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Company Report

Telco

After a blockbuster March quarter, for the quarter ended June Telco has posted a growth of 23 per cent in total income at Rs 1,754.67 crore (Rs 1,428.97 crore) against a 14 per cent rise in total spending which stood at Rs 1,726.64 crore (Rs 1,519.86 crore) resulting in a net profit of Rs 28.03 crore against a loss of Rs 90.89 crore during the corresponding period.

The June quarter saw Telco’s net sales drive up by 23 per cent over the previous corresponding quarter to Rs 1,747.73 crore (Rs 1,422.31 crore) mainly on the back of a 48 per cent rise in sales of commercial vehicles. Sales of passenger cars dropped by 5 per cent.

At Rs 1,546.31 crore (Rs 1,328.34 crore) operational costs were up 16 per cent against a 23 per cent rise in revenues over the previous corresponding period.

Operational costs having gone up by just about 16 per cent compared with a 23 per cent rise in the revenues, margins rose with operating profits shooting up by 114 per cent over the previous corresponding period to Rs 201.42 crore (Rs 93.97 crore).

OPM shot up to 12 per cent compared with 7 per cent during the same period last year. Other income was up 4 per cent over the previous corresponding period to Rs 6.94 crore (Rs 6.66 crore). Telco brought down its interest cost Rs 80.03 crore (Rs 102.05 crore) while depreciation remained almost flat at Rs 89.48 crore (Rs 89.47 crore).

Better volumes, debt reduction and improved cost control saw the company post a net profit of Rs 28.03 crore against a loss of Rs 90.89 crore during the previous corresponding period despite the additional burden of tax provision of Rs 10.82 crore.

OPM at 12.5 per cent was the best that the company has recorded during the past 8 quarters thanks to controlled operational costs. Despite reducing interest costs and a mild increase in depreciation the net profit was down 85 per cent over the March quarter profit of Rs 181.68 crore which was partly due to the tax write back of Rs 55 crore that the company accounted for in the preceding quarter.

The stock currently trades at Rs 135 discounting its June quarter annualised EPS of Rs 3.51 by 40 times. Having started to churn in profits, Telco has got the market interested in the stock but this will sustain only if the passenger car business grows again in the coming quarters. The stock is too high-priced currently.

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