Satyam Surges by Daily Limit After Reporting Profit

June 9- Satyam Computer Services Ltd. jumped by the daily limit in Mumbai trading after the software maker reported remaining profitable and retaining clients following the disclosure of India’s biggest corporate fraud.

Satyam rose 10 percent after posting a 520 million rupee ($10.9 million) unaudited profit and a 17.5 percent operating margin for February. The Hyderabad-based company said it won at least $380 million of orders from 215 clients since disclosing a $1 billion fraud by former chairman Ramalinga Raju in January.

“The numbers are better than what the market was fearing,” Apurva Shah, head of research at Prabhudas Lilladher Pvt. in Mumbai, said by telephone. “The big positive is the margins,” which some investors had expected to drop to as low as 4 percent, he said.

Satyam climbed to 66.8 rupees, its biggest gain since June 2. The stock has declined 61 percent this year compared with the benchmark Sensitive Index’s 57 percent advance. Tech Mahindra Ltd., which in April won a bid to gain control of Satyam, surged 26 percent, the most since August 2006.

Winning the contracts in the face of “negative publicity” was a positive, Shah said.

The fraud has compounded Satyam’s woes as it fights to retain clients and sustain sales amid a global recession that has forced companies to lower technology spending.

Satyam may cut as many as 8,000 jobs because of a lack of available work, two company officials who did not wish to be identified said on June 5. The parent company had 41,622 employees on March 28, and its subsidiaries had a combined workforce of 4,088 as on Jan. 17, according to a statement.

Estimates, Assumptions

Satyam said the earnings had been prepared with data from the company’s internal management information systems, which may not be adequate, and books of accounts making certain estimates and assumptions. The figures, which had been shared with bidders for the controlling stake in the company, had not been reviewed or verified by an independent auditor, according to the statement.

Gains or losses pertaining to the inflated assets that Raju had disclosed have not been eliminated from the earnings, pending restatement of accounts, Satyam said.

“More information is always welcome,” Dipesh Mehta, a Mumbai-based analyst at Khandwala Securities Ltd., said by phone. Still, “this information is less reliable as it has been derived from the internally available management information system,” he said.

Satyam’s financial statements are being reviewed by KPMG and Deloitte Touche Tohmatsu after its former auditor, the Indian affiliate of PricewaterhouseCoopers LLP, said in January its audit reports on the software maker were no longer reliable