Market Strategy

52-WEEK BLOCKBUSTER: ZYLOG SYSTEMS

K. Venkatasubramanian | Updated on July 07, 2012 Published on July 07, 2012

8ZylogCol.eps

BL08 Zylog Col.eps

The stock of mid-tier IT company - Zylog Systems, has been on a roll over the past one year. As with many similar-sized software services peers, the company has managed to latch on to improved client spends over the past couple of years.

In FY12, while the company’s revenues grew by 18.6 per cent over the previous fiscal to Rs 2,272.9 crore, net profits improved by 37.2 per cent to Rs 199.2 crore.

This compares favourably with both mid- and large-sized IT players’ growth rate recorded in 2011-12.

Zylog’s generally has a high onsite presence, which leads to enhanced costs.

But over the past four quarters, the company has been increasing its offshore presence and is reducing workforce onsite, as it transitions projects. This move would lead to optimisation of costs.

Zylog derives more than 90 per cent of its revenues from the US and Canada. This geographic mix has meant that the company has remained largely insulated from the debt crisis and slowdown in Europe.

The company is steadily increasing focus on product and solutions-driven revenues, which may lead to improvement in margins over the next few years.

Zylog’s utilisation rates, at more than 87 per cent, are among the highest in the industry. This elevated level of utilisation means that the company has managed to drive significant volumes-based growth.

Published on July 07, 2012
This article is closed for comments.
Please Email the Editor