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Aztec: Lacklustre performance

Jul 18, 2001

The highlight of Aztech's 1QFY02 performance is that it has managed to show a sequential growth in topline and bottomline. The revenues grew by 1.7% QoQ and the net profit figure rose by a marginal 50 basis points. On a YoY basis the company has posted a 80% rise in revenues and a 34% growth in profits. Aztec's net profits have shown a sequential growth due to a significant other income in the first quarter. The figure for this one quarter at Rs 14 m was more than that for the whole of FY01, which was Rs 11 m.

(Rs m) 4QFY01 1QFY02 Change
Sales 245 250 1.7%
Other Income 3 14 426.9%
Expenditure 179 195 8.6%
Operating Profit (EBDIT) 66 55 -17.1%
Operating Profit Margin (%) 26.9% 21.9%  
Interest 1 1 10.0%
Depreciation 7 7 -8.2%
Profit before Tax 60 61 0.5%
Tax 0 0 -
Profit after Tax/(Loss) 60 61 0.5%
Net profit margin (%) 24.6% 24.3%  
No. of Shares (eoy) 40.4 40.4  
Diluted Earnings per share* 6.0 6.0 0.5%
P/E (x) - 12.0  

However, the disappointing news was that the company's operating margins declined by about 500 basis points. This is due to a 77% increase in the company's onsite consultancy charge that have grown from 17% of revenues in 4QFY01 to 28% of revenues in 1QFY02. The onsite consultancy charges correspond to the payments made to the wholly owned subsidiary for rendering software services outside of India on behalf of Aztec.

The stock is trading at a P/E mulitple of 12 times its 1QFY02 annualised earnings. This kind of a lacklustre performance is not going to help the stock gain on the bourses.

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