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Visualsoft 3Q: Back on track - Views on News from Equitymaster
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  • Jan 23, 2001

    Visualsoft 3Q: Back on track

    In 2QFY01 Visualsoft had disappointed with just a 11% sequential (QoQ) growth in the topline. This, according to the company, was due to a delay in launch of its products. But now it seems the company is back on the fast track with a 36% sequential jump in sales and a similar 37% jump in net profit. On a YoY basis, Visualsoft put in a 126% rise in revenues and a siginficant 172% growth in net profit.

    Operating margins at 53% in 3QFY01 are one of the best in the industry. This is due to the fact that 52% of its sales comes from products. While the products sales have grown by 45.5% over 2QFY01, its services revenues have grown by 26.7% over the same period.

    (Rs m) 2QFY01 3QFY01 Change
    Sales 298 405 35.8%
    Other Income 18 11 -37.0%
    Expenditure 146 189 29.8%
    Operating Profit (EBDIT) 153 216 41.5%
    Operating Profit Margin (%) 51.1% 53.3%  
    Interest - -  
    Depreciation 9 10 18.7%
    Profit before Tax 162 217 33.9%
    Other Adjustments 9 9 -2.3%
    Tax 2 2 -4.6%
    Profit after Tax/(Loss) 151 206 36.5%
    Net profit margin (%) 50.7% 51.0%  
    No. of Shares (eoy) (m) 19.7 19.7  
    Diluted number of shares (m) 19.7 19.7  
    Diluted Earnings per share* 30.7 41.9  
    P/E (at current price)   18.37  

    The major concern with the company is its high debtor turnover ratio. Product sales traditionally have higher debtor days. According to the company, 95% of its service related revenues had debtor days less than 90 days. On the product front, 32% of its product related revenues had debtor days between 90-180 days.

    No doubt the performance is superlative. Obviously, the thrust is from product related revenues. VisualSoft WebProject was the product that grossed maximum sales. It's contribution to 3QFY01 product sales was 46%. The COM/DCOM components (accounts for around 25%) showed a jump of almost 75% in revenues compared to 2QFY01. A trend that is expected to continue.

    At a market price of Rs 770, the stock is trading at a P/E of 18 times is 3QFY01 annualised earnings. The stock has already risen 5% today, on the back of this performance.



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