Hughes Software found solid support on Monday as market men reckon that the company's financials will improve by leaps and bounds in the coming quarters.

The scrip of the software company rose by 5.49% to Rs 157.70 by 14:40 IST. It recovered from an intra-day low of Rs 165.50. Over 1.9 million Hughes Software shares were traded on BSE by that time.

Operators and institutions are believed to be on an immense buying spree on the counter. The market has it that operator Ajay Dadi is active on the counter. Prudential ICICI was also rumoured to be accumulating the stock last week.

Dealers say Hughes Software is witnessing buying support despite the uncertainty and weakness in the market. In the eight sessions between 25 February and 7 March 2003, the scrip rose 11.25% to Rs 166.55 from Rs 149.70.

Players reckon that the company's financials will improve substantially following the huge deal that it signed with Lucent Technologies recently. The order involves acquiring Lucent's software operations for GSM in at least two countries. The acquisition involves all employees of Lucent working in the GSM area moving to Hughes as part of a total outsourcing deal. The deal will result in revenues of $30 million over a period of three years for Hughes Software, it is estimated.

HSS announced a multi-year outsourcing relationship with Lucent Technologies, the world leader in mobile communications. Under the scope of the agreement, Lucent Technologies will outsource the software development and maintenance support for selected wireless products, and HSS will set up a state-of-the-art dedicated development facility in Nuremberg, Germany, and expand its existing operations in Bangalore, India. Media reports have also suggested that the company will be buying out Lucent Technologies software operations for GSM (a technology used to run cellular phone networks) in Germany and India.

For the third quarter ended 31 December 2002, HSS registered a 21.3% fall in net profit to Rs 11.40 crore. Total income declined by 6.2% to Rs 59 crore.

At the time of announcing the Q3 results, Hughes Software's management said the company's sales may record a 10% sequential growth in Q4 ending 31 March 2003 from Q3 ended December 2002, but the next four quarters will continue to be difficult for the telecom sector as a whole.

Hughes Software is focused on the telecom sector and derives more than 53% of its revenues from the wireless sector. However, the company is feeling the pinch of the sluggishness in the telecom sector globally. While the management gave a guidance of 10% sequential growth in revenues for the fourth quarter, it did not give any guidance on profitability.

In order to de-risk its business and create added opportunities, HSS has decided to enter into the business process outsourcing segment. This will be started as an independent operation. HSS is also diversifying its revenue streams and is working currently for a foray into the banking, financial services, insurance segment.

Hughes Software is a subsidiary of HNS, formerly a unit of Hughes Electronics Corporation. HNS is a networking company, dedicated to providing products and services to build and operate digital communication networks worldwide. HNS is the world leader in VSAT-based networks for voice and data, cellular wireless telephony, packet switching and multi-protocol routing. HE is a world leader in the design, manufacture and marketing of advanced electronic systems. It was a wholly-owned subsidiary of General Motors Corporation, US. HNS-India Inc. is the principal shareholder in Hughes Software

As on 31 December 2002, promoters held 55.57% stake in HSS, while the public, institutions and foreign bodies held 15.74%, 3.99% and 13.32 %, respectively.