4QFY09 results of Geometric remained under pressure- with revenues and profitability sharply impacted by client ramp downs and pricing pressure. Losses on other income line exacerbated financials and Geometric reported a net loss for the quarter.
Revenues plunged by 13% q-o-q to Rs.1.42 billion; company reported a net loss of Rs209 million for Q4FY09.
EBITDA margins fell sharply by 800bps q-o-q to 10.7%, negatively impacted by loss of revenues, despite the favorable INR depreciation and cost containment measures.
We have been negative on Geometric’s prospects given the headwinds of an uncertain demand environment in the US for Geometrics key target verticals- auto OEM’s and manufacturing.
The company’s results for the quarter reflect the stress Geomteric has encountered across its business segments.
FY10E is expected to remain weak with revenues declining 11% y-o-y; EBITDA too is expected to decline. We expect an EPS of Rs.3.4 for FY10E and expect Q1FY10E to remain weak given market trends and management commentary.
We retain our negative bias for the stock; maintain REDUCE with a price target of Rs23 (Rs26 earlier).
We see no good news till a revival in demand and stability returning to the company’s client roster and metrics.