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Rolta: Steady performance - Views on News from Equitymaster
Rolta has for 1QFY02 clocked a QoQ growth (compared to 4QFY01) of 5% in revenues. The growth in net profit is 18%. Considering Rolta's size the growth in topline is slightly low compared to the figures posted by others in the IT industry. However, Rolta's business model is slightly different from the run of the mill software companies as its core areas include CAD/CAM industry and ISP services.
(Rs m)
4QFY01
1QFY02
Change
Sales
765
800
4.6%
Other Income
8
2
-76.3%
Expenditure
261
372
42.6%
Operating Profit (EBDIT)
504
428
-15.0%
Operating Profit Margin (%)
65.9%
53.5%
Interest
44
49
10.4%
Depreciation
182
74
-59.1%
Profit before Tax
286
307
7.4%
Tax
25
-
Profit after Tax/(Loss)
261
307
17.6%
Net profit margin (%)
34.1%
38.4%
12.4%
Diluted number of shares
63.7
63.7
Diluted Earnings per share*
16.4
19.3
17.7%
*(annualised)
P/E (X)
3.8
On a YoY basis the company has clocked a revenue growth of 36% and the rise in net profits is 44%.
The operating margins for the company are one of the best in the industry at 53.5%. However this figure has come down from an astronomical 65.9% in 4QFY01.
The high operating margins could be due to the fact that Rolta's staff costs are just 4% of the revenues, which could be perhaps the lowest in the IT industry.
At the current market price of Rs 74, the stock is trading at a P/E multiple of 3.8 times its 1QFY01 annualised earnings.
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