Geometric expects to get back to growth in Q4

IT services provider Geometric posted a consolidated net profit of Rs 16.57 crore for the September quarter, down 7.38 percent from a year ago.

Profit was up 7.5 percent from the preceding quarter, while the consolidated revenue for the quarter stood at Rs 286.54 crore, up 10.1 percent on a sequential basis, and up 9.5 percent from a year ago. During the quarter, the company signed new deals worth USD 5.03 million. (Also Read: Goderj not exiting co; Q2, Q3 may not excite: Geometric)
Speaking to CNBC-TV18, Manu Parpia, MD and CEO of Goemetric says the company's order pipeline remains robust, despite seeing a slowdown. He expects margins to improve hereon and growth to get back fourth quarter onwards. Below is an edited transcript of the interview on CNBC-TV18 Q: You had mentioned that you expect both this quarter and next quarter to be weak in terms of your operational performance. How much lower do you think the margins could head below 15 percent mark?
A: That is a bit difficult to prescribe right now but I think that we are pretty much stabilized but it is difficult to project because we do not know what will be the shutdown in this current quarter by our large customers with the forthcoming holidays whether they will use the opportunity to do a larger shutdown but as I indicated I expect next quarter which is Q4 to be better and see us go back up. Q: What kind of order wins are you expecting to see in the next quarter? In Q2 you won new deals of around USD 5 million; in Q1 it was around USD 5.5 million and in Q4 it was USD 6.8 million. So in effect the last couple of quarters have seen a slowdown. Do you think this trend will continue?
A: As I have indicated in my note, as we are now focused on going back into growth. We have seen an increase in our pipeline which is up by 30 percent and business from existing customers the pipeline has increased by almost 50 percent. I expect this pipeline to be converted and I am quite positive on that. On the other side we are also transforming our sales process. Therefore, I am focused on returning to growth and once we do this, the margin picture will change. Q: Tell us about the wage hike and how much it may impact margins as we head into the next couple of quarters?
A: We have already given the wage hike this quarter. So that is already built into the picture and it has been done both in India and outside India.