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Gobal Tele : Focus on software

Jan 24, 2001

Global Tele's 3QFY01 results have shown a drop in revenues of 2% compared to 2QFY01 and the drop in net profits is 43%. According to the company the drop in revenues is due to the seasonal nature of turnkey contracts in the area of software and engineering services. The net profit figure last quarter had a significant Rs 281 m as extra ordinary item exlcuding this the drop would have been 22%. What was disheartening was the fact that operating margins have taken a hit. The operating margins came down to 30.7% from 40.5% in 2QFY01. 62% of the revnues in 3QFY01 came from e-commerence, software and internet group of the company. Engineering services group accounted for 28% of the revenues.

(Rs m) 2QFY01 3QFY01 Change
Sales 2,116 2,080 -1.7%
Other Income 125 142 13.4%
Expenditure 1,260 1,440 14.3%
Operating Profit (EBDIT) 856 639 -25.3%
Operating Profit Margin (%) 40.5% 30.7%  
Interest - -  
Depreciation 153 136 -11.1%
Profit before Tax 829 646 -22.1%
Tax 95 75  
Other adjustments 281 (0.18)  
Profit after Tax/(Loss) 1,015 571 -43.8%
Net profit margin (%) 48.0% 27.5%  
Diluted number of shares 43.5 43.6  
Diluted Earnings per share* 93.3 52.4  
P/E (at current price)   14  
*(annualised)      

The company's focus on software services, application services (ASP) and engineering services has enabled the company to maintain a growth of 37% in revenues and 111% in net profit (before other income) over the corresponding period.

At a market price of Rs 755, the stock is trading at a P/E multiple of 14 times its 3QFY01 annualised earnings.

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