Why Sify Technologies Shares Plunged

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Sify Technologies plunged nearly 20% Wednesday after the Indian IT services provider reported quarterly results.

So what: Quarterly revenue rose by 22% to approximately 2,505 million rupees, or approximately $40.7 million, beating analysts' expectations for sales of $38.88 million. Meanwhile, Sify turned in a net profit of 111 million rupees, or roughly $1.8 million, compared to a net loss of 57 million rupees in the same year-ago period -- that is, when you exclude its massive one-time gain this time last year from the exit of its MF Global Sify Securities India affiliate.

Now what: It's worth noting Sify stock also experienced a massive 32% run up in the three trading days prior to this earnings release, so today's pullback simply brings shares back to their week-ago levels as investors take their quick profits.

As it stands, though, I've got to applaud Sify's solid turn into the black as it benefits from increased IT spending in India's fast-growing economy. If the company can maintain this momentum going forward, and with shares trading at a reasonable 22 times last year's earnings, patient long-term shareholders who can stomach the volatility could be rewarded down the road.

Three solid picks you can hold forever
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

The article Why Sify Technologies Shares Plunged originally appeared on Fool.com.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading