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Visualsoft : Bad but not that bad - Views on News from Equitymaster
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  • Apr 24, 2001

    Visualsoft : Bad but not that bad

    Visualsoft has posted a QoQ dip of 15% in revenues for 4QFY01. The dip in the net profit figure (excl. extraordinary income) is a significant 41%. The company had earlier warned of a dip in sales as its products were facing tough market environment.

    The operating margins have taken a big hit and have fallen by almost 14%. Visualsoft has traditionally enjoyed higher operating margins due to a significant contribution of product sales to its topline (53% in 3QFY01). This contribution in 4QFY01 dropped to 36% of revenues.

    Visualsoft has shown a extraordinary income Rs 34 m, which is on account of cancellation of ESOPS.

    On a Year on Year (YoY) basis in 4QFY01 Visualsoft has clocked revenues growth of 54.5% and a jump in net profit figure (excl. extraordinary income) of 38.8%.

    (Rs m) 3QFY01 4QFY01 Change FY00 FY01 Change
    Sales 405 343 -15.2% 680 1,314 93.2%
    Other Income 11 2 -84.1% 23 42 88.1%
    Expenditure 189 208 9.7% 383 671 75.1%
    Operating Profit (EBDIT) 216 136 -37.1% 297 642 116.6%
    Operating Profit Margin (%) 53.3% 39.5%   43.6% 48.9%  
    Interest - -   - -  
    Depreciation 10 13 30.4% 22 40 82.5%
    Profit before Tax 217 124 -42.8% 297 645 117.0%
    Other Adjustments 9 0 -100.0% 8 26 240.1%
    Tax 2 2 -7.5% 8 7 -6.1%
    Profit after Tax/(Loss) 206 123 -40.6% 282 611 116.9%
    Net profit margin (%) 51.0% 35.7%   41.5% 46.5%  
    Extraordinary income 0.0 34.1   2 7 231.9%
    Profit after Tax/(Loss) # 206 157 -24.1% 284 618 117.7%
    Net profit margin (%)# 51.0% 45.7%   41.7% 47.0% 12.7%
    No. of Shares (eoy) (m) 19.7 19.7   7 20  
    Diluted number of shares (m) 19.7 19.7   20 20  
    Diluted Earnings per share* 41.9 24.9 -40.6% 14 31 116.9%
    P/E (at current price) 4.9 8.3   14.3 6.6  

    # incl extraordinary income

    For FY01 the company has recorded a growth in topline of 93% and a jump in profits of 117% compared to FY00.

    The operating margins for FY01 have increased by 530 basis points. The company's employee costs have reduced from 49% of revenues in FY00 to 38% in FY01.

    For the year FY01 the business mix was 47% from software products and 53% from services compared to 49% from products and 51% from services in FY00.

    The stock is trading at a P/E multiple of 6.6 times if FY01 annualised earnings. The results are not as bad as the markets were expecting.



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