The software education majors continued to post very weak numbers in September quarter due to decline in demand. The companies have been also hit by competition from the unorganised sector. Aptech like SSI and NIIT posted a significant dip in topline and bottomline for its 3QFY02. The company’s topline declined 54% YoY and the net profit figure fell by significant 96%.
Aptech earned 95% of its revenues from software education and the remaining part of the revenues came from its software services business. In the corresponding quarter last year the company’s business mix was 88% education and 12% software services. While the education business declined by 50% YoY, the software business declined by 83%. On a sequential basis, the company’s revenues from software have declined by 45%.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy)
Diluted Earnings per share*
Aptech’s operating margins declined sharply from nearly 23% in 3QFY01 to a marginal 4% in 3QFY02. However, the company has managed to control its overheads and variable costs like software development and education. These costs heads have declined by almost as much as the dip in revenues. The employee costs for the company have grown by 19% YoY. The company has been looking at separations to align its capacity with demand.
At the current market price of Rs 50, the stock is trading at a P/E multiple of 75 times its 2QFY02 annualised earnings. The high P/E is due to significantly low earnings per share. Aptech’s stock has gained in recent times on hopes of the company’s education division being bought out by another company. If a change of management takes place, the stock might see some upside on back of an open offer, which is to be made based on the last six months average price.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407