>GEOMETRIC (ANGEL BROKING)

Performance highlights

■ Global slowdown takes toll, Top-line crashes sequentially: For 4QFY2009, Geometric recorded a 12.9% qoq de-growth in Top-line (growth of 12.3% yoy). This was on account of the intensifying global economic slowdown and particularly in the segments in which the company operates. Geometric is witnessing a ramp down from major customers and this is having an adverse impact on its business. All three segments of the company saw a fall in revenues sequentially, with Software Services falling 11.8% qoq, Engineering Services contracting by 15.7% qoq and Products 10.2% qoq. Revenues in US Dollar terms fell 15.6% qoq and even on a yoy basis, contraction of 11.7% was recorded. Billing rates in Software Services witnessed a fall, another factor that impacted Top-line. The average realised Rupee rate for the quarter rose 3.1% qoq and 27.1% yoy to Rs50.47 v/s Rs48.96 in 3QFY2009 and Rs39.71 in 4QFY2008. The company actually witnessed a yoy growth in Rupee revenues entirely on account of this factor. Thus, the worsening business environment continues to negatively impact Geometric. We believe, with major companies like General Motors and Chrysler in a major crisis (Chrysler recently filed for bankruptcy), the impact particularly on the Engineering Services Business is expected to be severe. On yoy basis, Software Services grew 20.8% and Products 12.3%, while Engineering Services saw a fall of 1.1%. The slowdown is beginning to increasingly envelope Geometric every quarter. Its major automotive clients are in a fairly perilous financial position. With demand slowing down, this sector has suffered. The company saw lower order inflows for the third consecutive quarter (US $4.6mn v/s US $5.4mn in 3QFY2009). Thus, all indications point to a more challenging environment for Geometric.

■ Higher SG&A, lower billing rates, one-time costs hammer Margins: In 4QFY2009, Geometric recorded a significant 917bp qoq fall in Margins due to higher SG&A costs, lower rates and one-time employee retrenchment costs. On a yoy basis, Margins fell by 302bp again due to higher SG&A costs. In absolute terms, EBIDTA fell by over 53% qoq and by 12.5% yoy.

■ Lower Margins, Forex losses lead company into the red: On account of the Margin contraction witnessed and Forex losses to the tune of Rs24.9cr, as well as higher Interest and Depreciation Costs, Geometric recorded a Net Loss of Rs20.5cr in 4QFY2009 (Net Profit of Rs1.8cr in 3QFY2009). Thus, the company has posted a disappointing performance this quarter and will require the global economy to resume its upward trend to help bring better times for the company.

To see full report: GEOMTERIC