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Company Report

E-Serve

After stagnating for three quarters, E-Serve International has moved up to significantly higher level of turnover and profits.

For the December quarter, it has registered a 17 per cent year-on-year rise in total income (9 per cent sequentially). Its total expenditure went up 10 per cent (6 per cent sequentially), while its net profits was up 160 per cent on a year-on-year basis and 32 per cent sequentially to Rs 7.74 crore (Rs 2.98 crore).

Operational income grew 17 per cent on a year-on-year basis to Rs 66.05 crore (Rs 56.53 crore), while sequentially it rose 8 per cent against the September quarter income of Rs 60.88 crore after stagnating around Rs 56 crore for three quarters.

E-serve’s operational costs for the quarter at Rs 49.80 crore (Rs 46.81 crore), were 6 per cent up from the previous corresponding quarter, while sequentially it went up 8 per cent from the September quarter costs of Rs 46.11 crore.

With decent rise in revenue-controlled costs, operating profit was up 67 per cent over the year-ago period to Rs 16.25 crore (Rs 9.72 crore), while sequentially it was up 10 per cent. OPM at 25 per cent was significantly higher than the 17 per cent it reported during the year-ago period and a percentage point above the preceding quarter.

Pre-tax profits rose 106 per cent over the year-ago period and 21 per cent sequentially, whereas tax provision went up 48 per cent over the previous corresponding quarter to Rs 4.04 crore (Rs 2.73 crore), while sequentially too it was up by just about 5 per cent against Rs 3.83 crore provided for during the September quarter.

A lower tax provisioning and relatively lower incremental costs combined with a respectable rise in revenues has seen net profit rise by 160 per cent over the previous corresponding quarter to Rs 7.74 crore (Rs 2.98 crore), while sequentially it was up by 32 per cent over the September quarter profits of Rs 5.88 crore.

E-serve’s growth rate has picked up and it expects its fiscal 2003-2004 revenues to go up by 25 per cent over the previous corresponding period and net profits to rise by 70-80 per cent over the same period last year.

The stock, currently trading at Rs 465, discounts its December quarter annualised EPS of Rs 25 by 19 times. If its growth stays at the current levels, the stock should move up significantly this year.

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