Rolta: Improving margins - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Rolta: Improving margins

Apr 1, 2002

Rolta, the CAD/CAM services and solutions provider closed its FY02 (year ending December 31st 2001) with a healthy 19% growth in topline. The net profits for the year grew by 16%. The highlight of the performance is the fact that Rolta managed to improve its operating margins from 54% to 57%, despite the fact that the fiscal was one of the toughest for software companies. The improvement in margins was possible due to the strict control on costs. While the company's employee costs grew by only 9%, the other expenditure declined by 3%. However, the improvement in operating margins did not reflect in the net profit growth. This was due to the decline in other income. Also, growth in depreciation and taxes was much faster than that of the topline. Consequently, net profit growth was stunted.

(Rs m) FY01 FY02 Change
Sales 2,532 3,008 18.8%
Other Income 18 7 -63.3%
Expenditure 1,166 1,300 11.5%
Operating Profit (EBDIT) 1,366 1,708 25.1%
Operating Profit Margin (%) 53.9% 56.8%
Interest 168 204 21.8%
Depreciation 281 368 30.8%
Profit before Tax 934 1,142 22.2%
Tax 25 88 250.0%
Profit after Tax/(Loss) 909 1,055 16.0%
Net profit margin (%) 35.9% 35.1%
Diluted number of shares 63.6 63.6
Diluted Earnings per share* 14.3 16.6
P/E (x) 6.6

For FY02, the company earned 97% of its revenues from the CAD/CAM/GIS services and solutions business. The remaining part of the revenues came from its Internet (ISP) and e-business solutions service offerings. During the fiscal the company added services offerings that include e-business and e-security solutions. The new offerings also include solutions in the area of business intelligence, data warehousing, mining and customization.

Rolta's offerings in the CAD/CAM areas allow it to tap markets that have been traditionally less pursued by the Indian software sector. Also its offerings in the GIS segment would allow it to tap opportunities emerging from the growth of the retailing sector in the country. Software companies in the recent past have seen growth coming from the logistics vertical. This too is a positive for the company.

At the current market price of Rs 109, the stock is trading at a P/E multiple of 7x its FY02 earnings. The company's foray into e-business related solutions is likely to add some pace to its topline, as traditionally the growth of the CAD/CAM industry has been lower than that of the software sector.

Equitymaster requests your view! Post a comment on "Rolta: Improving margins". Click here!


More Views on News

ROLTA INDIA Announces Quarterly Results (4QFY19); Net Profit Down 1009.3% (Quarterly Result Update)

Jun 10, 2019 | Updated on Jun 10, 2019

For the quarter ended March 2019, ROLTA INDIA has posted a net profit of Rs 25 bn (down 1009.3% YoY). Sales on the other hand came in at Rs 4 bn (down 37.0% YoY). Read on for a complete analysis of ROLTA INDIA's quarterly results.

ROLTA INDIA Announces Quarterly Results (3QFY19); Net Profit Down 8335.2% (Quarterly Result Update)

Feb 15, 2019 | Updated on Feb 15, 2019

For the quarter ended December 2018, ROLTA INDIA has posted a net profit of Rs 11 bn (down 8335.2% YoY). Sales on the other hand came in at Rs 5 bn (down 33.9% YoY). Read on for a complete analysis of ROLTA INDIA's quarterly results.

ROLTA INDIA 2017-18 Annual Report Analysis (Annual Result Update)

Dec 19, 2018 | Updated on Dec 19, 2018

Here's an analysis of the annual report of ROLTA INDIA for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of ROLTA INDIA. Also includes updates on the valuation of ROLTA INDIA.

More Views on News

Most Popular

How to Find the Best Stocks for Day Trading - 1 (Fast Profits Daily)

Jul 2, 2020

In the first of two videos, I'll show you how to identify the best stocks for intraday trading.

Two Agri Stocks Are Likely to Outperform Even in this Market (Profit Hunter)

Jul 2, 2020

Why we have recommended two agriculture stocks for our Hidden Treasure subscribers. Read on...

A Warning for Traders: Don't Get Addicted to Hopium (Fast Profits Daily)

Jun 30, 2020

If you are a trader, you must watch out for this dangerous addiction.

Smallcaps Are in a Sweet Spot Again: Are You Buying? (Profit Hunter)

Jul 3, 2020

This is why I believe smallcaps are the place to be in the near future.


India's #1 Trader
Reveals His Secrets

The Secret to Increasing Your Trading Profits Today
Get this Special Report, The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Jul 10, 2020 (Close)


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