Hughes Software: Beats expectations - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Hughes Software: Beats expectations

Jan 16, 2002

Hughes Software has posted a sequential growth of 130% in net profits for 3QFY02. This is above market expectations. The total income has also increased by 9.5% sequentially. Though full details are not yet available, but the company seems to have got a hold on the problems plaguing product sales. In 2QFY02 Hughes had posted very disappointing financials due to a sequential 59% drop in product sales. On a YoY basis, the total income has grown by 6.7% and the net profits have declined by 21%. This could indicate that while sales seem to be picking up margins are under pressure.

(Rs m) 2QFY02 3QFY02 Change
Sales 536 599 11.8%
Other Income 38 30 -21.1%
Expenditure 443 411 -7.2%
Operating Profit (EBDIT) 93 188 102.2%
Operating Profit Margin (%) 17.4% 31.4%  
Interest -  -  
Depreciation 53 55 3.8%
Profit before Tax 78 163 109.0%
Tax 15 18 20.0%
Profit after Tax/(Loss) 63 145 130.2%
Net profit margin (%) 11.8% 24.2%  
No. of Shares (eoy) (m) 33.3 33.3  
Diluted Earnings per share* 7.6 17.4  
P/E (x)   17.5  
*(annualised)      

The product sales have shown a 97% sequential growth. This has caused the contribution of products sales to jump from 13% in 2QFY02 to 23%. The revenues from HNS have shown a sequential growth of 11%. However, the revenues from services to non-HNS clients continue to show weakness. For 3QFY02, sales declined by 15% as compared to a 6% decline in 2QFY02.

The increased contribution from product sales has caused the company’s operating margins to jump. Also, the company has managed to cut costs sharply. The employee costs have shown a sequential 10% decline.

% Contribution to revenues 2QFY02 3QFY02
HNS Services 46% 46%
Non-HNS Serivces 41% 31%
Products 13% 23%

However the management has once again revised the guidance for the growth in revenues downwards from an earlier guidance of 25%-35% to 17%-19%. This could adversely impact the valuations of the company.


Equitymaster requests your view! Post a comment on "Hughes Software: Beats expectations". Click here!

  

More Views on News

Sorry! There are no related views on news for this company/sector.

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

TRACK FLEXTRONICS SOFTWARE

  • Track your investment in FLEXTRONICS SOFTWARE with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MARKET STATS