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Global Tele: Slowdown takes toll

Jul 23, 2001

Global Tele has reported a 49% sequential drop in profits for the first quarter of FY02. The net profits have come down by 76%. This is considering an extra-ordinary income Rs 376 m in 4QFY01. Excluding this, the company's net profits have declined by 64%. On a YoY basis, Global's topline has grown by 6% and net profits have dipped by 13% (excl. extra-ordinary income of Rs 1,319 m). The operating margins for the company have declined by 820 basis points. This due to the decline in sales the company has seen.

(Rs m)4QFY011QFY02Change
Sales 2,307 1,181 -48.8%
Other Income 84 157 86.8%
Expenditure 1,514 867 -42.7%
Operating Profit (EBDIT) 793 314 -60.4%
Operating Profit Margin (%)34.4%26.6% 
Interest - -  
Depreciation 154 209 35.8%
Profit before Tax723262-63.8%
Tax (30) (9)-69.5%
Extra-ordinary item 376 - -
Profit after Tax/(Loss) 1,129 271 -76.0%
Net profit margin (%)48.9%22.9% 
Diluted number of shares43.470.4 
Diluted Earnings per share* 64.2 15.4  
P/E (at current price)  8.9  

According to the company, while the revenues from businesses like e-commerce infrastructure continued to grow, the traditional revenues of GTL like systems integration, e-commerce consultancy and IPR / licensing were affected due to the slowdown in the international and domestic markets. A trend that the company expects will continue. The company has also stated that its financials for the year are expected to be impacted by the slowdown.

Service offering(Rs m)%
Software and application services 579 49.0%-2.3%
Enterprise network services 427 36.1%-6.8%
Engineering services 176 14.9%136.0%
Total 1,181 100.0% 

At the current market price of Rs 137, the stock is trading at a P/E multiple of 9 times its 1QFY02 annualised earnings.

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