NETSOL's Third-Quarter Income Plummets Due to Unexplained 'Other Expenses'

For the 3rd quarter ending March 2024, NETSOL reported a profit after tax of Rs. 64.3 million, compared to a profit after tax of Rs. 1,403 million over the same quarter last year, registering a massive decrease of 95.4%.
The earnings per share came out at Rs. 0.73 for the quarter.
NETSOL did not announce any cash dividends along with the results announcement.

On a 9-month basis, NETSOL's profit after tax was Rs. 869.9 million, compared to a profit after tax of Rs. 1,432.5 million in the same period last year. Registering a decline of 39%.

The gross profit margin in this quarter was 44%, compared to 33% in the same quarter last year. The tax rate in this quarter was 36%, compared to 4% in the same quarter last year.

Revenue of NETSOL for the quarter  increased by 8.1%, gross profit increased by 42.2%, and financial charges increased by 64.7% compared to the same quarter last year. 

The significant decrease in net income for this quarter compared to last year, despite an increase in sales and gross profit, can be primarily attributed to the fact that last year's income was augmented by other income of Rs. 1.46 billion, whereas the other income for this quarter is merely Rs. 120 million. Additionally, NETSOL has recorded 'other expenses' of Rs. 384 million in this quarter, for which the financial statements offer no explanation.

NETSOL is currently trading at approximately Rs. 115 per share. In the last 52 weeks, the NETSOL stock reached a high of Rs. 141.88 and a low of Rs. 69.91.
    NETSOL returns have lagged behind the market. Over the past 6 months, NETSOL returns have been 27%, compared to the 31% return of the KSE100 Index. In the last year, NETSOL returns were 54%, contrasting with the 78% return of the KSE100 Index.
    NETSOL holds a relatively high price-earnings ratio of 14 and a price-to-book ratio of 1. However, it hasn't paid any cash dividends since 2019.
    The market capitalization of NETSOL stands at Rs. 10,347 million, and it carries no weighting in PSX Indices.
Netsol Technologies Inc. owns 67.6% of NETSOL.

NETSOL Results Announcement, March 2024