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51% rise in profits for Aptech - Views on News from Equitymaster
Aptech announced a 51% rise in the net profit on the back of a 40% growth in the topline for the year ended December 31st, 1999. The company has also announced a 1:1 bonus.
Aptech’s software division accounted for 19% of the company’s revenues, the balance 81% being accounted by training. The company delivers software solutions in Internet enablement, e-commerce portals and technology based training software.
(Rs m)
4QFY2000
4QFY1999
Change
Operating Revenue
887.3
656.4
35.2%
Other Income
1.1
0.9
21.3%
Expenditure
629.0
467.6
34.5%
Interest
(6.8)
30.8
-122.0%
Depreciation
70.9
28.5
148.9%
Profit before Tax
195.3
130.2
50.0%
Tax
29.2
23.8
22.3%
Profit after Tax/(Loss)
166.1
106.4
56.1%
Net profit margin (%)
18.7%
16.2%
The last year saw training companies’ margins under pressure primarily because of a shift towards short-term courses. Hence an innovative mix of courseware has become far more critical than ever before.
This year the drop in margins seems to have been arrested. If one were to assume that the software business yields margins of around 22% then the company has been able to maintain net margins for the training business at around 10% plus.
Aptech has the largest network of centres with around 1150 centres in the country. The flipside is that this limits the scope for expansion. Therefore, for future growth Aptech would need to improve its revenues per centre. The company already has centres offering specialised courses such as ‘Arena’ and ‘Asset’ where the revenue per student year is higher by anywhere between 25-50%.
The company had collected Rs 1.17 bn by way of a private placement at a premium of Rs.865 per share. This also seems to have helped the company in raising its software revenues.
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