Geometric posted a heartening performance this quarter by coming out of the red. It has shown a revenue growth of 30% compared to last quarter. But with operating margins at 20% the company has a long way to go. Last quarter it had posted losses due to drop in sales. That was because of its subsidiary through which it sells in the United Sates. The company has taken quick remedial measures and it seems to be getting its act together.
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To streamline operations the management has decided to restructure the company into three groups Geometry, Information Management and Collaborative Engineering. The company now plans to concentrate on areas of information management and collaborative engineering.
Geometric has a very small onsite presence and therefore an increase in onsite presence will definitely see a rise in revenues. The billing rates currently earned by the company is estimated to be US $ 4,000 – 4,500 per man month. With onsite projects the company is expecting billing rates in the range of US $ 7,000 – 8,000 per man month.
Another advantage the company has is that it is also into products. It has about 90 people working in this area. Some of products are sold as add ons with other high end CAD/CAM software.
This quarter the company has changed its method of accounting depreciation from written down value to straight-line method. According to the method followed previously the profits would have been lower by about Rs 3 m.
At the current market price of Rs 113, it is valued at a P/E multiple of 9.4 times its 3QFY01 annualised earnings.
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