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Geometric posted a steady revenue growth in line with expectations, however
EBITDA margin deteriorated by 544bps QoQ to 12.5% due to extra ordinary items of
expenditure & currency fluctuation. In our upgrade note in the previous quarter, we
indicated presence in growth market, with focus on margins yielding stronger
performance. But this quarter performance marred our expectation due to volatility.
We retain ‘Accumulate’, with a TP of Rs80.
Steady performance accompanied by lower than expected margins : Geometric
reported in-line revenue growth of 2.7% QoQ to Rs2.25bn (PLe: Rs2.21bn, Cons:
Rs2.20bn) and 5.4% QoQ in USD terms to $44.92m (PLe: $43.91m). EBITDA
margin dipped by 544bps to 12.5% (PLe: 17.4%, Cons: 16.5%), due to rupee
depreciation, higher utilization & extra ordinary items of expenditure. EPS degrew
by 39.9% QoQ to Rs2.04 (PLe: Rs3.23, Cons: Rs3.15).
Two‐fold performance – Revenue growth and margin expansion: We believe
that the company’s strength in PLM and PES space is playing out well. The
company’s ability to cross-sell strength of different geographies has started
paying-off. We expect steady margin performance as these extra-ordinary is not
going to be part in FY13. The management didn’t give detail for extra-ordinary.
Conference call highlight 1) Volume growth at ~5.1%, no change in pricing 2)
New contracts amounting to $11.71mn awarded during the quarter (Q3FY12 :
$3.55mn) 3) Total headcount is 4567 (Q3FY12: 4447) 4) Growth from emerging
verticals like ship building, Oil & Gas & Energy 5) Effective tax rate to be ~28%
for FY13 6) Fresher Hiring for FY13 to be ~200+ 7) DSO stood at 65.28 for
Q4FY12 (Q3FY12: 71.36)
Valuation & Recommendation: We believe that Geometric’s operational
performance is expected to strengthen from here. We expect a steady revenue
performance for the company in FY13 with improved margins. We reiterate our
‘Accumulate’ rating, with a TP of Rs80, 6x FY13E earnings estimate.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Geometric posted a steady revenue growth in line with expectations, however
EBITDA margin deteriorated by 544bps QoQ to 12.5% due to extra ordinary items of
expenditure & currency fluctuation. In our upgrade note in the previous quarter, we
indicated presence in growth market, with focus on margins yielding stronger
performance. But this quarter performance marred our expectation due to volatility.
We retain ‘Accumulate’, with a TP of Rs80.
Steady performance accompanied by lower than expected margins : Geometric
reported in-line revenue growth of 2.7% QoQ to Rs2.25bn (PLe: Rs2.21bn, Cons:
Rs2.20bn) and 5.4% QoQ in USD terms to $44.92m (PLe: $43.91m). EBITDA
margin dipped by 544bps to 12.5% (PLe: 17.4%, Cons: 16.5%), due to rupee
depreciation, higher utilization & extra ordinary items of expenditure. EPS degrew
by 39.9% QoQ to Rs2.04 (PLe: Rs3.23, Cons: Rs3.15).
Two‐fold performance – Revenue growth and margin expansion: We believe
that the company’s strength in PLM and PES space is playing out well. The
company’s ability to cross-sell strength of different geographies has started
paying-off. We expect steady margin performance as these extra-ordinary is not
going to be part in FY13. The management didn’t give detail for extra-ordinary.
Conference call highlight 1) Volume growth at ~5.1%, no change in pricing 2)
New contracts amounting to $11.71mn awarded during the quarter (Q3FY12 :
$3.55mn) 3) Total headcount is 4567 (Q3FY12: 4447) 4) Growth from emerging
verticals like ship building, Oil & Gas & Energy 5) Effective tax rate to be ~28%
for FY13 6) Fresher Hiring for FY13 to be ~200+ 7) DSO stood at 65.28 for
Q4FY12 (Q3FY12: 71.36)
Valuation & Recommendation: We believe that Geometric’s operational
performance is expected to strengthen from here. We expect a steady revenue
performance for the company in FY13 with improved margins. We reiterate our
‘Accumulate’ rating, with a TP of Rs80, 6x FY13E earnings estimate.
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