Satyam Computer Services Ltd., the software developer embroiled in India’s biggest corporate fraud probe, fell the most in almost two years in Mumbai trading on concerns the company is failing to win profitable contracts.
The shares declined as much as 12 percent to 74.3 rupees, the biggest drop since Jan. 15, 2009, at the 3:30 p.m. close of trading. The benchmark Sensex index fell 2.2 percent.
Satyam’s clients had put their orders “on hold,” Chief Executive Officer Chander Prakash Gurnani said yesterday after the Hyderabad-based company reported quarterly earnings for the first time since December 2008. Satyam’s net income in the three months ended September plunged 76 percent from the June quarter, indicating the company’s inability to seek higher prices from clients, said Rahul Jain, a Mumbai-based analyst.
“If I’m a client and I get similar capability and pricing from a company that’s not tainted the way Satyam is, what’s the logic in going with Satyam?” said Jain, an analyst with Dolat Capital Market Ltd. “I’ll ask for a discount. Satyam is winning deals, but I believe they are still getting business at lower pricing.”
Jain has a “neutral to negative” rating on Satyam.
Satyam had a profit of 233 million rupees ($5.1 million) in the three months ended September, the company said yesterday after trading hours.
The company, which delayed reporting its accounts after former Chairman Ramalinga Raju disclosed in January 2009 that he overstated Satyam’s assets by $1 billion, will be absorbed by its largest shareholder, Tech Mahindra Ltd., by November 2011.
“A lot of clients had put us on hold, waiting for us to come out with results,” Gurnani said. “Now we can aggressively go back to our lost and prospective customers. Overall, we are on the right track.”