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The curious case of Geodesic

Posted by fairval on May 13, 2011

Goedesic declared its usual bumper results today. Net profit for FY11 is, hold your breath, Rs 344 crore. This is up 54% from Rs 223 crore declared for FY10. Revenues are up 37% to Rs 874 crore.

The market tho gives this company a M Cap of Rs 728 crore, or a P/E pf 2.1x. There is debt of Rs 590 crore, or the EV is around Rs 1300 crore. The EV/EBITDA is just 3x.

So is Geodesic a roaring buy? The market clearly does not think so. And why? Of course, operators always know the inside stuff.

Even for a layman it is not hard to spot. If a company does not pay tax, and does not pay dividend, you need not believe its financials. In the last 5 years, Geodesic has paid tax of Rs 35 crore or so. That is on PBT of around Rs 1100 crore. It has paid dividend of it seems around Rs 90-100 crore. All this is not much in comparision to its reported profits.

So how long before the Satyam (truth) comes out?


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