Don't Go by the Looks

At the outset, what all do you look in a company? Strong financials, profitability and attractive price are some of the predictable answers. But, sometimes, all this acts as a facade, hiding the most important element which can render all the other aspects useless. Below mentioned companies too tick all the right boxes when it comes to buying and are extremely cheap too; but wait, we are not recommending them to you. But why? Because they are cheap for a reason. Read on to find out. Geodesic | Price: Rs 23 | PE: 1.0 What meets the eye: Geodesic is engaged in providing software products which operate across platforms of landlines, mobile phones and desktops/laptops. The company has been expanding business by many acquisitions with revenue multiplying every year. What doesn't meet the eye: Falling margins and mounting debt due to acquisitions of unrelated businesses. Also, there are questions about the utilisation debt raised from ECBs, of which $125 million is to be paid by January 2013. Paucity of funds makes it highly unlikely. Glodyne Technoserve | Price: Rs 24 | PE: 1.08 What meets the eye: An IT company that offers technology-led business solutions, Glodyne has almost doubled its revenue every year FY06 onwards. Profits have grown at an extraordinary pace of 66 per cent annualised in the past 5 years and