Geometric Ltd - PINC Result Update

Geometric's Q1FY11 results were a mixed bag on the back of robust volume growth, but a sharp dip in the EBIDTA margins.

• Strong revenue growth and weak operating margins, forex gains save the day
• Robust growth across selective verticals and geographies pose concern for overall growth
• Steep decline the products business, traction in engineering services

Outlook – Volume to remain strong, but operating margins will continue to dent profitability

Geometric has a strong deal pipeline across the verticals like automotive, industrial, defense and aerospace. Net addition in this quarter was 188 in anticipation of the strong demand. However flat pricing and peaked out utilization provide less scope for any major improvement in the operating margins which will negatively impact the profitability.

We revise our EPS estimates downwards and maintain our 'HOLD' on the stock with a price target of Rs 82.

Source : Equity Bulls

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