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Geometric: Good show

Apr 25, 2002

Geometric (standalone) posted a moderate 4% growth in revenues and a 7% rise in bottomline for 4QFY02. Thus, the company clocked a 37% topline growth and a jump of 42% for the full year ended March 2002. The numbers are in line with the guidance given by the management earlier.

(Rs m)3QFY024QFY02ChangeFY01FY02Change
Sales1611673.6%449 616 37.3%
Other Income 9 15 63.7%20 39 91.1%
Expenditure1221295.0%351 481 36.9%
Operating Profit (EBDIT)3838-1.1%9813538.8%
Operating Profit Margin (%)23.9%22.8% 21.7%22.0% 
Interest - -   0 -  
Depreciation 11 12 2.9%36 45 23.3%
Profit before Tax 36 41 13.8% 82 130 58.7%
Extra-ordinary income/(expense) - -   7 -  
Tax 1 3 383.9% 1 4 638.6%
Profit after Tax/(Loss) 36 38 7.4% 89 126 41.8%
Net profit margin (%)22.1%22.9% 19.8%20.4% 
Diluted number of shares5.35.3 5.35.3 
Diluted Earnings per share* 27.0 29.0   16.9 24.0  
P/E (x)  19.3   23.4  
*(annualised)      

The consolidated revenues (Geometric, its subsidiary and newly formed company 3D PLM) of the company grew by 49%, while the net profits were up by only 34% for FY02. The newly formed joint venture with Dassault Systems (DS), 3D PLM Software Solutions, posting losses of about Rs 3 m. 3D PLM earned Rs 1 m in revenues during 4QFY02. The company added 7 new clients in 4Q, taking to the total number of client additions during the year to 29. Of the total revenues for the fiscal FY02, the company earned 15% from projects, while the remaining 85% came from services.

It is very interesting to note that the company earns higher margins from its services than products. The EBIT (earnings before interest and taxes) from the products revenues stream was only 33%, while the margins from the services business was 47% in FY02.

At the current market price of Rs 561, the stock is trading at a P/E multiple of 23x its FY02 annualised earnings. While the company has managed to post a robust performance for the fiscal and expects a average 10% sequential growth in revenues for FY03, retail investors should also keep in mind company’s small size and the potential impact to its financials due to loss of a key account.

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