The Telegraph
Since 1st March, 1999
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Company Report


While Telco’s success with its Indica project continues, the commercial vehicle segment has recovered. The result is excellent financial results for the September quarter.

At Rs 2,161.24 crore (Rs 1,723.75 crore) income from operations was up 25 per cent over the same period last year, while sequentially it grew a powerful 24 per cent.

That growth came from a 22 per cent volume growth in commercial vehicles backed by buoyant truck sales (both MHCV and LCV segments) as well as in the LCV bus segment.

Passenger vehicles did extremely well growing 42 per cent during the quarter on the back of a strong 57 per cent growth in Indica volumes.

Operational cost at Rs 1,900.16 crore (Rs 1,603.58 crore) was up 18 per cent over the previous corresponding period, while the sequential rise was 23 per cent.

Telco’s successful turnaround is equally attributable to lower costs. Raw material costs rose moderately (20 per cent) as did staff costs (19 per cent) and the other expenditure (11 per cent) keeping the overall operational spending of the company under control.

Operating profit rose by a phenomenal 117 per cent over the previous corresponding period to Rs 261.08 crore (Rs 120.17 crore) while sequentially too it was up 30 per cent over the June quarter profit of Rs 201.42 crore.

However, OPM has remained stagnant (12 per cent in the June quarter and 11 per cent in March quarter).

For the September quarter interest cost was Rs 67.17 crore (Rs 101.27 crore) — 34 per cent below the previous corresponding quarter and 16 per cent down from the June quarter spending of Rs 80.03 crore.

Depreciation at Rs 89.99 crore was up 6 per cent over the previous corresponding quarter provisioning of Rs 85.19 crore and 1 per cent over the June quarter provision of Rs 89.48 crore.

PAT was Rs 58.80 crore against a loss of Rs 52.58 crore during the same period last year and a massive 110 per cent above the June quarter profits of Rs 28.03 crore.

The stock is currently trading at Rs 164 discounting its September quarter annualised EPS of Rs 7.35 by 22 times. Despite such a tremendous topline as well as bottomline performance, Telco’s price is running ahead of the fundamentals. Long-term investors may consider buying it at 10 per cent correction.

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