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Result Analysis

AMARA RAJA BATTERIES

Industrial batteries major Amara Raja Batteries Limited has for the first quarter ended June posted a 45 per cent increase in total income at Rs 37.52 crore (Rs 25.82 crore) against which the total spending of the company was up by 49 per cent to Rs 33.68 crore (Rs 22.60 crore) resulting in a 19 per cent rise in the net profits over the previous corresponding period. Net sales were up by a good 60 per cent to Rs 37.19 crore (Rs 23.31 crore) while its operational expenditure went up by 48 per cent to Rs 29.98 crore (Rs 20.24 crore) bringing about a sharp improvement in the margins. Operating profits shot up by a massive 135 per cent to Rs 7.21 crore (Rs 3.06 crore) while OPM for the quarter stood at 19 per cent against 13 per cent during the same period last year. Interest cost and other income were negligible while depreciation moved up by 41 per cent to Rs 2.75 crore (Rs 1.95 crore). The before tax profits was up 35 per cent. Net profit growth was Rs 3.83 crore (Rs 3.22 crore) up by 19 per cent over the previous corresponding quarter. The stock currently trades at Rs 78 discounting its June quarter annualised EPS of Rs 13.46 by just about six times. At a 19 per cent growth rate in profits and a discounting of just about six times the stock is cheap.

FINOLEX INDUSTRIES

The largest manufacturer of rigid poly vinyl chloride (PVC) in the country, Finolex Industries Limited has ostensibly reported a fine performance for the first quarter ended June with a growth of 166 per cent in the net profits over the previous corresponding period. However, an interesting aspect of this is that the total income was down 1 per cent to Rs 213.17 crore (Rs 214.36 crore) but total spending of the company went down by a massive 14 per cent to Rs 164.90 crore (Rs 197.91 crore). Income from operations was up 1 per cent over the last year to Rs 211.34 crore (Rs 208.88 crore) against which there has been a 15 per cent decline in the operational costs at Rs 149.92 crore (Rs 175.93 crore) substantially improving the margins. Operating profits were up 86 per cent over the year ago period to Rs 61.43 crore (Rs 32.95 crore) while OPM shot up to 29 per cent from just about 16 per cent during the same period last year. Further weakening the position was a 67 per cent drop in other income, which stood at Rs 1.83 crore (Rs 5.48 crore) but this was more or less compensated by a 51 per cent drop in the interest cost which stood at Rs 4.15 crore (Rs 8.50 crore). Depreciation was up 1 per cent to Rs 10.49 crore (Rs 10.39 crore). With an across the board savings in costs the company reported a rise of 149 per cent in its before tax profits which in turn took up the tax provisioning by 57 per cent to Rs 4.85 crore (Rs 3.09 crore) leading to a 166 per cent rise in the net profits at Rs 43.78 crore (Rs 16.45 crore). The stock currently trades at Rs.30 discounting its June quarter annualized EPS of Rs 13.55 by just about twice. Seems pretty cheap.

RALLIS INDIA

Tata group company, Rallis India operating in the pesticides and fertilizers segment reported a 3 per cent drop in total revenues at Rs 190.77 crore (Rs 197.12 crore) against which the total spending of the company went down by 4 per cent to Rs 187.14 crore (Rs 195.32 crore) resulting in a 102 per cent increase in the net profits (excluding extraordinary items). Net sales fell 3 per cent over the previous corresponding period to Rs 188.17 crore (Rs 194.06 crore) while the operational costs were down 5 per cent to Rs 174.94 crore (Rs 184.05 crore) improving the margins. Operating profits were up 32 per cent to Rs 13.23 crore (Rs 10.01 crore) while OPM stood at 7 per cent against 5 per cent during the year ago period. Other income was down 15 per cent to Rs 2.60 crore (Rs 3.06 crore). Interest at Rs 8.66 crore was up 20 per cent over the year ago cost of Rs 7.19 crore while depreciation went down by 14 per cent to Rs 3.28 crore (Rs 3.80 crore). Savings in operational costs over the corresponding quarter saw the before tax profits move up by 87 per cent to Rs 3.89 crore (Rs 2.08 crore). However, the tax provision was down 7 per cent to Rs 0.26 crore (Rs 0.28 crore) resulting in the net profits moving up by 102 per cent to Rs 3.63 crore (Rs 1.80 crore). During the quarter the company reported an extraordinary expense of Rs 0.40 crore against an income of Rs 18.56 crore during the previous corresponding quarter, which if considered would mean a drop of 84 per cent in net profits over the same period last year. The stock is currently trading at Rs 83 discounting its June quarter annualised EPS of Rs 8.07 by 10 times.

NESTLE INDIA

Foods major Nestle India Limited has for the second quarter ended June posted a 10 per cent increase in total revenues at Rs 520.22 crore (Rs 471.74 crore) against which the total spending of the company was up by 7 per cent to Rs 452.36 crore (Rs 422.17 crore) resulting in a net profit (excluding extraordinary items) of Rs 67.86 crore (Rs 49.57 crore) up by 37 per cent over the previous corresponding period. Net sales were up 9 per cent to Rs 511.48 crore (Rs 468.22 crore) against which the operating costs went up by 7 per cent to Rs 405.32 crore (Rs 379.15 crore) slightly improving the margins. Operating profits went up by 19 per cent to Rs 106.16 crore (Rs 89.07 crore) while OPM at 21 per cent was better than the 19 per cent it recorded during the same period last year. There has been a smart improvement of 148 per cent in the other income, which stood at Rs 8.74 crore (Rs 3.52 crore). Interest was down 4 per cent at Rs 2.18 crore (Rs 2.28 crore) while depreciation moved up by 15 per cent to Rs 12.26 crore (Rs 10.64 crore). The before tax profits having gone up by 26 per cent took up tax provisioning up by 8 per cent to Rs 32.60 crore (Rs 30.10 crore) eventually leading to a 37 per cent increase in the net profits (excluding extraordinaries) to Rs 67.86 crore (Rs 49.57 crore). During the quarter the company has reported an extraordinary cost of Rs 9.53 crore (Rs 4.83 crore). The stock currently trading at Rs 555 discounting its June quarter annualised EPS of Rs 28.15 by 20 times.

Company        Total Income       Net profit        Equity       O. Income       EPS*

Amara Raja       37.19       3.83       11.39       0.33       13.46 Finolex Industries       211.34       43.78       129.22       1.83       13.55 Rallis India       188.17       3.23       18.00       2.60       8.07 Nestle India#       511.48       58.33       96.42       8.74       28.15

n Figures in Rs crore; * annualised; # second quarter results

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