• JULY 6, 2000

Software revenues drives up Aptech's 2QFY00 profits

Aptech has reported an astounding YoY growth of 44% in its net profits for the 2QFY00. Its revenues jumped 36% to Rs 1.4 bn led by strong growth of 82% in software solution business. However the profit growth is slowed down slightly due to more than 200% increase in the interest expenditure.

Aptech's software business which is a high margin business contributed 17% to its total revenue (13% in 2QFY99). This has also enabled the company to improve its operating margins to 37.3% from 33% in the previous year.

(Rs m) 2QFY99 2QFY00 Change
Sales 1,018 1,389 36.4%
Other Income 1 2 53.0%
Expenditure 682 871 27.7%
Operating Profit (EBDIT) 336 518 54.0%
Operating Profit Margin (%) 33.0% 37.3%  
Interest 3 9 210.1%
Depreciation 45 84 87.8%
Profit before Tax 290 426 47.2%
Tax 31 55 77.4%
Profit after Tax/(Loss) 259 371 43.6%
Net profit margin (%) 25.4% 26.7%  
Earnings per share 41.3 59.4  

The company's global software solutions business witnessed an increase of 135% to Rs 386 m during the same period. This suggests the strong growth opportunity for Aptech India's software business which is growing by leaps & bound.

At the current market price of Rs 917 (ex-bonus), Aptech is trading at a P/E multiple of 15 times its 2QFY00 annualised earnings. The company has also allotted bonus in the ratio of 1:1 in June 2000 in the current year. The company has comparatively lower valuations than NIIT and SSI due to comparatively lower contribution from software business. However the company is gradually increasing contribution from software business to total revenues which is likely to improve sentiment in the stock.

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