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Result Analysis

TVS MOTOR COMPANY

For its second quarter ended September 2002, TVS Motor Company has reported a 64 per cent rise in sales to Rs 705.05 crore (Rs 428.74 crore), powered by its motorcycle model Victor for which there is now a queue. Net profit has increased by a whopping 197 per cent to Rs 30.85 crore (Rs 10.39 crore) thanks to Victor’s domination in the southern markets. Operational expenditure has increased by 61 per cent to Rs 643.44 crore (Rs 400.14 crore), fuelling a 115 per cent rise in operating profit to Rs 61.61 crore (Rs 28.60 crore). Operating profit margin has risen to 9 per cent from the previous corresponding quarter’s 7 per cent. This sounds like an impressive jump but TVS Motor’s OPM is much below that enjoyed by Hero Honda and Bajaj Auto. This is so because its portfolio is dominated by low-margin mopeds. For the September quarter total income rose by 64 per cent to Rs 708.78 crore (Rs 433.02 crore), while on total expenditure increased by 58 per cent to Rs 659.43 crore (Rs 416.67 crore). Other income fell 13 per cent to Rs 3.73 crore (Rs 4.28 crore). Interest cost fell to a negligible Rs 0.76 crore from Rs 2.88 crore, while depreciation charge was up by 12 per cent to Rs 15.23 crore (Rs 13.65 crore). Tax burden was up 210 per cent to Rs 18.50 crore (Rs 5.96 crore).

BHARAT FORGE

For the second quarter ended September, Bharat Forge’s sales have increased by 42 per cent to Rs 156.39 crore (Rs 110.24 crore), while net profit has risen by a huge 580 per cent to Rs 17.35 crore (Rs 2.55 crore), partly because last year’s September quarter was terrible. Total income stood at Rs 156.60 crore (Rs 112.22 crore), a rise of 40 per cent, while total expenditure incurred was Rs 130.91 crore (Rs 106.30 crore), an increase of 23 per cent. Operational expenditure has increased by 27 per cent to Rs 109.59 crore (Rs 86.17 crore) yielding a 94 per cent rise in operating profit to Rs 46.80 crore from Rs 24.07 crore last year. Operating profit margin has improved to 30 per cent from the previous corresponding quarter’s 22 per cent. Other income was a negligible Rs 0.21 crore (Rs 1.98 crore). Interest charges at Rs 11.04 crore (Rs 11.09 crore) have been static. On the back of rising profits tax provision has shot up by 147 per cent to Rs 8.34 crore (Rs 3.37 crore) The stock is currently quoted at Rs 166.80 discounting its second quarter ended September annualised EPS of Rs 18.42 by almost 9 times. Its not cheap despite its powerful earnings growth because its profits have widely fluctuated in the past. Its worth buying at declines for the long term.

HINDUSTAN INKS & RESINS

For its second quarter ended September 2002, Hindustan Inks & Resins’ results have been disappointing. Meanwhile, total income fell by 4 per cent to Rs 134.73 crore (Rs 140.24 crore), while total expenditure rose by 2 per cent to Rs 122.48 crore (Rs 120.32 crore). Sales dropped by 5 per cent to Rs 130.02 crore (Rs 137.24 crore), while its net profit has fallen 48 per cent to Rs 9.36 crore (Rs 18 crore). Operational expenditure declined by a marginal 1 per cent to Rs 107.51 crore (Rs 108.32 crore). Operating profit stood at Rs 22.51 crore (Rs 28.92 crore), a drop of 22 per cent, while operating profit margin declined to 17 per cent from the previous corresponding quarter’s 21 per cent. Other income clocked Rs 4.71 crore (Rs 3 crore), a fall of 57 per cent. The company’s scrip currently hovering at Rs 202.50 discounts its second quarter ended September annualised EPS of Rs 27.41 by nearly 7.3 times.

GEOMETRIC SOFTWARE SOLUTIONS

Geometric Software Solutions’ results for its second quarter ended September have shown a mixed trend. While sales have dropped by 2 per cent to Rs 13.74 crore (Rs 13.97 crore), its net profit has gone up by 11 per cent to Rs 3.43 crore (Rs 3.10 crore). Its operational expenditure has declined by 5 per cent to Rs 10.19 crore (Rs 10.75 crore), while operating profit has moved up 11 per cent to Rs 3.55 crore (Rs 3.21 crore). As a result, operating profit margin improved to 26 per cent from the previous corresponding quarter’s 23 per cent. Other income was Rs 1.19 crore (Rs 1.08 crore), a rise of 11 per cent. Meanwhile, total income has fallen by a marginal 1 per cent to Rs 14.93 crore (Rs 15.04 crore), while total expenditure incurred dropped by 5 per cent to Rs 11.30 crore (Rs 11.89 crore). The stock’s current market price at Rs 398.85 discounts is second quarter ended September annualised earning per share of Rs 26.03 by 15.3 times.

Company        Total Income       Net profit        Equity       O. Income       EPS*

TVS Motor       705.05       30.85       23.10       3.73       53.42 Bharat Forge       156.39       17.35       37.67       0.21       18.42 Hindustan Inks       130.02       9.36       13.66       4.71       27.41 Geometric Software       13.74       3.38       5.27       1.19       26.03

n Figures in Rs crore; * annualised.

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