38734.32 (1218.25) 243.20 (1435.20) (95.29) (5671.52)

Net Increase in Cash and Cash Equivalents 23633.10 6890.20 9074.90 5018.60 14249.36 15647.63

Cash and cash equivalents At the beginning 0 23633.1 30523.3 39598.2 44616.8 58866.16

Net Increase in Cash and Cash Equivalents 23633.10 6890.20 9074.90 5018.60 14249.36 15647.63

Cash and cash equivalents At the end 23633.10 30,523.30 39598.20 44616.80 58866.16 74513.79

cash balance as per balance sheet 23633.1 30523.3 39598.2 44616.8 58866.2 74513.8

difference 0.00 0.00 0.00 0.00 0.00 0.00

Cash Flow from Financing Activities

Cash Flow Statement - SATYAMRs in million

Cash Flow from Operating Activities

Cash Flow from Investing Activities


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10.4 RATIO ANALYSIS :

FY05 FY06 FY07 FY08 FY09(E) FY10(E)

Profitability Ratios

Return on Assets (ROA) -18.21% 24.52% 20.87% 19.45% 22.68% 24.51%

Return on Equity (ROE) -20.82% 28.60% 24.58% 23.32% 27.08% 29.64%

Return on Capital Employed (ROCE) -19.67% 24.63% 24.11% 22.90% 26.73% 29.53%

Dupont Analysis-ROE Decomposition

PAT/PBT (Tax Efficiency) 1.21 0.86 0.90 0.88 0.89 0.89

PBT/EBIT (Interest Burden) 0.87 1.35 1.12 1.15 1.13 1.13

EBIT/Sales (OPM) -0.18 0.23 0.22 0.21 0.22 0.22

Sales/Total Assets (Asset Turnover) 0.94 0.92 0.91 0.92 1.03 1.12

TA/NW (Financial Leverage) 1.14 1.17 1.18 1.20 1.19 1.21

ROE -20.82 28.60 24.58 23.32 27.08 29.64

Liquidity Ratios

Current Ratio 7.25 6.32 5.83 5.11 5.22 4.85

Acid Test Ratio 7.25 6.32 5.83 5.11 5.22 4.85

Efficiency Ratios

Assets Turnover Ratio 0.94 0.92 0.91 0.92 1.03 1.12

Working Capital Turnover Ratio 1.23 1.23 1.27 1.38 1.53 1.70

F.A. Turnover Ratio 10.93 10.87 9.73 9.21 8.92 9.33

C.A. Turnover Ratio 1.06 1.04 1.05 1.11 1.24 1.35Debtors Velocity 80.62 88.43 96.68 99.73 93.10 90.59

Margin Ratios (%)

EBITDA Margin -15.33% 25.75% 24.55% 22.47% 23.56% 23.56%

Pre-Tax Margin -15.97% 31.20% 25.26% 23.86% 24.57% 24.68%

Net Profit Margin -19.34% 26.75% 22.85% 21.08% 21.92% 21.92%

Growth Ratios YoY (%)

Net Sales 36.30% 33.78% 34.40% 30.65% 52.98% 46.77%

EBITDA 295.38% -324.79% 28.12% 19.58% 60.41% 46.77%

Adj.PAT 147.10% -285.08% 14.80% 20.55% 59.04% 46.80%

Adj.EPS 152.91% -113.73% 14.80% 16.25% 59.04% 46.80%

Working Ratios (Days)

Debtors 80.62 88.43 96.68 99.73 93.10 90.59

Net Working Capital Excluding Cash 4578.70 7093.70 9588.20 14550.60 22259.89 32671.49

Financial Ratios

Documents

Satyam Valuation