GICS Industry : IT Services l Sub Industry : IT Consulting & Other Services l Website : www.patni.

com

Patni Computer Systems Limited

Key Stock Indicators
NSE Ticker : Bloomberg Ticker : Face value / Share: Div. Yield (%): PATNI PATNI:IN 2.0 0.6 CMP (as on 01 Feb 2011 Rs/Share) 52-weekrange up to 01 Feb 2011 (Rs)(H/L): Market Cap as on 01 Feb 2011 (Rs Mn): Enterprise Value as on 01 Feb 2011 (Rs Mn): Div. Yield (%): 0.0 466.1 608.5/414.7 61,041 57,633 Shares outstanding (mn) : Free Float (%) : Average daily volumes (12 months) : Beta (2 year) : 131 54.1 586,876 0.6

Patni Computer Systems Limited (PCSL) is a provider of information technology services and business solutions. PCSL provides solutions to industries such as insurance, manufacturing, retail and distribution, financial services, product engineering, communication, media and utilities. It provides services in the areas of application development and maintenance and support, infrastructure management services, product engineering services and business process outsourcing. The company has facilities in Noida, Navi Mumbai, Chennai, Pune, Hyderabad and Kolkata. It employed close to 14,000 people, as of end-December 2009.

Key Financial Indicators

Revenue (Rs mn) EBITDA ma rgins (%) PAT (Rs mn) PAT ma rgins (%) Gea ring (x) EPS (Rs /s ha re) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x)
n.m. : Not meaningful

KEY HIGHLIGHTS
PCSL has a diversified portfolio PCSL obtains revenues from diversified industry segments. The contribution of each segment to total revenues in CY09 is as follows: Insurance 30%, manufacturing, retail and distribution 29%, financial services 13%, communications, media and utilities 13%, product engineering 15%. The contribution of various segments to the revenue, with respect to service mix, is as follows: Application development and maintenance and support 65%, packaged software implementation 13%, infrastructure management services 5%, product engineering services 11%, business process outsourcing (BPO) 6%. Revenue break-up by region is: EMEA 14%, Asia-Pacific 6% and Americas 80%. Diversification helps the company to mitigate risk in the event of a downturn in any one of the segments. Acquisition of US-based CHCS Services, Inc In April 2010, PCSL acquired US-based CHCS Services, Inc, a wholly-owned subsidiary of Universal American Corp and a leading third-party administrator (TPA) in the seniors health market and eldercare programs, through its wholly-owned subsidiary, Patni Americas, Inc. This transaction helps PCSL enhance its existing BPO capabilities and TPA solutions to insurance companies and also provides end-to-end platform-based solutions.

Dec-07 26,956.2 19.9 4,803.7 17.8 34.6 9.6 2.1 24.3 22.8 8.4

Dec-08 31,211.8 17.8 4,380.1 14.0 34.2 3.8 0.7 25.8 19.6 2.5

Dec-09 31,608.9 21.5 5,866.1 18.6 45.4 10.3 2.0 25.6 22.2 8.3

Shareholding (As on Dec 31,2010)

Others 36%

DII 4% FII 13%

KEY RISKS
. Country concentration risk as majority of revenue comes from USA Intense competition from Indian and multinational IT service companies
Promoter 47%

Indexed price chart Stock Performances vis--vis market

Returns (%) YTD PATNI NI FTY -3 4 1-m -1 -12 3-m 0 -11 12-m -1 11

(index) 140 120 100 80 60 40 20 0 Nov-10 Apr-10 Mar-10 May-10 Dec-10 Aug-10 Feb-10 Sep-10 Jun-10 Oct-10 Jul-10

('000) 25000 20000 15000 10000 5000 0 Jan-11 NIFTY

Note: 1) YTD returns are since Jan 04, 2010 to Feb 01, 2011. 2) 1-m, 3-m and 12-m returns are up to Feb 01, 2011.

