Aftek: Power but safe? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Aftek: Power but safe?

Jul 27, 2001

Aftek has ended its fiscal FY01, with an impressive growth of 127.2% in revenues and the rise in net profits was 192%. The company's growth comes from its product Powersafe, which the company started shipping from the 2QFY01 and the revenues started coming in from 3QFY01.

(Rs m)3QFY014QFY01ChangeFY00FY01Change
Sales1451471.3%198 449 127.2%
Other Income98-12.2%10 35 229.7%
Expenditure6564-0.7%112 221 97.6%
Operating Profit (EBDIT) 81 83 2.9% 86 228 165.6%
Operating Profit Margin (%)55.5%56.4% 43.5%50.8% 
Interest - -   1 -  
Profit before Tax88891.3%89254184.4%
Profit after Tax/(Loss) 86 87 1.3% 85 247 191.9%
Net profit margin (%)58.9%58.9%0.0%42.8%55.0% 
Diluted number of shares 6.0 6.0 0.0% 6.0 6.0  
Diluted Earnings per share*
*(annualised)  2    3  

For FY01 29% of Aftek's revenues came from software products, 62% came from its software business and the remaining came from embedded products. The contribution of products sales is low due to the facts that the revenues from products were realized only in the second half.

Aftek's operating margins improved significantly during FY01. This is due to products sales that is traditionally high margins business. Also, the company's employee costs are one of the lowest in the industry. The employee costs for FY01 was just 6% of the sales.

The growth of the company's software business for FY01 was approximately 40%.

For the 4QFY01, Aftek's performance was quite ordinary. The company recorded a 1.3% growth in topline (QoQ) and the rise in net profits was 1.3%. On a YoY basis revenues have grown by 184% and the bottomline has grown by 259%. The operating margin improved by 90 basis points on the back of increased contribution to revenues from products that went up from 43.8% in 3QFY01 to 46.3% 4QFY02. The products sales have shown a sequential growth of about 7%.

The software business of the company that contributed to 47.5% of the revenues in 4QFY01 (49.9% in 3QFY01) has shown a marginal decline of 3.4% for the second consecutive quarter.

At the current market price of Rs 112, the stock is trading at a P/E multiple of 3 times FY01 earnings. The stock has seen an upside due to the low valuations it has been quoting. However, the risk from the products business will continue to be a concern that will haunt the valuations. In the near term the stock might see some appreciation but its valuation could improve if it continues to perform steadily, which is yet to be seen from product based companies.

Equitymaster requests your view! Post a comment on "Aftek: Power but safe?". Click here!


More Views on News

If You had Invested Rs 1 Lakh in TCS in 2011, this is how Much You Would have Today (Views On News)

Nov 30, 2021

Did TCS perform better than the market and its peers?

India's Top 4 IT Companies are Struggling. Here's Why... (Views On News)

Oct 22, 2021

As attrition rates are unbelievably high, top Indian IT companies are going for big-ticket raises, and much more hiring this year.

Infosys had an Exceptional Quarter Buoyed by Huge Deal Wins. Revenue Guidance Boosts Stock (Views On News)

Oct 14, 2021

Infosys raised its forecast for annual revenue growth to 16.5-17.5% from the earlier 14-16%, predicted in July 2021.

Info Edge: The Anatomy of an Indian Internet Behemoth (Views On News)

Oct 2, 2021

Info Edge is very popular in the Indian startup ecosystem due to its active participation in funding events.

This Indian Company is Tapping into the Huge Autonomous Driving Opportunity (Views On News)

Sep 14, 2021

Despite many challenges, Indian companies and startups have not shied away from entering this space.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Nov 30, 2015 (Close)