X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Silverline: Cutting costs - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Feb 2, 2002

    Silverline: Cutting costs

    Silverline Limited (the numbers are only for the Indian operations) has posted a steep 9% decline in revenues and a 15% drop in bottomline for 3QFY02. On a YoY basis, the topline has declined by 44% and the drop in net profits is a steeper 66%. One of the reasons for the steep decline in revenues could be the fact that the company earns about 92% of its revenues from e-business solutions. This area has been witnessing significant weakness as corporates are delaying their online initiatives in wake of the economic slowdown. Silverline Limited contributes about 35% to the consolidated revenues of the Silverline group, the numbers for which are yet to be declared.

    (Rs m) 2QFY02 3QFY02 Change 9mFY01 9mFY02 Change
    Sales 442 404 -8.5% 2,117 1,403 -33.7%
    Other Income 59 11 -81.7% 306 96 -68.7%
    Expenditure 329 264 -19.9% 1,249 970 -22.4%
    Operating Profit (EBDIT) 113 141 24.6% 868 433 -50.1%
    Operating Profit Margin (%) 25.6% 34.8%   41.0% 30.9%  
    Interest 5 4 -18.3% 9 9 2.8%
    Depreciation 29 30 5.5% 74 88 18.0%
    Profit before Tax 139 118 -15.3% 1091 432 -60.4%
    Tax - -   6.5 - -100.0%
    Profit after Tax/(Loss) 139 118 -15.3% 1,084 432 -60.2%
    Net profit margin (%) 31.4% 29.1%   51.2% 30.8%  
    Diluted number of shares (m) 85.6 85.6   85.6 85.6  
    Diluted Earnings per share* 6.5 5.5     7  
    P/E (at current price)   10.9     8.9  
    *(annualised)            

    The company’s operating margins moved up sharply during the quarter. This is due to the fact that it has cut corners aggressively. On a sequentially basis, the staff costs and software development costs have declined by 15%. The other expenses head has fallen even more sharply by 34%.

    Silverline added five new solutions clients in the US along with additions in the Europe and Far Eastern geographies. The company also got new projects from existing companies like Amgen, Citibank and First Union.

    At the current market price of Rs 60, the stock is trading at a P/E multiple of 9x its 2QFY02 annualised earnings. The abysmal valuations are due to the fact that the company has reported a significant fall in revenues 34% in 9mFY02. Another major concern with the company is its management. However, sometime back a few changes were announced and the co-CEO Mr. Ravi Singh had assured the company would make efforts to change the management perception. Considering the fact that the company is trading at a P/BV of 0.4x, the valuations might see a significant upside when the markets conditions for the software sector improve. Retail investors should be very careful before considering investment in the stock as the stock draws a blank on one of the most important reason to buy – the management’s perception.

     

     

    Equitymaster requests your view! Post a comment on "Silverline: Cutting costs". Click here!

      
     

    More Views on News

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    TCS: Currency Volatility Plays Spoilsport (Quarterly Results Update - Detailed)

    Jul 14, 2017

    TCS starts FY18 decently despite an adverse currency impact.

    HCL Tech: Ends FY17 on Expected Lines (Quarterly Results Update - Detailed)

    Jun 29, 2017

    Volvo partnership caps a good year for HCL Technologies.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    SILVERLINE TECH SHARE PRICE


    Apr 19, 2012 (Close)

    TRACK SILVERLINE TECH

    • Track your investment in SILVERLINE TECH with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MARKET STATS