Geometric EBITDA dropped on 33.7% in 2015 while Revenue increased slightly on 1.4%

27-04-2015 • About Geometric ($GEOMETRIC) • By InTwits

Geometric reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Geometric has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.0%. At the same time it's in pair with industry average of 3.5%.
CAPEX is quite volatile: 141 in FY2015, 236 in FY2014, 989 in FY2013, 1,199 in FY2012, 829 in FY2011
The company has highly profitable business model: ROIC is at 20.6%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Geometric ($GEOMETRIC) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	6,206	8,079	10,150	10,896	11,053	1.4%
EBITDA	733	1,147	1,918	2,016	1,337	-33.7%
Net Income	575	592	687	462	552	19.4%
Balance Sheet
Cash	81	532	313	790	536	-32.1%
Short Term Debt	45	675	277	366	587	60.4%
Long Term Debt	0	0	0	0	0
Cash flow
Capex	234	282	431	440	479	8.8%
Ratios
Revenue growth	-52.3%	30.2%	25.6%	7.3%	1.4%
EBITDA growth	-14.3%	56.4%	67.2%	5.1%	-33.7%
EBITDA Margin	11.8%	14.2%	18.9%	18.5%	12.1%	-6.4%
Net Income Margin	9.3%	7.3%	6.8%	4.2%	5.0%	0.7%
CAPEX, % of revenue	3.8%	3.5%	4.2%	4.0%	4.3%	0.3%
ROIC	19.6%	29.9%	46.4%	41.1%	20.6%	-20.6%
ROE	29.1%	29.3%	30.6%	15.5%	14.9%	-0.6%
Net Debt/EBITDA	-0.0x	0.1x	-0.0x	-0.2x	0.0x	0.2x

Revenue and profitability

The company's Revenue increased slightly on 1.4% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 6.4 pp from 18.5% to 12.1% in FY2015.

Net Income marign increased slightly on 0.75 pp from 4.2% to 5.0% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 Geometric had CAPEX/Revenue of 4.3%. The company showed small growth in CAPEX/Revenue of 0.85 pp from 3.5% in FY2012 to 4.3% in FY2015. For the last three years the average CAPEX/Revenue was 4.2%.

Return on investment

The company operates at high and attractive ROIC (20.57%) while ROE is a bit lower (14.85%). ROIC dropped on 20.6 pp from 41.1% to 20.6% in FY2015. ROE decreased slightly on 0.61 pp from 15.5% to 14.9% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is 0.0x and Debt / EBITDA is 0.4x. Net Debt / EBITDA jumped on 0.2x from -0.2x to 0.038x in FY2015. Debt surged on 60.4% in FY2015 while cash dropped on 32.1% in FY2015.

Management team

The company's CEO Manu Mahmud Parpia has spent 7 years at the company. The company's CFO Shashank Patkar has spent 15 years at the company.

Appendix 1: Peers in IT Consulting & Software

Below we provide Geometric benchmarking against other companies in IT Consulting & Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Tech Mahindra ($TECHM)	-85.8%	6.8%	25.2%	174.0%
Tata Consultancy Services ($TCS)		31.0%	28.8%	29.9%	15.7%
Mindtree ($MINDTREE)		26.6%	23.2%	28.8%	17.0%
Infinite Computer Solutions (India) ($INFINITE)	-57.9%	19.5%	31.7%	24.6%
Infosys ($INFY)		22.7%	19.6%	24.2%	6.4%
Median (21 companies)	-40.7%	22.7%	20.4%	14.3%	12.7%
Geometric ($GEOMETRIC)		30.2%	25.6%	7.3%	1.4%

