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Result Analysis

DIGITAL GLOBALSOFT

For the second quarter ended September, Digital’s results reveal a mixed trend. While sales have moved up by 18 per cent to Rs 94.87 crore (Rs 80.73 crore), net profit has slipped down by 4 per cent to Rs 21.37 crore (Rs 22.29 crore). Operational expenditure has gone up by 23 per cent to Rs 68.77 crore (Rs 55.90 crore). Operating profit has increased by 5 per cent to Rs 26.10 crore (Rs 24.83 crore), while operating profit margin has declined to 28 per cent from the previous corresponding quarter’s 31 per cent. Total income has scaled up by 17 per cent to Rs 97.91 crore (Rs 83.58 crore), while total expenditure too has increased by 25 per cent to Rs 76.54 crore (Rs 61.29 crore). Other income has risen by 7 per cent to Rs 3.04 crore (Rs 2.85 crore). Depreciation charges have gone up by a huge 146 per cent to Rs 6.34 crore (Rs 2.58 crore). Tax burden has lightened by almost 50 per cent to Rs 1.38 crore (Rs 2.78 crore). During the last six months the stock has fallen by 36 per cent. Currently traded at Rs 510 it discounts its second quarter ended September annualised earnings per share of Rs 26.05 by 20 times. The stock has lost momentum and will need at least two quarters of good results to attract fresh interest.

GRASIM INDUSTRIES

For its second quarter ended September, Grasim sales have fallen 8 per cent to Rs 1,112.85 crore (Rs 1,207.17 crore), while net profit has jumped 55 per cent to Rs 130.27 crore (Rs 84.10 crore) mainly duty to cost-cutting and shutting down a controversial viscose fibre plant. Operational expenditure has dropped by 15 per cent to Rs 862.76 crore (Rs 1,015.60 crore) thanks to reduced cost of raw materials and payroll-cutting. Operating profit has gone up 31 per cent to Rs 250.09 crore (Rs 191.57 crore). Operating profit margin has improved to an impressive 22 per cent from the previous corresponding quarter’s 16 per cent. Total income has declined 6 per cent to Rs 1,149.46 crore (Rs 1226.87 crore), while total expenditure also fell 11 per cent to Rs 1,019.19 crore (Rs 1,142.77 crore). Other income stood at Rs 36.61 crore (Rs 19.70 crore), a leap of 86 per cent. Taking advantage of low interest rates, Grasim has been cutting its debt and so interest cost was down 10 per cent to Rs 43.16 crore (Rs 47.85 crore), while depreciation increased marginally by 1 per cent to Rs 62.77 crore (Rs 61.87 crore). Taxation went up by 189 per cent to Rs 50.50 crore (Rs 17.45 crore). The scrip currently trading in the range of Rs 310 discounting its second quarter ended September annualised EPS of Rs 56.83 by around five times.

INDIAN RAYON AND INDUSTRIES

For its second quarter ended September, Indian Rayon sales moved up 12 per cent to Rs 404.97 crore (Rs 363.12 crore), while net profit has surged by a massive 150 per cent to Rs 37.73 crore (Rs 15.11 crore) mainly due to great performance by the insulators and carbon black divisions. Operational expenditure has gone up by just 8 per cent to Rs 337.75 crore (Rs 312.88 crore), while operating profit rose by 34 per cent to Rs 67.22 crore (Rs 50.24 crore). Meanwhile, operating profit margin has improved to 17 per cent from the previous corresponding quarter’s 14 per cent. Total income and total expenditure rose by 11 per cent to Rs 412.44 crore (Rs 371.72 crore), and by 5 per cent respectively to Rs 374.71 crore (Rs 356.61 crore). Other income has dropped 13 per cent to Rs 7.47 crore (Rs 8.60 crore). While interest charges have fallen by 37 per cent to Rs 9.79 crore (Rs 15.45 crore) due to falling interest rate and easy liquidity, depreciation inched up by 2 per cent to Rs 18.80 crore (Rs 18.38 crore). Tax provision has declined by 15 per cent to Rs 8.37 crore. At the current market price of Rs 100, the stock discounts its second quarter ended September annualised EPS of Rs 25.20 by just four times. Indian Rayon is hiving off its insulators division into a separate company and hence its profitability will fall in future.

HENKEL SPIC

For the third quarter ended September, Henkel sales have gone up 11 per cent to Rs 91.65 crore (Rs 82.21 crore), while net profit has increased 6 per cent to Rs 2.08 crore (Rs 1.96 crore). Operational expenditure has risen 11 per cent to Rs 86.46 crore (Rs 77.57 crore), while operating profit was up 12 per cent to Rs 5.19 crore (Rs 4.64 crore). OPM was constant at 6 per cent. Total income has moved up 11 per cent to Rs 91.65 crore (Rs 82.30 crore). Total expenditure also went up 11 to Rs 89.57 crore (Rs 80.34 crore). Interest cost has increased 21 per cent to Rs 1.66 crore (Rs 1.37 crore), while depreciation charges were up 4 per cent to Rs 1.45 crore (Rs 1.40 crore). The stock is currently priced at Rs 22.50 that is a rich 31 times its third quarter annualised EPS of Rs 0.71.

Company        Total Income       Net profit        Equity       O. Income       EPS*

Digital GlobalSoft       94.87       21.37       32.81       3.04       26.05 Grasim       1112.85       130.27       91.69       36.61       56.83 Indian Rayon       404.97       37.73       59.88       7.47       25.20 Henkel Spic#       91.65       2.08       116.39       —       0.71

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

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