X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Geometric: Growth pangs - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Nov 28, 2000

    Geometric: Growth pangs

    Geometric Software has many firsts. It is the first company in India in the area of software solutions for computer aided design /computer aided manufacturing/ computer aided engineering. A business model that is very niche. This area requires highly skilled manpower. The best thing is that the entry barrier into this segment is high due to the level of skills required. Therefore, there is hardly any competition for Geometric in the country.

    The strength of Geometric as a company is its philosophy of 'people building partnership'. Geometric as a company works with its customers, solves their problems that is quite essential considering the nature of the engineering industry.

    But there is another first that the company would rather forget. Geometric was the first Indian company to issue warnings on its earnings in line with trends in the US and UK. The management announced that they were not able to meet sales targets.

    Immediate corrective action was taken. The management reorganised its sales and marketing functions. Dick Miller, CEO of Geometricís US subsidiary resigned with effect from September 30, and Manu Parpia, MD of Geometric Software, took over.

    The company recently tapped the capital market with an initial public offering of 0.3 m shares at a premium of Rs 290 per share. The issue got an overwhelming response and subsequently it was listed at Rs 900 on the Bombay Stock Exchange. Since then it has been falling sharply. Presently the stock trades at Rs 163, a significant 44% discount to its issue price.

    The second quarter results were quite disappointing. There has been a fall in the top line in 2QFY01 compared to 1QFY01. The operating margins for the first quarter were excellent but the second quarter was quite a horror story. In 2QFY01, a large component of other expenses (Rs 27 m) depressed the bottomline and resulted in losses.

    (Rs m) 1QFY01 2QFY01 % Change
    Sales 88 86 -1%
    Other Income 5 5 -
    Expenditure 67 99 33%
    Operating Profit (EBDIT) 20 (13) -
    Operating Profit Margin (%) 23.4% -14.9%
    Interest 0 0 -
    Depreciation 10 6 -72%
    Profit before Tax 15 -13 -
    Tax 0 0 -
    Profit after Tax/(Loss) 15 (13) -
    Net profit margin (%) 17.1% -15.0%
    Diluted number of shares 5.2 5.2 -
    Diluted Earnings per share* 3 - -
    *(annualised)

    The stock is trading at a P/e multiple of 87 times its annualised half yearly earnings. The main concern for the company is revenue generation, which is alarming considering that the company is in the software business. Its top 10 clients account for about 70% of the business. Perhaps, the company is too technology oriented. Nothing against that but in the present circumstances the ability to market is as critical.

     

     

    Equitymaster requests your view! Post a comment on "Geometric: Growth pangs". Click here!

      
     

    More Views on News

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    TCS: Currency Volatility Plays Spoilsport (Quarterly Results Update - Detailed)

    Jul 14, 2017

    TCS starts FY18 decently despite an adverse currency impact.

    HCL Tech: Ends FY17 on Expected Lines (Quarterly Results Update - Detailed)

    Jun 29, 2017

    Volvo partnership caps a good year for HCL Technologies.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    GEOMETRIC LTD SHARE PRICE


    Mar 10, 2017 (Close)

    TRACK GEOMETRIC LTD

    • Track your investment in GEOMETRIC LTD with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    GEOMETRIC LTD - SUBEX LTD COMPARISON

    Compare Company With Charts

    COMPARE GEOMETRIC LTD WITH

    MARKET STATS