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Result Analysis

HINDALCO INDUSTRIES

Lower production volumes on account of power disruptions and an overall gloomy demand scenario has seen Hindalco post a poor performance for the third quarter ended December 2002. Income from operations at Rs 521.50 crore (Rs 577.40 crore) was 10 per cent below the year-ago period (8 per cent down sequentially). Sales volumes declined by 11per cent. Higher power cost during the quarter, raised operational cost to Rs 363.30 crore (Rs 335 crore) up 8 per cent from the year-ago period. Sequentially, however, it was down 7 per cent over the September quarter. Operating profits declined 35 per cent over the year ago period to Rs 158.20 crore (Rs 242.40 crore). Sequentially too it was down 12 per cent over the September quarter profits of Rs 180 crore. OPM has shrunk dismally from 42 per cent (32 per cent in the preceding quarter) in the year ago period to just 30 per cent for the current quarter. Other income at Rs 45.20 crore (Rs 54.30 crore) was 17 per cent lower. Tax provision at Rs 43.50 crore (Rs 78 crore) down 45 per cent from last year and 26 per cent from the preceding quarter provision of Rs 58.50 crore. Net profit declined by 39 per cent.The stock is currently trading at Rs 600 discounting its December quarter annualised EPS of Rs 54.87 by 11 times.

GODREJ CONSUMER PRODUCTS

Godrej continues to perform well. For the third quarter ended December, net sales at Rs 129.23 crore went up by 12 per cent over the previous corresponding quarter (7 per cent sequentially). Sales from the Godrej brands moved up 6 per cent on a year-on-year and 16 per cent sequentially contributing close to 68 per cent of the growth on a year-on-year basis and almost the entire growth on a sequential quarter basis. GCPLs operational cost at Rs 106.78 crore (Rs 99.37 crore) was up by 7 per cent both on a year-on-year as well as a sequential quarter basis. Operating profits shot up 45 per cent from the year-ago period to Rs 22.45 crore (Rs 15.53 crore). Sequentially too it was up 4 per cent over the September quarter profit of Rs 21.53 crore. The OPM at 17 per cent was 3 percentage points above the 13 per cent it reported during the year-ago period but was marginally down from the 18 per cent of the preceding quarter. Other income and interest cost are negligible. The stock currently trades at Rs 105 discounting its December quarter annualised EPS of Rs 10.18 by 10 times. It looks mildly undervalued.Net profit moved up by 20 per cent over the previous corresponding quarter to Rs 14.78 crore (Rs 12.30 crore) and 5 per cent up from the September quarter profit of Rs 14.02 crore.

ZEE TELEFILMS

Zee has been struggling to improve its performance with a new set of programmes and concepts. The results are unclear. Its income from operations during the third quarter ended December was sharply up to Rs 124 crore (Rs 85.33 crore), mainly from increasing cable services. Operating profits were down 6 per cent over the year-ago period to Rs 36.06 crore (Rs 38.38 crore). Sequentially, however, operating profit improved by 71 per cent. At 29 per cent the OPM was slightly higher than the September quarter but well below the 45 per cent it reported during the year-ago period. Other income at Rs 17.13 crore (Rs 16.50 crore) went up by 4 per cent from the previous corresponding quarter but was down 8 per cent from the September quarter. Currently trading at Rs 85 the stock discounts its December quarter annualised EPS of Rs 2.15 by 39 times. Though valuations have dropped dramatically, at a discounting of 39 times the stock doesnt come cheap.

MASTEK

After a somewhat subdued September quarter, Mastek has put up a superb performance for the second quarter ended December 2002. Its income from operations was up 49 per cent over the year-ago period to Rs 97.43 crore (Rs 65.55 crore). Sequentially, it was up 6 per cent over the September quarter income of Rs 91.63 crore. Operational costs rose 36 per cent over the previous corresponding quarter and 5 per cent over the September quarter at Rs 76.15 crore (Rs 55.81 crore). Operating profit was up 118 per cent over the previous corresponding quarter to Rs 21.28 crore (Rs 9.74 crore), while sequentially the same was up 12 per cent over the September quarter profit of Rs 19 crore. OPM shot up to 22 per cent from the 15 per cent it reported during the previous corresponding quarter and was up by a percentage point over the September quarter. The stock currently trading at Rs 595 discounts its December quarter annualised EPS of Rs 45 by 13 times. The stock has minor upside from this level.

Company        Total Income       Net profit        Equity       O. Income       EPS*

Hindalco       521.50       101.10       73.70       45.20       54.87 Godrej       129.23       14.78       23.23       0.22       10.18 Zee Telefilms       124.00       22.19       41.24       17.13       2.15 Mastek#       97.43       16.26       7.00              45.00

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

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