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Showing posts with label Geometric Software. Show all posts
Showing posts with label Geometric Software. Show all posts
Tuesday, January 24, 2012
Thursday, November 03, 2011
Wednesday, April 27, 2011
Wednesday, July 14, 2010
Sunday, May 16, 2010
Geometric
Investors with a two-year horizon can consider taking exposure to the stock of Geometric, a software and engineering services provider, considering the improvement in the outsourcing budgets in key client segments such as automotive and Software ISV (Independent Software Vendors).
The company has a reasonably strong order-book and has managed to ramp-up on its key clients, suggesting that after a rather difficult FY-10 there could be better visibility on the revenue front. The company had managed margins well in 2009-10 by cutting manpower costs, reducing selling expenses and increasing the offshore component of revenues.
At Rs 68, the stock trades at 8 times its likely 2010-11 per share earnings. This is at a steep discount to similar players such as Persistent Systems and larger peers such as Infotech Enterprises and KPIT Cummins. Companies such as Geometric that cater to selective clients can take a hard hit in pricing and budget reductions during economic downturns, but the recovery tends to be sharper on the revenue front. Evidence of this is KPIT Cummins and Persistent Systems that operate in many of the segments that Geometric does, guiding for an industry-leading 22-25 per cent revenue growth.
The company saw its revenues fall by 14.5 per cent in FY-10 to Rs 511.5 crore; it posted net profits of Rs 46.6 crore from a loss in the previous fiscal. Forex losses of Rs 48.3 crore hit the company's profits hard in FY-09. Over a four-year period, the company has seen its revenues grow at a compounded annual rate of 31.8 per cent, while net profits grew at 21.8 per cent.
Better macro-environment
Geometric provides offshore product development, product life-cycle management and engineering services to clients. Its offerings are different from traditional IT services companies in the sense that it target audience is only two-three segments. These include software ISVs (47.5 per cent of revenues), automotive (32.5 per cent of revenues) and agricultural and construction machinery manufacturers. It counts GM, Daimler Chrysler, Caterpiller and ABB as its clients. Geometric which would be looking for increased outsourcing and offshoring from auto majors as a part of their cost-cutting measures.
A report from IDC indicates that R&D and product engineering services are set to grow from $40.1 billion in 2010 to $65.7 billion by 2013. The size of the offshore market within that is set to grow at a much faster clip from $8.9 billion in 2010 to $16.1 billion by 2013.
According to a Strategy Analytics Automotive Electronics Service report, the global market for automotive electronics systems is expected to bounce back strongly in 2010, with demand increasing 18 per cent to $147 billion from the 2009 low point. This, the report states, is a result of a forecast increase of 11 per cent in light vehicle production in 2010, alongside a shift back to larger, more electronics-rich vehicles in established markets.
These trends are suggestive of the fact that vendors such as Geometric that have existing relationship with key clients could benefit from the incremental pie.
Operational improvements
The company has a favourable geographic mix with over 63 per cent revenues coming from the US and 26 per cent from Europe. Geometric could capitalise on the revival in IT budgets in the US. . Geometric has an order book of $48.9 million, as of FY-10, to be executed over the next year, compared to just $29.5 million as of FY-09.
Over the last fiscal, the company has managed to add a $10-million-plus annual run-rate client as well as two in the $1-$5 million category. The repeat business level has also increased by 5 percentage points in FY-10 to 89.8 percent. The company's top clients have increased contribution to revenues by 5-7 percentage points.
Geometric's performance in these metrics suggests better traction in client budgets, greater client-mining ability and sound execution capabilities.
The company has also increased its offshore operations by 5 percentage points to 49.5 per cent in FY-10, which provides for low-cost revenues and an optimal cost structure. This level still leaves sufficient room for the company to enhance its offshore component.
Geometric has also indicated that it is getting into fixed-price projects, which would ensure better realisations compared to time and material billing mode.
Risks
Rupee appreciation, although a risk, is largely mitigated by the fact that Geometric has hedged 70 per cent of its inflows for FY-11 at Rs 48-49 levels. A wage hike of 13-14 per cent has been announced by the company for its offshore employees, which would affect margins in the near term. But the company has indicated that the growth in the second half of this fiscal would compensate for this.
via BL
Tuesday, April 06, 2010
Tuesday, January 19, 2010
Geometric
We recommend a buy in Geometric from a short-term perspective. It is evident from the charts of the stock that after touching a multi-year low at Rs 10.5 in March 2009, the stock reversed direction. Since then the stock has been on a longer-term uptrend, forming higher peaks and higher troughs consistently. It broke through key resistances at Rs 42 and Rs 63 while trending upwards backed with good volumes. Moreover, the stock broke out of a sideway consolidation range between Rs 66 and Rs 73 by gaining 7 per cent with high volume. The daily relative strength index is hovering in the bullish zone and weekly RSI also is featuring in this zone. Both the daily and weekly moving average convergence and divergence indicators are hovering in the positive territory. Considering that the longer and medium-term uptrend lines are in tact, we are bullish on the stock from a short-term horizon. We anticipate its rally to prolong until it hits our short-term price target of Rs 84. Traders with short-term perspective can consider buying the stock while maintaining stop-loss at Rs 72.
via BL
Tuesday, July 28, 2009
Tuesday, March 24, 2009
Saturday, January 24, 2009
Friday, November 14, 2008
Tuesday, October 21, 2008
India Economy, Zensar Technologies, Geometric Software, HT Media, Indian Bank, Patel Engineering, Voltamp, Alembic, Petronet LNG
Wednesday, April 23, 2008
Sunday, January 20, 2008
Thursday, January 17, 2008
Wednesday, January 16, 2008
Wednesday, December 26, 2007
Geometric Software
We recommend a buy in Geometric. It is evident from the weekly chart of Geometric that it had been on a long-term downtrend from June high of Rs 131 to November low of Rs 70. The stock found support at Rs 70 and began moving higher. During this up move, the stock penetrated the medium-term down trendline as well as 50-day moving average line on December 7. Following a minor correction, the stock is facing resistance at Rs 90 level. The daily momentum indicator is on the ve rge of entering the bullish region and the weekly momentum indicator has recovered from the oversold region, which indicates bullishness. The daily moving average convergence divergence is featuring in the positive territory.
Immediate support for the stock is pegged at Rs 79 and the next is at Rs 70. Short-term investors can buy the stock with stop-loss at Rs 78. We expect the stock to break through the immediate resistance and move up to the next resistance level of Rs 100 in the short-term.
Via Businessline
Friday, October 26, 2007
Wednesday, August 15, 2007
Sunday, May 13, 2007
Motilal Oswal - Andhra Bank, Geometric Software, Colgate, Ashok Leyland, Eicher Motors, Tech Mahindra, J&K Bank
Motilal Oswal - Andhra Bank
Motilal Oswal - Ashok Leyland
Motilal Oswal - Eicher Motors
Motilal Oswal - Tech Mahindra
Motilal Oswal - J&K Bank
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