Hold Geometric - PINC Result Review

Geometric's revenue grew 10.4%QoQ to USD 32.8mn led by robust volumes. EBIDTA margins improved 497bpsQoQ to 13.6%. The company recorded an EPS of Rs2.2.

* Strong revenue growth and sharp improvement in EBIDTA margins result in 31% PAT growth
* Europe and APAC outperform; automotive, agri and construction equipment lead the vertical pack
* Engineering services outperform; uptick in discretionary spend

Outlook - Robust deal pipeline, improved S&M, traction in Modern Engineering, improved margins and profitability

Geometric has a robust deal pipeline, which has increased almost twofold since last year. The company has also raised its S&M efforts in the US and Europe to win new clients. Its subsidiary, Modern Engineering, which turned profitable in the quarter, recorded revenue growth of 15%QoQ. It will help improve the company's margins and consolidated profit going forward.

Geometric trades at 7.7x FY12E earnings. We maintain 'HOLD' on the stock with a target price of Rs82, based on 9x FY12E earnings.

Source : Equity Bulls

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