Volumes (RHS)

PATNI

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Patni Computer Systems Limited

BACKGROUND
PCSL is a provider of information technology services and business solutions. It provides solutions to a variety of industries such as insurance, manufacturing, retail and distribution, financial services, product engineering, communication, media and utilities. PCSL is also into providing services in the areas of application development and maintenance and support, infrastructure management services, product engineering services and BPO. Exports account for around 94% of sales; the company exports to Asia-Pacific, the Americas, Europe, Middle East and Africa. PCSL has constructed 3 knowledge parks at Navi Mumbai, Chennai and Noida with capacities of 4,300, 1,200 and 3,200 seats, respectively. It has also acquired 18.75 acres of land in Chennai on a 99-year lease for a software development project and support services, in CY09. Also in CY09, the company acquired licenses to establish working facilities on 50 acres of land in Navi Mumbai. Among the clients of PCSL are CIO Electrolux, McCormick & Co Inc and Schindler India Pvt Ltd. The company has over 30 international service clients. It has 22 global delivery centers across the world. In April 2010, PCSL acquired CHCS Services, Inc, a leading US-based TPA in the seniors health market and eldercare programs.

COMPETITIVE POSITION
Peer Comparison

Patni Computer Systems Limited Dec-09 31,608.9 21.5 5,866.1 18.6 45.4 10.3 2.0 25.6 22.2 8.3

Wipro Limited

KPIT Cummins Infosystems Limited Mar-10 7,320.8 22.4 857.3 11.7 0.4 10.9 14.4 4.3 41.1 41.1 7.6

Revenue (Rs mn) EBITDA ma rgins (%) PAT (Rs mn) PAT ma rgins (%) Gea ring (x) EPS (Rs /s ha re) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x)
n.m: Not meaningful

Mar-10 272,687.0 22.0 46,495.0 17.1 0.5 31.7 13.8 5.0 35.4 45.2 10.5

Infosys Technologies Limited Mar-10 227,650.0 34.6 62,660.0 27.5 109.5 28.2 8.0 40.2 31.6 20.9

FINANCIAL PROFILE
Increase in top-line, operating margin and PAT in CY09

Key Financial Indicators Units Revenue Rs mi ll ion Rs mi ll ion Per cent Per cent Per cent Times Per cent Per cent EBITDA ma rgins Per cent PAT PAT ma rgins EBITDA growth PAT growth Gea ring RoCE RoE

Dec-07
26,956.2 19.9 4,803.7 17.8 3.1 -7.2 96.2 0.0 24.3 22.8

Dec-08
31,211.8 17.8 4,380.1 14.0 15.8 3.6 -8.8 0.0 25.8 19.6

Dec-09
31,608.9 21.5 5,866.1 18.6 1.3 22.7 33.9 0.0 25.6 22.2

The companys top-line registered a CAGR of 9.2% from CY07 to CY09. The rise is attributed to the increased geographical diversification and sale of investments. The operating margin increased by 370 basis points year-on-year (y-o-y) in CY09, because of increase in operational efficiency. The companys PAT increased by 34% y-o-y in CY09 because of tax reversals in the year.

Revenue growth Per cent

INDUSTRY PROFILE
IT services Indian IT services revenues are estimated to be around $34 billion in 2009-10, registering a CAGR of 20 per cent from 2004-05 to 2009-10. During the same period, IT services exports, which accounted for 80 per cent of the revenues, are estimated to have grown at a CAGR of 22 per cent to $27 billion in 2009-10. The industry is highly dependent on the US and UK markets, which contribute to around 75 per cent of export revenues. With IT services deriving a large portion of its revenues from exports, the sector`s profitability is highly correlated to foreign exchange movements. An appreciating rupee is thus a key risk factor. Also, as human resource is the main input in IT services, issues related to non-availability of skilled labor, attrition and wage inflation would also impact Indian IT players. IT enabled services ITeS is a term used to describe a range of IT-intensive processes and services, which includes business process outsourcing (BPO) and knowledge process outsourcing (KPO), provided from a distant location and delivered over telecom networks. The Indian ITeS industry grew at a healthy CAGR growth of 30 per cent over 2003-04 to 2008-09, driven by demand from developed economies like USA and UK. However, the y-o-y revenue growth had significantly declined to 7 per cent in 2009-10 and is estimated at $ 14.6 billion .The slowdown was a result of weak demand from key markets, protectionist measures by developed countries, and delay in decision making cycles during the downturn. The revival in the global economy, along with the continuing maturity of the offshore global delivery models, process innovation and inherent need of clients to reduce costs would continue to propel export growth.

