Ramesh Damani has not earned his reputation as an astute stock picker just like that. When Ramesh Damani announced Geometric as his stock pick, a lot of eyebrows were raised because Geometric was seen to be a mediocre company (see Geometric: Why Ramesh Damani recommends this stock). However, Ramesh Damani made his immense fortune by selecting companies that are presently not in demand and quoting at low valuations. Ramesh Damani has the vision to see that such companies will do well in future and so he buys shares of such companies and sells them after they become a multibagger.
So far, Geometric has not disappointed Ramesh Damani or his vast legion of followers at least on the financial results front. Geometric reported good Q1 FY 2011 results (see Geometric – Slow & Steady on the growth path).
| (Rs cr) | Sep 2010 | Sep 2009 | YOY |
|---|---|---|---|
| Operating Income | 151.93 | 128.19 | 18.52 |
| Total Expenses | 130.41 | 109.03 | 19.61 |
| Operating Profit | 21.52 | 19.16 | 12.32 |
| Other Income | 0.76 | 0.62 | 22.58 |
| PBDIT | 22.28 | 19.78 | 12.64 |
| PBT | 16.17 | 12.58 | 28.54 |
| Adjusted Net Profit | 13.64 | 10.03 | 35.99 |
Geometric has continued the good work in Q2 FY 2011 as well.
Geometric declared operating revenues of Rs. 151.93 crores in Q2 FY 2011, a rise of 12.2% from the previous quarter revenues of Rs. 135.45 crores; and an 18.5% rise from revenues of Rs. 128.19 crores in the same quarter last year. In U S dollar term, Geometric‘s revenues rose 10.8% Q-o-Q and 23.6% Y-o-Y to USD 32.8 Mn this quarter from USD 29.59 Mn in Q1 FY11 and USD 26.54 Mn in Q2 FY10 respectively.
| Rs in Cr. | Mar 2010 | Mar 2009 | Mar 2008 |
| Sales Turnover | 511.56 | 598.08 | 485.83 |
| Net Profit | 46.66 | 6.88 | 32.13 |
| Total Shareholder’s Funds | 177.92 | 103.82 | 244.48 |
| Total Debt | 18.53 | 116.88 | 79.43 |
| Earning Per Share ( Rs ) | 7.28 | 0.78 | 4.71 |
Geometric recorded a profit after tax (excluding extraordinary items) of Rs 13.64 crores; a rise of 26.1% from the previous quarter profit of Rs 10.81 crores, 36% rise from Rs 10.02 crores in the same quarter last year.
Geometric added nine new customers during Q2, and at the end of the quarter, it had 108 active customers, including 18 customers with million dollar plus revenues.
Some of Geometric‘s significant wins in Q2 FY 2011 include:
– Multiple engineering services contracts for a leading global heavy engineering company in India
-A software development project for a leading PLM company in US
-A plant support and process planning project for a leading heavy engineering company in US
-A system integration project for an automotive company’s R&D unit in US
-A supply management system development project for a leading aerospace player in the US
-A process and methods development project for a leading agricultural equipments company in US
-A product launch support project for a key agricultural and heavy equipments manufacturer in the US
-Multiple contract extensions with a leading PLM company in US
-Maintenance support contracts in product lifecycle management for a leading automotive company in Europe
Geometric‘s market price has not moved much from the range of Rs. 60 to 70 that it is stuck in. But as Ramesh Damani is always fond of pointing out, you must buy shares when you see value in them and wait for the market to give it the price it deserves. If you have bought shares cheap and have an adequate margin of safety, you will do well over time, says Ramesh Damani. Ramesh Damani cites the examples of today’s multibaggers like VIP Industries, TTK & Hawkins to drive home the point that even these stellar performers were laggards at some point in the past. Of course, whether Geometric will also become a VIP Industries at some time in the past remains in the realm of sweet dreams!!
Geometric’s Research Report
Fore More Geometric Research Reports See Geometric – Slow & Steady on the growth path
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