Some niche players in the tech sector have outperformed their past estimates
It's time for quarterly results again. With the uncertainty arising out of the border tensions and the subsequent travel advisory calls given by most of the developed countries, markets were closely watching for any sign of weakness in the results announced by companies in the export-oriented sectors, especially information technology.
Despite the anticipated adverse impact of the border tensions and the on-going sluggishness in the sector, infotech companies, including the industry heavyweight -- Infosys Technologies, announced encouraging results for the first quarter ended June 2002.
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Among second-rung infotech companies, Geometric Software and MphasiS BFL Software continued with their impressive run. Both the companies not only posted double-digit sequential topline growth but also exceeded their own guidance.
In our cover story dated December 24, 2001, we had identified these companies as one of the few relatively smaller companies well positioned to tide over the difficult times, due to their focus on niche segments and initiatives to create alternative revenue streams. The share prices of both these companies has more than doubled since our recommendation six months ago. In this issue, we take a re-look at the performance of these companies.
Geometric Software
With a sequential growth of 12.7 per cent to Rs 19.42 crore in the quarter ended June 2002, Geometric exceeded its earlier guidance of 10 per cent sequential growth in each of the quarters in this fiscal. This is despite the fact that one of its close associates PowerWay temporarily suspended business with Geometric in this quarter.
But the ramp-up of business at their newly formed joint venture with Dassault Systems, 3D PLM aided the sequential growth in the last quarter. In addition to this, a healthy sequential jump of 27.3 per cent to Rs 2.4 crore from sale of software components and products was one of the primary growth drivers in the last quarter.
The growth in high margin products and offshore business was also clearly reflected in the 80 basis points improvement in operating margins to 23.6 per cent as against 22.8 per cent in the previous quarter.
However, consolidated net profits declined by over 12 per cent sequentially to Rs 3.7 crore as against Rs 3.25 crore in the fourth quarter of last fiscal. This was primarily due to the steep fall of 59 per cent in