Thursday, July 17, 2003
This is one of the key reasons for the management's confidence
into the future guidance HSS has an order back log of around
$ 35 million as on 30 June 2003, up from $ 32 million as on
31 March 2003. Out of this, $ 26.3 millon is from Services
business, which also includes orders from Lucent
deal ($6 million was from Lucent and $ 16 million from services),
$ 5 million from Products business ($ 3 million) and around
$ 3.4 million from BPO ($ 4 million).
This high order backlog is also one of the key reasons for
the management's confidence into the future guidance. The
management indicated that the business outlook is very positive
and visibility has improved to a large extent. This is the
key reason for upward revision of the guidance for full year.
The management clarified at its conference call that guidance
is all about visibility. The fundamental change during the
past three months has been the visibility in revenues, which
has improved significantly. This is on the back of revival
of relationships with customers who were to take decisions
on ramp up before the slowdown began. Also, the Lucent deal
has given a fillip to the visibility.
Notably, the guidance for the full year takes into account
the contribution from Tenet Technologies deal. This deal is
expected to be closed by the end of second quarter and it
will contribute for around two quarters to HSS consolidated
numbers for this year.
At the beginning of FY 2003-04, the management had given
a guidance of sales growth to be between 35%-40% and PAT growth
to be between 40%-45%. However, after its strong show in the
first quarter, the company has revised its guidance upward
for both revenues as well as PAT. The revised
guidance is sales growth of 55%-60% and PAT growth of 60%-70%
This translates to revenues in the range of Rs 364.1-375.84
crore and PAT in the range of Rs 83.52-88.74 crore.
For the second quarter ending Sep. 2003, the company expects
sales growth of 55%-60% y-o-y and PAT growth of 90%-100% y-o-y.
This translates to 5.6%-9% growth in sales and 3.8%-9.2% growth
in PAT on a sequential basis. The marginal drop in growth
in bottom line (as compared to top line) for
the second quarter can be on account of further rupee appreciation.
For the first quarter ended Jun. 2003, HSS posted a very
strong 245% growth in profits after tax (PAT) to Rs 15.2 crore
on the back of 61% rise in sales to Rs 76.5 crore and expansion
of margins. The company easily surpassed the sales expectations
of the street and met the higher end of
the PAT expectations. The cost control helped the company
to improve its operating margins (OPM) by 620 basis points
to 24.6% (18.4%).
With good top line growth and improvement in margins, the
operating profits (OP) were up 116% to Rs 18.8 crore. Other
Income (OI) was down 28% to Rs 1.8 crore. Depreciation was
flat at Rs 5.2 crore. Deferment of product development cost
(net of amortisation) was down 51% to Rs 1.8 crore. Profits
before tax (PBT) was up 77% to Rs 17.2 crore.
During the quarter, there was no extra-ordinary item (EO)
as against EO charges of Rs 4.6 crore on account of provision
for bad & doubtful debts and advances in the corresponding
previous period. As a result, PBT after EO was up 237% to
Rs 17.2 crore. The provision for taxation was up 186% to Rs
2 crore.
Last updated : February 2, 2004
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