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Result Analysis

ACC

ACC’s top-line performance still remains distressful. Though there has been a 4 per cent improvement in volumes in the third quarter ended December 2002, net sales were down 3 per cent over the previous corresponding quarter to Rs 682.28 crore (Rs 703.86 crore) and up by only 1 per cent sequentially. Operational costs went up 2 per cent to Rs 614.87 crore, down 1 per cent over the September quarter. ACC’s saving grace for the December quarter has been a massive rise in the other income which at Rs 38.40 crore (Rs 9.05 crore), includes the sale of investments (International Ferrites) and write back on provisions. With a Rs 3-crore provision for tax (Rs 12.41 crore in the previous corresponding quarter and Rs 0.05 crore in the preceding quarter) net profit was Rs 34.17 crore (Rs 16.93 crore) up 102 per cent from the year-ago period and more than 500 per cent above the September quarter profit of Rs 5.12 crore. The company has written down the value of its assets thereby taking a hit of Rs 13.96 crore, which if considered would have narrowed down the net growth to 19 per cent on a year-on-year basis. After a bad September quarter, ACC’s valuations have again come to realistic levels and the stock trading at Rs 149 discounts its December quarter annualised EPS of Rs 7.99 by 19 times.

HDFC Bank

HDFC Bank continues to grow. It has recorded a 23 per cent year-on-year increase in total income from the third consecutive quarter at Rs 646.28 crore (Rs 525.07 crore), while sequentially the growth rate has slowed down to 7 per cent over the 8 per cent it reported during the September quarter. Profit moved up by a robust 31 per cent on a year-on-year and 10 per cent over the preceding quarter to Rs 98.88 crore (Rs 89.69 crore). Other income stood at Rs 141.42 crore (Rs 85.51 crore) up 65 per cent over the year-ago period and 16 per cent above the September quarter. OPM has also improved to a significant 37 per cent from 35 per cent in the September quarter and 31 per cent during the same period last year. Tax provision was up 61 per cent from last year to Rs 53.19 crore (Rs 32.95 crore) and 19 per cent up from the September quarter, eventually leading to a 31 per cent improvement in the profits after tax at Rs 98.88 crore (Rs 75.45 crore) and 10 per cent above the September quarter profit of Rs 89.69 crore. At Rs 248 the stock discounts its December quarter annualised EPS of Rs 14.03 by 18 times. It is fully valued in the short run for the current level of growth and poor visibility but is an excellent trading buy if the price falls below Rs 200.

STATE BANK OF INDIA

Though profits continue to grow, income growth seems to be further slowing down for the largest public sector bank of the country. SBI’s third quarter ended December 2002 total interest managed to rise by just about 3 per cent in the December quarter. Other income was up 51 per cent over the previous corresponding quarter and 20 per cent above the September quarter. Operating profits grew 36 per cent on a year-on-year basis and 8 per cent sequentially. OPM at 24 per cent was much better than the 18 per cent it reported during the year-ago period and slightly better than the 22 per cent it earned during the preceding quarter. With a slightly higher provision for other contingencies (43 per cent rise year-on-year and 25 per cent sequentially) and the tax provision having gone up by 43 per cent over the previous corresponding quarter and 18 per cent sequentially net profit at Rs 787.05 crore (Rs 613.89 crore) went up 28 per cent. Sequentially, it was down 6 per cent from the September quarter profit of Rs 835.20 crore. The stock now trades at Rs 300 discounting its December quarter annualised EPS of Rs 59.82 by just about five times. It looks cheap, but now that interest rates have started stagnating, it remains to be seen what happens to SBI’s bond portfolio and income from investment.

TATA POWER COMPANY

For the third quarter ended December, Tata Power’s income from operations was up 23 per cent from the year-ago period at Rs 1,147.91 crore (Rs 930 crore) (down 5 per cent sequentially). OPM at 27 per cent was above the 22 per cent it earned during the previous corresponding quarter and down from the 28 per cent it reported during the preceding quarter. Other income continued its slide and at Rs 32.61 crore (Rs 64 crore) was 49 per cent down from the year-ago period. With the tax provision moving up 77 per cent over the previous corresponding quarter to Rs 37.21 crore (Rs 21 crore), net profits grew 35 per cent on a year-on-year basis. Currently trading at Rs 117 the stock still discounts its December quarter annualised EPS of Rs 29.50 by four times.

Company        Total Income       Net profit        Equity       O. Income       EPS*

ACC       682.28       20.21       171.08       38.40       7.99 HDFC Bank       504.86       98.88       282.01       141.42       14.03 SBI        7705.48       787.05       526.30       1361.44       59.82 Tata Power       1147.91       145.91       197.91       32.61       29.50

n Figures in Rs crore; * annualised.

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