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Patni Computer Systems Limited

ANNUAL RESULTS
Income Statement (Rs million ) Net Sales Operating Income EBITDA EBITDA Margin Depreciation Interest Other Income PBT PAT PAT Margin No. of shares (Mn No.) Earnings per share (EPS) Cash flow (Rs million ) Pre-tax profit Total tax paid Depreciation Change in working capital Cash flow from operating activities Capital Expenditure Investments and others Cash flow from investing activities Equity raised/(repaid) Debt raised/(repaid) Dividend (incl. tax) Others (incl extraordinaries) Cash flow from financing activities Change in cash position Opening cash Closing cash Balance sheet (Rs million ) Equity share capital Reserves and surplus Tangible net worth Deferred tax liablity:|asset| Long-term debt Short-term-debt Total debt Current liabilities Total provisions Total liabilities Gross block Net fixed assets Investments Current assets Receivables Inventories Cash Total assets Ratio Dec-07 5,989.3 -1,064.9 984.7 -603.8 5,305.3 -4,318.7 -818.9 -5,137.6 133.6 -6.9 -501.6 -567.6 -942.5 -774.8 2,060.6 1,285.9 Dec-08 4,857.3 -644.6 1,141.5 2,404.4 7,758.6 -2,438.7 -254.6 -2,693.3 -2,362.4 -6.2 -449.8 -601.1 -3,419.5 1,645.8 1,285.9 2,931.8 Dec-09 6,054.8 -224.3 1,420.8 -1,942.0 5,309.3 -562.4 -5,980.6 -6,543.0 273.0 -8.1 -453.2 1,442.8 1,254.5 20.8 2,931.8 2,952.6 Revenue growth (%) EBITDA growth(%) PAT growth(%) EBITDA margins(%) Tax rate (%) PAT margins (%) Dividend payout (%) Return on Equity (%) Return on capital employed (%) Gearing (x) Interest coverage (x) Debt/EBITDA (x) Asset turnover (x) Current ratio (x) Gross current assets (days) Dec-07 3.1 -7.2 96.2 19.9 18.4 17.8 8.7 22.8 24.3 0.0 0.0 0.0 3.3 3.1 121 Dec-08 15.8 3.6 -8.8 17.8 9.0 14.0 8.8 19.6 25.8 0.0 6.8 0.0 3.1 2.6 125 Dec-09 1.3 22.7 33.9 21.5 4.3 18.6 6.6 22.2 25.6 0.0 14.6 0.0 2.8 4.4 115

Dec-07 26,885.5 26,956.2 5,357.2 19.9 984.7 -822.6 794.1 5,812.1 4,803.7 17.8 139.0 34.6

Dec-08 31,172.7 31,211.8 5,548.0 17.8 1,141.5 813.5 1,264.3 4,784.5 4,380.1 14.0 128.1 34.2

Dec-09 31,461.5 31,608.9 6,808.1 21.5 1,420.8 467.9 1,135.4 6,075.2 5,866.1 18.6 129.1 45.4

Dec-07 279.8 21,934.8 22,214.6 -571.3 12.8 10.9 23.8 4,295.0 2,517.5 28,479.6 9,331.2 7,448.9 11,516.8 9,513.9 5,316.5 0.0 1,285.9 28,479.6

Dec-08 256.2 22,293.7 22,549.9 -811.5 9.0 8.6 17.5 6,327.8 2,395.6 30,479.3 10,556.7 8,041.7 11,771.3 10,666.3 5,450.9 0.0 2,931.8 30,479.3

