Digital GlobalSoft northward bound

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February 03, 2003 16:29 IST

Digital GlobalSoft surged for the third straight session on Monday.

The stock of the multinational software firm spurted by 5.4% to Rs 610.55 on the BSE in mid-afternoon trades. It was trading near the day's high of Rs 611.

Apart from the encouraging Q3 results that the company unveiled last Thursday came another trigger – the reports on Monday that Alliance Capital, USA, has decided not to exit from its Indian arm called Alliance Capital Mutual Fund. ACMF is a leading Indian mutual fund player and Digital GlobalSoft is supposed to be its favourite scrip.

ACMF, in fact, bought the Digital stock, said dealers. It is believed to be mopping up the Digital stock offloaded by the Unit Trust of India.

The Digital scrip bounced back last week i.e. on Thursday and Friday. Thursday's rise came ahead of the announcement of the company's DQ 2002 results. Excellent results on Thursday after market hours led to the scrip posting further gains on Friday.

On the back of the two-session rally, the scrip gained 11.7% to Rs 578. Last week, the scrip clocked a higher average daily volume of 2.5 million shares. This was against an average daily volume of 1.91 million shares last fortnight and 2 million shares in the last quarter.

For the third quarter ended 31 December 2002, Digital GlobalSoft recorded a 9.7% rise in net profit to Rs 27.01 crore on net sales growth of 26% to Rs 109.98 crore (Rs 1.09 billion). A capitalmarket.com (of seven software analysts) analysis had projected a net profit of Rs 21-31 crore and net sales of between Rs 96.8 crore and Rs 104.8 crore (Rs 1.04 billion), a growth of 11% to 20%.

On a sequential basis, the company's performance was more redeeming - a 27% rise in net profit on a 16% increase in sales. It reported strong sequential growth rates in both Hewlett- Packard and non-HP revenues. HP revenues grew by 11% quarter-on-quarter, thus arresting a decline in growth rates witnessed during the last few quarters. Non-HP revenues grew by 35% during the quarter. Contribution from HP revenues stands reduced to 78% from 85% last year and 81% during September 2002.

Strong growth was witnessed in the company's enterprise solutions division and its e-applications division.

The company added 29 new customers during the quarter under review, including a significant multi-year, multi-location comprehensive outsourcing e-business application deal from HP. Operating margins during the quarter improved to 31%, primarily due to increased contributions from offshore revenues. Revenues from offshore increased to 37% from 34% during the previous quarter.

The company also recruited 252 employees during the quarter, taking its employee strength to 2003. 189 people were appointed in the services segment, largely in e-applications and enterprise solutions.

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