Feb 6, 2001|
Trigyn: Bad debts cause bad results
Trigyn’s 3QFY01 performance is quite dismal compared to 2QFY01. This quarter (3QFY01) it has not been able to show any growth, neither in revenues nor in operating margins. The company has written off Rs 70 m due to bad receivables. On account of these bad debts the net profit has taken a severe hit and the company declared losses. If we do a sequential (quarter-on-quarter, QoQ) comparison revenues have come down by about 4% and the net profits have dipped by 166%. Excluding the write off the company’s net profits would have gone down by 42%. On a YoY basis the company’s revenue has grown by 36.2%.
The only figure that has shown growth this quarter is total expenditure that grew by 2.7% QoQ. This has caused the operating margins to dip from 21.7% in 2QFY01 to 16.1% in 3QFY01. Of the bad debts, according to the company, Rs 50 m are due to a dot com that could not pay its bills as it did not get second round of funding. The remaining amount of Rs 20 m is due to bills that have not been paid by a customer. This particular customer according to the company has a record to stretching payments and has had receivables up to 180 days.
|Operating Profit (EBDIT)
|Operating Profit Margin (%)
|Profit before Tax
|Profit after Tax/(Loss)
|Net profit margin (%)
|No. of Shares (eoy) (m)
|Diluted Earnings per share*
|P/E (at current price)
The company plans to control its expenditure and market aggressively to improve its performance. According to the company, the drop in operating margins is due to high SGA (selling and general administration) expenditure. The company plans to counter this by reducing the salaries of top management (who will be given stock options in lieu of salary) and introducing stringent performance standards for marketing group.
Trigyn hived off e-vector, its WAP enabling software into a separate company. The company is expected to gross US $ 6.4 m in its first year of operation. Also, Trigyn is to introduce two new products Apollo (a billing software) and e-CRM software.
On a consolidated basis the company’s revenues have jumped 61% in the 3QFY01. The operating margins for the quarter are 12%. However, this too is not without blips. Here too, Trigyn had to write off Rs 160.9 m on a consolidated basis. End result, the company has suffered a loss.
Trigyn needs to put a very smart risk management system in place. Also, it has to improve its performance. The company has targeted operating margins of 30% by 2QFY02. The main push for growth will come from e-vector, which is a subsidiary. Therefore, the operating margins on a consolidated basis are quite likely to touch the levels indicated by the company.
The stock is trading at a P/E multiple of 84 times its 9 months FY01 annualised earnings. This is quite high compared to its peers in the industry.
More Views on News
Aug 2, 2017
A better than expected turnaround in performance results in a change in view.
Jul 27, 2017
Digital services drive growth for Wipro in 1QFY18.
Jul 14, 2017
Infosys starts FY18 on an encouraging note with a stable performance.
Jul 14, 2017
TCS starts FY18 decently despite an adverse currency impact.
Jun 29, 2017
Volvo partnership caps a good year for HCL Technologies.
More Views on News
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
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: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
TRACK TRIGYN TECHNOLOGIES
- Track your investment in TRIGYN TECHNOLOGIES with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
- Add To MyStocks