The press release headline reads “MSat reports stellar Q2 performance!”, though perhaps their over-exuberance is more an expression of sheer relief that ‘born again’ Indian offshore services firm, Mahindra Satyam, is still growing (see Mahindra Satyam back to growth).
The results themselves were OK, but hardly ‘stellar’. Headline revenues (to 30th Sept.) grew by 7% yoy to $354m, 3.5% higher than the prior quarter (3.1% in Rupee terms). EBITDA margins slipped back a bit qoq to 21.5% though hugely better than the 15.3% the year prior.
What I did find ‘stellar’, though, were MSat’s BPO margins. BPO is only 4% of MSat’s total revenues but has doubled in size over the past year. If I have done my sums right, BPO segment margins hit 30% in the quarter, though they have been bouncing up and down like a bucking bronco over the past 6 quarters, crashing as low as 4% and soaring as high as 34%. It looks like BPO is a ‘beast’ that MSat has yet to tame, and I suspect part of the reason for this is the eclectic mix of business process services that MSat offers (see It’s business transformation, but not as we know it). But whatever the reason, I would have thought that you really can’t ‘ride’ a business like that for very long without the risk of being thrown out of the saddle!