Geometric reported USD revenue growth of 10.5%QoQ led by robust volume growth of 8.9%QoQ and pricing improvement of 1.4%QoQ.

Strong volume growth, uptick in pricing - Revenues grew7.4%QoQ to Rs1,632mn (PINCe - Rs1,579mn) led by strong volume growth and a positive surprise in pricing which grew on the back of higher IP revenues. EBIDTA margins dipped 132bpsQoQ on the back of a mid term salary hike of 7% and a one time G&A cost. Forex gain of Rs43mn and lower tax rates supported the bottom-line which grew 10.6%QoQ to Rs153mn.

Broad based growth across major verticals and geographies- US grew 10.4%QoQ, Europe witnessed positive surprise with13.4%QoQ growth Auto vertical posed strength with 13.1%QoQ led by robust demand in US. Others' (emerging verticals) surged 26.6%QoQ on expansion towards newer verticals.

Uptick in discretionary spend- IP and engineering services outperform- Engineering services grew 10.8%QoQ on the back of high demand for discretionary IT spend globally. IP led revenues surged 23.4%QoQ led by a seasonally strong quarter. PLMS grew 14.2%QoQ in the software segment whereas SPE was muted with 5.4%QoQ growth.

Growth in new business, healthy client addition - Revenues from new business contributed 5% of revenues led by strong client addition and robust order book. 10 new clients were added out of which 4 clients were in US and 4 in APAC from industrial and automotive verticals. The order book grew13.1%QoQ and now stands at USD9.4mn. Top 5 clients ramped up and grew 14.6%QoQ.

Outlook - strong deal pipeline, improved demand for engineering services, better EBIDTA margins - The management claims that demand environment and deal pipeline continues to be strong. Higher recovery in modern engineering will boost engineering services going forward. EBIDTA margins are expected to improve to 14% in FY12 led by improved offshoring, higher fresher addition and higher FPP. We have introduced FY13E financials. We maintain `HOLD' on the stock with a target price of Rs82 based on 9xFY12E earnings.