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.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
Diluted number of shares
Diluted Earnings per share*
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
Software and Internet Group
E - Business Infrastructure
Network Engineering (NE)
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.
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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407