Geometric March’14 Profit Dips By 11%

Yesterday (April 30, 2014), two IT companies announced its financial performance for March'14 quarter. After Hexaware Technologies, who disappointed the street with its poor performance, it’s now Geometric which has posted a poor Q4FY14 result.

Geometric, a company having specialization into engineering solutions, services and technologies, reported its financial result after market hours yesterday. Net sales reported a fall of 1% and stood at Rs 273 crore for the similar period. As said by the company, the reason for this fall is decline in income from its one of the largest client during the last quarter. On services front, except engineering services segment which showed soft growth, all its other segments either registered drop or showed muted performance. The revenue from it’s largest service segment, the software services dropped by 3% to 58% of total sales sequentially during the quarter.

Further, EBITDA of Geometric improved by 29% to Rs 27 crore, only because of the reduction in operating expenses during Q4FY14 on sequential basis. However, its net profit registered significant drop on sequential basis. For the March'14 quarter, net profit of company reduced by 11% to Rs 6.7 crore on Q-o-Q basis, mainly due to the drop in other income as well as due to the increase in current and deferred tax expenses. The effective tax rate for Q4FY14 was 40.78% against 29.32% for Q3FY14, which resulted in a sharp fall in the bottomline of Geometric. If we look at the PBT, it had grown 6% during said quarter.

Moreover, for FY14, the revenue of Geometric grew by 7% and stands at Rs 1095 crore on Y-o-Y basis. The EBITDA and net profit fell by 13% to Rs 140 and 33% to Rs 46 crore respectively.

The company added two new clients into its list and signed new deals worth of USD 10.49 million in the last quarter. Though, the performance of Geometric was not impressive, the management expects the coming quarters to be better, backed by the heavy investments made by company in transforming operations and sales engine during FY14. Also, it intends to reap the opportunities growing into the emerging markets, especially for engineering services in the fiscal coming ahead.

Due to the poor financial performance, the stock price was down by 3% from the previous close of Rs 109.9 in today's early trading session.