Geometric has posted a strong 8% sequential growth in revenues and an even steeper 15% rise in bottomline. On a YoY basis the company’s topline has grown by 43%, while net profits have grown by 120%. The sharp improvement in bottomline is due to the fact that the company’s operating margins have improved sharply and net profits have grown from a very small base of Rs 16 m.
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On a consolidated basis the company’s revenues grew by 11% on a sequential basis. Projects contributed to 87% of the revenues during the quarter (88% in 2QFY02). Also, the remaining part of the revenues came from product sales. According to the segmental revenue break up given, the EBIT (earnings before interest and taxes) margins on products works out to be 26%, while for projects margins are a significant 47%. Of the total project revenues, 67% comes from offshore work.
Geometric added 4 new customers for its software geometry business. The group expects to cash in on a significant business opportunity arising from developing API, facilitating migration of Dassault Systeme’s Catia from V4 to V5.
The collaborative engineering business unit won a repeat order from an agricultural manufacturer. The division is expected to show significant growth in volumes during the subsequent quarters. The work on Collabview visualization engine is progressing satisfactorily and the unit plans to make the product commercially available by the end of 1QFY03. Collabview will facilitate viewing of Geometry related documents like drawings with enterprise resource planning systems. If the product is a commercial success, the company’s topline should see a sharp boost.
The information management business saw marginal decline in revenues. The division is to supply a solution, which will be marketed by a leading PDM (product data management) company. It entered into another agreement with a manufacturer in Europe. The revenues from this division are also expected to show growth in the subsequent quarters.
At the current market price of Rs 355, the stock is trading at a P/E multiple of 13 x its 3QFY02 annualised earnings. In the future, the stock is likely to see a significant upside due to growth in revenues arising from penetrating global markets on back of its relationship with companies like Dassault and Wipro.
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