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Result Analysis

GLAXOSMITHKLINE PHARMACEUTICALS

GlaxoSmithKline Pharmaceuticals (GSK), ended the year with just a 3 per cent rise in the total income at Rs 1,089.35 crore (Rs 1,056.51 crore). Its total spending was down 2 per cent, in effect bringing about a 71 per cent improvement in the net profits. At Rs 1,047.27 crore (Rs 1,010.31 crore) net sales were 4 per cent higher than those last year. The operational expenditure at Rs 873.55 crore (Rs 905.72 crore) was down 4 per cent over the previous corresponding period. GSK has been able to improve margins on the back of reduced costs. Operating profits went up 66 per cent to Rs 173.72 crore (Rs 104.59 crore), while the OPM shot up to 17 per cent from the 10 per cent it reported during the previous year. Other income was lower 9 per cent against the previous corresponding period to Rs 42.08 crore (Rs 46.20 crore), while there being no debt the interest cost was nil as against Rs 9.56 crore during the same period last year. Net profit rose 71 per cent at Rs 128.47 crore (Rs 75.32 crore). The stock currently trades at Rs 312, which is 18 times its EPS of Rs 17.25. Though profit growth growth was fantastic it was the result of stringent cost control. There has been no significant growth in sales while other income also seem to be on the decline, after years of asset sales. The stock continues to be overpriced.

HCL TECHNOLOGIES

HCL has reported a 16 per cent year-on-year rise in revenues for the second quarter ended December 2002 at Rs 247.55 crore (Rs 212.81 crore) (up by 3 per cent sequentially). Total expenditure was up 48 per cent (sequentially up by 12 per cent) in turn pulling down profits by 19 per cent over the year-ago period and 11 per cent sequentially. At Rs 232.34 crore (Rs 179.14 crore), income from operations was up 30 per cent on a year-on-year basis (sequentially up by 5 per cent). At Rs 150.61 crore (Rs 98.73 crore), operational costs went up 53 per cent over the year-ago period and 15 per cent sequentially. Margins eroded sharply with operating profit rising 2 per cent, while sequentially it was down 10 per cent over the September quarter profit of Rs 90.79 crore. OPM at 35 per cent has been the lowest in the past 11 quarters. Other income has been declining and at Rs 15.21 crore (Rs 33.67 crore) was 55 per cent below the year-ago period. Sequentially it fell 18 per cent. Net profit was down 19 per cent over the previous corresponding quarter to Rs 82.08 crore (Rs 101.15 crore) and 11 per cent over the preceding quarter profit of Rs 92.23 crore. Currently trading at Rs 145, the stock discounts its December quarter annualised EPS of Rs 11.39 by 13 times. It is fully priced at the current growth rates.

TRENT

Trent Limited, retailing venture of the Tatas, has further consolidated its performance for this year with much better third quarter numbers. Net sales at Rs 34.94 crore (Rs 23.99 crore) went up 46 per cent over the previous corresponding quarter and 31 per cent sequentially. Operational costs were up 47 per cent over the previous corresponding quarter to Rs 32.25 crore (Rs 22.01 crore). Sequentially the rise was 29 per cent over the September quarter costs of Rs 23.75 crore. Operating profit was up 36 per cent over the previous corresponding quarter to Rs 2.69 crore (Rs 1.98 crore),but was 8 per cent below the September quarter profit of Rs 2.94 crore. OPM has remained flat at 8 per cent on a year-on-year basis. Other income at Rs 1.53 crore (Rs 1.32 crore) was up 15 per cent over the year-ago period and 34 per cent sequentially. With the tax provision up by a whopping 194 per cent over the year-ago period, (down 24 per cent sequentially) Trentís net profit managed to rise 15 per cent over the previous corresponding period to Rs 2.87 crore (Rs 2.50 crore). Sequentially it went up 11 per cent over the September quarter profit of Rs 2.59 crore. Trentís valuation has remained almost the same in the December quarter as it was in the preceding quarter. It now trades at 17 times its EPS. Not cheap at all.

WOCKHARDT

Wockhardt has put up a lousy performance for the fourth quarter ended December 2002 with net sales of Rs 177.30 crore (Rs 177.90 crore) down 0.3 per cent over the previous corresponding period, while sequentially it was down 14 per cent. Operating profits came down 43 per cent over the previous corresponding quarter. The OPM at 13 per cent has been the lowest in the past 11 quarters. Net profits were down 44 per cent over the previous corresponding period to Rs 18.30 crore (Rs 32.50 crore). Sequentially too, it fell by 49 per cent against Rs 36 crore it earned in the September quarter. The stock has been thoroughly battered after its result were declared. Currently trading at Rs 373, it is 18 times its December quarter annualised EPS of Rs 20.17.

Company        Total Income       Net profit        Equity       O. Income       EPS*

GlaxoSmithKline#       1047.27       98.06       74.48       42.08       17.25 HCL Tech##       232.34       82.08       57.64       15.21       11.39 Trent ###       34.94       2.87       13.12       1.53       8.75 Wockhardt**       177.30       18.30       36.30       0.80       20.17

n Figures in Rs crore; * annualised; # annual, ## Q2,### Q3,**Q4 results

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