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Result Analysis

BALAJI TELEFILMS

For the quarter ended September, Balaji Telefilms’ income from operations at Rs 48.96 crore (Rs 23.62 crore) was up 107 per cent over the previous corresponding quarter, (23 per cent sequentially). Operational cost at Rs 24.27 crore (Rs 14.98 crore) was 62 per cent over those of the previous corresponding quarter (30 per cent Sequentially). Operating profit at Rs 24.69 crore (Rs 8.64 crore) was 186 per cent above the same period last year. Sequentially too it was up by 17 per cent over the June quarter profits of Rs 21.04 crore. The OPM at 50 per cent was much higher than the 37 per cent it reported during the previous corresponding period but was actually down 3 percentage points from the 53 per cent it earned during the June quarter. Despite a 259 per cent rise in the tax provision at Rs 8.44 crore (Rs 2.35 crore) over the previous corresponding quarter and 14 per cent over the June quarter provision of Rs 7.42 crore, net profit zoomed to Rs 33.70 crore (Rs 17.52 crore) up 92 per cent from the year-ago period and 24 per cent over the June quarter profit of Rs 27.11 crore. The stock is currently trading at Rs 82, discounting its September quarter annualised EPS of Rs 11.87 by just about seven times. It is cheap and will move up but will be hobbled by the doubts that the market sometimes places on the future of top performers.

RAYMOND

Raymond Limited, the flagship company of the Vijaypat Singhania group, is the best name in the worsted textile industry with a 40 per cent market share in this segment. Despite a wide range of physical assets and brands Raymond has been struggling to create value during the past three years, even after extensive restructuring under which it got rid of its ill-fated diversification of cement business and investment in loss-making Raymond Synthetics. Net sales for the second quarter ended September at Rs 275.10 crore (Rs 265.48 crore) were up 4 per cent over the previous corresponding quarter. At Rs 217.45 crore (Rs 198.95 crore) operational costs went up by 9 per cent over the previous corresponding quarter. Operating profits fell 13 per cent over the previous corresponding quarter to Rs 57.65 crore (Rs 66.53 crore). OPM at 21 per cent was down 4 percentage points over the previous corresponding quarter. Other income was Rs 9.01 crore (Rs 6.55 crore) up 38 per cent from the same period last year. The stock is currently trading at Rs 101, discounting its September quarter annualised EPS of Rs 22.42 by just about five times. Though it appears to be cheap there is hardly anything exciting about it. The company has recently acquired the Color Plus brand at a cost of Rs 44 crore the benefits of which may not accrue to Raymond shareholders anytime soon.

ZEE TELEFILMS

Zee’s performance in the September quarter has been a disaster. Its income from operations was down for the fourth consecutive quarter and at Rs 88.03 crore (Rs 106.40 crore) it was 16 per cent below the year-ago period (5 per cent sequentially) despite subscription revenues, both domestic and international, having improved. At Rs 66.98 crore (Rs 68.31 crore), operational cost was down 2 per cent both on a year-on-year as well as a sequential quarter basis. The operating profits suffered a setback mainly on account of lower revenue generation and insufficient cost savings and at Rs 21.05 crore (Rs 36.29 crore) it was 42 per cent below last year’s (15 per cent sequentially). OPM at 24 per cent was 3 percentage points below the June quarter and 11 percentage points below the 35 per cent it earned during the previous corresponding period last year. Zee’s other income at Rs 18.67 crore (Rs 18.57 crore) was marginally up 1 per cent over the previous corresponding quarter but rose 20 per cent sequentially. Despite a sorry performance, Zee enjoys a valuation of 61 times to its September quarter annualised EPS of Rs 1.56 at a price of Rs 96. There has been a bullish sentiment building up on the Zee counter citing the positive impact of the conditional access system and the high rating of movie premieres. These will make no significant impact on the sluggish growth pattern.

Company        Total Income       Net profit        Equity       O. Income       EPS*

Balaji Telefilms       48.96       15.29       10.30       0.02       11.87 Raymond       275.10       34.41       61.38       9.01       22.42 Zee Telefilms       88.03       16.13       41.24       18.67       1.56

n Figures in Rs crore; * annualised.

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