Blue Star Infotech has been a major loser among software stocks in the last few sessions, what with the company's Q3 results disappointing the market.
The Blue Star Infotech stock has declined 42.38% to Rs 123.15 on 12 February 2003 from Rs 213.75 touched on 2 December 2002. Average daily volumes in BSIL have fallen steadily from around 6,500 shares to 1,500 shares in the same period.
The BSE IT Sector Index has shed 15.36% in the same period and the 30-share BSE Sensitive Index has lost less than 1% in that time.
The Blue Star group software company announced quarterly results on 22 January 2003. For the quarter ended 31 December 2002, the company posted a consolidated net profit of Rs 3.73 crore on total income of Rs 18.27 crore.
Both net profit as well as total income fell below analysts' expectations - a net profit of Rs 4.5 crore on a total income of Rs 19.85 crore.
On a standalone basis, for the quarter ended 31 December 2002, net profit stood at Rs 3.18 crore on total income of Rs 14.61 crore.
BSIL has shown a sequential fall in both consolidated revenues and net profit for the quarter ended 31 December 2002. While sales fell by 13% to Rs 18.17 crore, net profit after tax fell by 15% to Rs 3.73 crore.
Sequentially, revenue and net profit were lower mainly due to postponement of a couple of new large projects from existing customers and significant number of holidays especially at offices of key technology customers. The company has already ramped up employees and infrastructure for these postponed projects, which are expected to commence in the current quarter. Notably, the volume of offshore business increased.
The net profit growth was stagnant despite a 24% revenue growth as compared to the corresponding previous quarter, mainly due to ramp- up of employees including sales and marketing people as well as build-up of infrastructure to cater to the growth requirements.
The BSIL stock has declined over 25.76% of its value after it announced its quarterly results on 22 January 2003.
Looking ahead, the company expects its consolidated net profit to grow by around 30% for the year ending 31 March 2003. This means that the company is expecting net profit of around Rs 4.05 crore for the quarter ending 31 March 2003. This would imply a sequential growth of just 8%.
BSIL has several Fortune 500 and hi-technology clients and has been providing services ranging from customised software development to application implementation, maintenance and support for nearly two decades.
The company caters to diverse markets across the globe such as the US, the UK, Continental Europe, Scandinavia, Canada, Japan, Malaysia and India. It has a subsidiary called Blue Star Infotech America Inc. to market services in the US and Canada. This subsidiary has opened offices in Boston and Princeton on the East Coast as well as in Toronto, Canada.
The company has also a London-headquartered Blue Star Infotech, to represent its interests in the UK and continental Europe. It also has branch offices in Helsinki, Finland, to serve the growing demand of the Scandinavian telecom industry.
As on 31 December 2002, promoters held 46.75% stake in the company, while the public and institutions held 36.9% and 7.80% respectively.
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