SSI net profit up 215 per cent

NetScribes/Ganesh Ramamoorthy

Buoyed by a six-fold increase in other income, SSI Limited on Wednesday announced a 433 per cent growth in net profit for the fourth quarter ending June 30, 2000. SSI has reported a 150 per cent growth in revenues for the fourth quarter.

Reacting to the results, early trades at the BSE on Thursday saw the SSI scrip up Rs 100 at Rs 2,558 from Wednesday's close of Rs 2,454.90. The counter witnessed volumes of 460,000 shares before 14:00 IST. SSI's earnings per share now stands at Rs 44.4 on an enhanced equity capital of Rs 128.1 million after its global depository issue (GDR) issue this March. The scrip is currently trading at a price-earnings (P/E) multiple of 55.

For the full year ending June 30, 2000, SSI's bottom line grew 215 per cent to Rs 569.4 million (Rs 180.76 million for the previous year) on an increased turnover of Rs 1.98 billion. Turnover for the year grew 133 per cent from Rs 849.35 million in the previous year.

According to analysts, the company's bottom line got a big boost from the rupee depreciation and the interest income from its GDR proceeds. "Of the Rs 168.32 million other income, Rs 72.37 million is on account of exchange rate difference and the remaining due to interest income from the GDR proceeds," says Amit Khurana, an analyst with Birla Sun Life. "SSI has definitely benefitted from the rupee depreciation during the quarter, and the advantage will continue to be reflected even in the first quarter results for the current fiscal," he added.

SSI is in for more positive developments once its ongoing internal restructuring is completed, Khurana said. The company is in the process of transforming itself into a software solutions provider from an education and training company. To this end, SSI has acquired two companies. During the year, SSI acquired 240,000 shares of the US-based Indigo International Inc in a share swap and Inndsoft Systekh Ltd in Madras for a total consideration of Rs 31.5 million. It invested Rs 36.1 million for an 80 per cent stake in Agenda Netmarketing Pvt. Ltd, Chennai. "These acquisitions will augur well for SSI as it strengthens the company's focus on software solutions and development," Khurana said.

Sagar Tanna, an analyst with Asit C Mehta Brokerage, says, "Even without considering other income, SSI's performance is impressive for the full year and even more impressive for the fourth quarter. The company has posted a growth of 274 per cent to Rs 221.7 million for the fourth quarter and 164 per cent to Rs 527.2 million for the full year at the pre-tax level."

"The 102 per cent, 128 per cent and 138 per cent growth in revenues in the first, second and third quarters, respectively, and now a 150 per cent growth, indicates that the company's fundamentals are really strong," he says. He adds that the recent acquisitions will take SSI up the value chain, as it moves into the high-margin software solutions business.

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