PSI has again performed way below its peer group like it did for FY01. For 1QFY02 the company has posted a drop of 10% in revenues and a significant drop of 53% in net profits. However, it is heartening to note that the company has improved operating margins by 100 basis points. This could be an indication that the company's billing rates are not under pressure.
The company claims it has been hit by the slowdown in the US economy. PSI does not have such a significant contribution to the revenues from the US. The company could have posted a drop in topline due to the fact that is has sold off its business of marking ATM machines and has not been able to find business to offset this loss of revenues.
PSI might be finding it difficult to get new business as it is a relatively new player in the US market. PSI derives a significant portion of its revenues from India (about 30%), which why it has low margins. The margins in Indian markets are lower than international markets.
The company is hopeful that it will get some new orders in the near future and will be able to meet the 50% topline growth it has projected for the year. This projection was before NASSCOM revised its figures downwards for the sector to 40-45%. Therefore, a downward revision by PSI in the near future is quite likely.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Provision for contingencies
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Diluted number of shares
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P/E (at current price)
At the current market price of Rs 133, the stock is trading at a P/E multiple of 11.7 times its 1QFY02 annualised earnings.
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