Geometric Attracts Investor Fancy

Earlier today, Geometric announced their Q1FY13 results, posting sequential revenue growth of 6.41 per cent in dollar terms. This figure is extremely robust considering the current global situation, IT spending cuts all over and the revenue figures of the major IT companies in India. As with every other IT firm in India, Geometric is dependent on most its revenue generation on the U.S. and Europe, with India amounting to 5.21 per cent contribution in Q1FY13. It has largely benefited due to the depreciating rupee, thus making the rupee revenue grow by 15.95 per cent to Rs 260.87 crore from Rs 224.93 crore in Q4FY12.

Financials For Q1FY13 And Q4FY12

 Margins For FY13 And FY12

In terms of services, the contribution to revenue by software services and engineering services remained more or less the same. De-growth was seen in the revenue from industrial and production engineering. On the geographic front as well, the loss from Europe’s revenue was compensated by an increase in Asia Pacific and India. The firm is also looking forward to a partner-led approach in Japan, thus getting distributed geographically.

Like a few other mid-cap IT firms, Geometric focuses on a couple of verticals for sector-centric growth to give it leverage in terms of revenue. The firm continues its focus on automotive and industrial customers. They also plan to increase revenues from segments like aerospace & defence and oil & gas.

In terms of clients though, the firm has seen a reduction in both number of active clients and the value of new deals won in Q1FY13 as compared to Q4FY12. The total number of active clients in Q1FY13 was 95 as against 109 in Q4FY12. The value of new deals won is USD 10.34 million for the quarter in review as compared to USD 11.71 million in Q4FY12.

Due to these robust numbers by Geometric, the stock price went up by a humongous 9.72 per cent today. During the trading session, it had reached highs of up to Rs 85.70, which is more than 15 per cent appreciation. As we have said earlier, the growth prospects of mid-cap IT firms looks bright. Their performance lately has been way better than their big IT counterparts. But, their capital appreciation puts investors to downside risk which calls for extreme caution while investing. The YTD returns of Geometric go up to 72.19 per cent, which leaves lesser room for the future to witness similar growth seen till date. We maintain our positive outlook for all these firms but recommend caution and close tracking.

Percentage Revenue Contribution

 Client Details For Q1FY13 And Q4FY12