Top companies by Gross margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Tata Consultancy Services ($TCS)				47.4%	42.4%
Infosys ($INFY)	45.3%	41.3%	98.1%	35.9%	38.3%
Mindtree ($MINDTREE)	32.8%	31.5%	36.2%		34.8%
Wipro ($WIPRO)	31.5%	29.2%	30.4%	32.0%	31.6%
Median (4 companies)	34.7%	32.7%	36.2%	35.9%	36.6%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Oracle Financial Services Software ($OFSS)	37.4%	35.3%	35.2%	37.4%
Tata Consultancy Services ($TCS)	29.9%	29.5%	28.6%	30.7%	26.1%
Infosys ($INFY)	32.5%	31.6%	27.9%	26.3%	27.1%
Wipro ($WIPRO)	21.1%	19.1%	20.9%	22.4%	22.3%
Tech Mahindra ($TECHM)	19.5%	16.7%	20.7%	22.2%
Median (18 companies)	18.0%	15.1%	16.5%	18.3%	19.4%
Geometric ($GEOMETRIC)	11.8%	14.2%	18.9%	18.5%	12.1%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Ramco Systems ($RAMCOSYS)	16.4%		22.1%	15.3%	12.4%
Niit Technologies ($NIITTECH)	4.1%	5.9%	4.6%	6.1%
Infosys ($INFY)	4.7%	4.9%	5.2%	5.5%	4.2%
Mindtree ($MINDTREE)	5.6%	2.5%	4.5%	5.0%	5.6%
Tech Mahindra ($TECHM)	3.0%	5.4%	2.6%	5.0%
Median (17 companies)	4.2%	3.9%	3.2%	2.6%	3.0%
Geometric ($GEOMETRIC)	3.8%	3.5%	4.2%	4.0%	4.3%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Tata Consultancy Services ($TCS)	47.1%	48.6%	48.4%	50.2%	40.5%
Tech Mahindra ($TECHM)	19.2%	15.4%	20.1%	43.0%
Mindtree ($MINDTREE)	14.9%	24.9%	34.6%	36.2%	32.0%
Cmc ($CMC)	31.5%	26.2%	33.2%	35.3%	26.0%
Hexaware Technologies ($HEXAWARE)	23.8%	33.5%	39.2%	34.7%
Median (30 companies)	16.0%	19.1%	20.4%	22.9%	25.1%
Geometric ($GEOMETRIC)	19.6%	29.9%	46.4%	41.1%	20.6%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
3I Infotech ($3IINFOTECH)	3.5x	8.5x	20.3x	27.7x
Ramco Systems ($RAMCOSYS)	4.0x	8.8x		27.6x	4.2x
Starcom Information Technology ($STARCOM)				17.4x
Onward Technologies ($ONWARDTEC)	2.7x	2.4x	2.2x	4.1x
Kpit Technologies ($KPIT)	-0.7x	0.3x	0.5x	0.7x
Median (23 companies)	-0.2x	-0.1x	-0.2x	-0.3x	-0.8x
Geometric ($GEOMETRIC)	-0.0x	0.1x	-0.0x	-0.2x	0.0x

Geometric stock price chart

Geometric financials

mln.	FY2010	FY2011	FY2012

Revenue	13,014	6,206	8,079
EBITDA	855.3	733.3	1,147
Net income	466.6	575.2	591.6
CAPEX	218.0	233.9	281.8
Debt	185.3	44.619	674.6
Cash	113.2	81.116	532.0

About Geometric

Geometric Limited provides software and engineering services in India. It operates through Products, Software Services, and Engineering Services segments. The company offers product lifecycle management (PLM) services, including PLM consulting, PLM implementation, PLM data migration, and application management services; and PLM solutions comprising integrated quality management, integrated manufacturing process planning, and enterprise interoperability solutions. It also provides CAD/CAM/CAE solutions; software product engineering services, such as outsourced software product development and quality engineering services; and product engineering solutions, such as product design and development, design methods, dimension management, engineering change management, CAD data creation and migration, reverse engineering, product localization, and equipment design. In addition, the company offers manufacturing engineering services comprising process design and simulation, plant layout design, tool and equipment design, workstation design, assembly validation services, and computer aided manufacturing; industrial and production engineering services, such as methods engineering, line balancing, material flow, packaging/rack design, process improvement, and robotic simulation and ergonomics services; and should costing and technical publications solutions, as well as designs, implements, and verifies embedded systems. Further, it provides CAMWorks, DFMPro, eDrawings, Glovis, 3DPaintBrush, CAMWorksXpress, GeomCaliper, 3DSearchIT, Feature Recognition, NestLib, and GeomDiff products and technologies, as well as interoperability solutions. The company serves manufacturers in aerospace and defense, automotive, heavy engineering, machine tool, off highway, high tech, oil and gas, and software industries primarily in the United States, Europe, the Asia Pacific, the Middle East, and internationally. Geometric Limited was founded in 1984 and is headquartered in Navi Mumbai, India.