Geometric - 4QFY13 results - Kotak

Geometric's 4QFY13 results were below estimates. Organic revenues fell by 5% QoQ and came in lower than estimates due to continued scale down in one of the top accounts. Geometric has consolidated financials of 3cap WEF 4Q. Margins (excluding prior period items) fell sharply due to revenue degrowth and also on consolidation of 3cap. Excluding the impacted account, revenues were flat in 4Q v/s $1.3mn growth in 3Q. New order bookings stood at $6.8mn ($8.8mn QoQ). Our FY14 EPS estimates stand at Rs.11.

Our DCF - based PT stands at Rs.98 (Rs.114). We maintain ACCUMULATE. The management sees strong continuing traction in the engineering services business. It has also undertaken several restructuring initiatives to improve growth, bring in predictability as well as improve margins. However, these will take effect only in due course of time. In the meantime, the uncertain prospects in the impacted account and unpredictability in project-based accounts may continue to impact growth. We will become more positive once revenues become relatively predictable.

Source : Equity Bulls

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