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Global Tele: Dull show

Apr 19, 2002

GTL Limited (erstwhile Global Tele) reported a 35% decline in topline for FY02. The net profits have declined by a steep 74% including extraordinary income of Rs 1,952 m in FY02. Excluding the extraordinary income the bottomline has declined by 57%, as last year’s extraordinary income was higher than in FY02. Falling sales in certain business segments have adversely impacted the financials of the company. For 4QFY02, the topline growth was flat on a sequential basis. However, the net profits grew by 9% sequentially. The signs of trouble from the exports markets were evident from the sequential decline of 44% from the export markets.

(Rs m) 3QFY02 4QFY02 Change FY01 FY02 Change
Sales 1,370 1,369 -0.1% 8,148 5,328 -34.6%
Other Income 97 92 -5.6% 538 508 -5.7%
Expenditure 965 951 -1.5% 5,308 3,856 -27.4%
Operating Profit (EBDIT) 405 418 3.2% 2,840 1,472 -48.2%
Operating Profit Margin (%) 29.6% 30.6%   34.9% 27.6%  
Interest - -   - -  
Depreciation 213 226 6.3% 789 886 12.3%
Profit before Tax 290 284 -2.0% 2,590 1,093 -57.8%
Tax 76 (32) -141.7% 165 53 -67.8%
Extraordinary Items 74 - -100.0% 1,952 74 -96.2%
Profit after Tax/(Loss) 288 316 9.7% 4,376 1,114 -74.5%
Net profit margin (%) 21.0% 23.0%   53.7% 20.9%  
Diluted number of shares 70.7 70.7   70.7 70.7  
Diluted Earnings per share* 16.3 17.8   61.9 15.7  
P/E (x)   7.1     8.0  

While the companies network engineering (NE) and customer relationship management (call centre) businesses witnessed growth, the revenues from software services and enterprise network services (ENS) showed declining sales trend. GTL also reduced its focus from the IPR (intellectual property rights) segment. The business of this segment is to sell software licenses and derivatives. The licensing business had been major revenue grosser for GTL in FY01 (20% of the revenues). The decline in revenues from this business has impacted the profitability and revenue growth. There were concerns about the licensing business, considering the fact that the company does not have much of expertise in software development. In case of software becoming obsolete, the sales could fall sharply.

GTL : Revenue break up
Business group % contribution
Software and Internet Group 26.3%
CRM 12.8%
E - Business Infrastructure 23.3%
Enterprise Networks 17.9%
Network Engineering (NE) 19.5%
Others 0.2%

The company expects the revenues for FY03 to grow by 7.5% to 10%. We expect a marginal improvement in operating margins on the back of increased contribution to revenues from the CRM business. At the current market price of Rs 126, the stock is trading at a P/E multiple of 8x its FY02 annualised earnings. The stock price is likely to remain range bound in the near future due to lack of a trigger.

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More Views on News

GTL LTD Announces Quarterly Results (4QFY19); Net Profit Up 95.5% (Quarterly Result Update)

May 8, 2019 | Updated on May 8, 2019

For the quarter ended March 2019, GTL LTD has posted a net profit of Rs 965 m (up 95.5% YoY). Sales on the other hand came in at Rs 348 m (down 57.6% YoY). Read on for a complete analysis of GTL LTD's quarterly results.

GTL LTD Announces Quarterly Results (3QFY19); Net Profit Down 419.1% (Quarterly Result Update)

Feb 4, 2019 | Updated on Feb 4, 2019

For the quarter ended December 2018, GTL LTD has posted a net profit of Rs 308 m (down 419.1% YoY). Sales on the other hand came in at Rs 561 m (down 76.5% YoY). Read on for a complete analysis of GTL LTD's quarterly results.

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