Dec-09 258.3 29,946.9 30,205.2 -826.7 4.2 5.2 9.4 4,650.4 1,663.5 35,701.8 12,073.5 7,730.2 17,751.9 10,219.6 5,089.7 0.0 2,952.6 35,701.7

QUARTERLY RESULTS
Profit and loss account (Rs million) No of Months Revenue EBITDA Interes t Depreci a tion PBT PAT Sep-10 3 8,715.8 2,045.4 12.8 314.2 1,718.4 1,444.5 100.0 23.5 0.1 3.6 19.7 16.6 % of Rev Sep-09 % of Rev 3 8,337.7 1,921.6 15.5 311.5 1,594.6 1,685.8 100.0 23.0 0.2 3.7 19.1 20.2 Jun-10 3 8,154.5 1,967.1 2.8 290.8 1,673.5 1,467.4 100.0 24.1 0.0 3.6 20.5 18.0 % of Rev Sep-10 % of Rev 9 25,208.6 6,220.7 37.5 891.3 5,291.9 4,482.3 100.0 24.7 0.1 3.5 21.0 17.8 Sep-09 9 24,659.5 5,382.9 63.7 1,140.4 4,178.8 3,810.6 100.0 21.8 0.3 4.6 16.9 15.5 % of Rev

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Patni Computer Systems Limited

FOCUS CHARTS & TABLES
Rs mn 6,000 5,000 4,000 3,000 2,000 1,000 0 Dec-07 Dec-08 Dec-09 Sep-08 Sep-09 Mar-08 Mar-09 Mar-10 Sep-10 Jun-08 Jun-09 Jun-10

Quarterly sales & y-o-y growth

Per cent 40 30 20 10 0 -10 -20

Rs mn 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Dec-07 Mar-08

Quarterly PAT & y-o-y growth

Per cent 100 80 60 40 20 0 -20 -40

Dec-08

Dec-09

Sep-08

Sep-09

Mar-09

Sales

Sales growth y-o-y (RHS)

Net Profit

Net profit growth y-o-y (RHS)

Rs/share 14 12 10 8 6 4 2 0 Dec-07 Dec-08

EPS

Per cent 50 45 40 35 30 25 20 15 10 5 0 Dec-07 Mar-08 Dec-09 Sep-09 Mar-10 Sep-10 Jun-09 Jun-10

Movement in operating and net margins

Dec-08

Dec-09

Sep-08

Sep-09

Mar-10

Sep-10
Sep-10 Jun-10

Jun-08

Jun-09

Jun-08

Mar-09

Jun-09

Mar-08

Sep-08

Jun-08

Mar-09

OPM

NPM

Shareholding Pattern (Per cent) Mar 2010 Jun 2010 Promoter 46.5 46.3 FII 13.0 12.3 DII 7.0 6.5 Others 33.6 35.0

Sep 2010 45.9 11.1 4.0 39.0

Board of Directors Dec 2010 Director Name 45.7 Arun Kuma r Dugga l (Mr.) 13.4 Wi ll i a m O. Gra be (Mr.) 4.5 Jeya Kuma r (Mr.) 36.4 As hok Kuma r Pa tni (Mr.) Na rendra Kuma r Pa tni (Mr.) Pra dip Ba ija l (Mr.) Vima l Ra njeet Bha nda ri (Mr.) Mi cha el A. Cus uma no (Dr.) Ga jendra Kuma r Pa tni (Mr.) Pra dip Pa na l a l Sha h (Mr.) Loui s Theodoor Va n Den Boog (Mr.) Ra mes h Venka tes wa ra n (Mr.)

Designation Non-Executi ve Di rector Nomi nee Di rector Di rector Non-Executi ve Di rector, Promoter-Di rector Executi ve Cha irma n, Promoter-Di rector Non-Executi ve Di rector Non-Executi ve Di rector Non-Executi ve Di rector Promoter-Di rector, Non-Executi ve Di rector Non-Executi ve Di rector Non-Executi ve Di rector Non-Executi ve Di rector

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