The Telegraph
Since 1st March, 1999
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Result Analysis


Cost rationalisation has seen Kochi Refineries Ltd post handsome growth in profit for the first quarter ended June30, 2003. Net sales at Rs 2,630.70 crore (Rs 2,498.10 crore) was up by 5 per cent over the corresponding previous period. Operational cost was down by 1 per cent at Rs 2,348.50 crore (Rs 2,368.10 crore). Although the growth in revenues has not been very impressive the reduced costs have seem margins improve substantially. Operating profit at Rs 282.20 crore (Rs 130 crore) went up by a huge 117 per cent. Other income was also up by 64 per cent at Rs 7.40 crore (Rs 4.50 crore). Further consolidation came in the form of a 52 per cent decline in interest cost which stood at Rs 11.50 crore (Rs 24 crore). With a 200 per cent rise in profit before tax the tax provision swelled by 167 per cent to Rs 79.50 crore (Rs.29.80 crore). Net profit was up 218 per cent at Rs 169.30 crore (Rs 53.20 crore). The stock enjoys an incredibly low discounting of 2 times to its June quarter annualised EPS of Rs 48.90. Though it seems to be cheap vis-à-vis its profit growth for the quarter, the fact that much of the growth has been fuelled by declining costs rather than growth in core revenues works against any immediate upside, except for fascination for the oil sector that has been gripping the market in recent times.


Textiles major Himatsingka Siede Limited’s peformance in the first quarter of this fiscal ended June 30 has been perked up by a huge rise in other income. Net sales was up 5 per cent at Rs 29.42 crore (Rs 27.95 crore) from the year-ago period. Operational expenses also went up by a similar percentage to Rs 16.89 crore (Rs 16.12 crore). The equal rise in revenue, as well as the cost, saw margins remain almost stagnant with operating profits managing to rise by only 6 per cent over the corresponding previous period to Rs 12.53 crore (Rs 11.83 crore). Other income at Rs 3.69 crore (Rs 0.78 crore) was up by a huge 373 per cent over the corresponding previous quarter and has actually been the highlight of its performance for the quarter. Interest cost was negligible while depreciation went up by 7 per cent to Rs 3.62 crore (Rs 3.37 crore). With a 69 per cent rise in tax provision at Rs 1.25 crore (Rs 0.74 crore), it reported a net profit of Rs 11.35 crore (Rs 8.49 crore) up 34 per cent from the year-ago period. The company has fascinating operating efficiency but much of the growth has been fuelled by better treasury operations. Currently trading at Rs 134 the stock discounts its June quarter annualised EPS of Rs 23.74 by six times.


Pidilite Industries Ltd has reported a 13 per cent rise in net sales at Rs 166.13 crore (Rs 147.17 crore) for the first quarter of this fiscal. Operating expenditure went up by 14 per cent over the same period last year to Rs 129.98 crore (Rs 113.78 crore). The slightly higher rise in the costs compared with the revenue has had a fringe impact on the margins with operating profits moving up by only 8 per cent to Rs 36.15 crore (Rs 33.39 crore). Other income was up by a good 68 per cent over the year-ago period at Rs 1.88 crore (Rs 1.12 crore). This was further complemented by a 39 per cent fall in the interest cost at Rs 0.44 crore (Rs 0.72 crore). Depreciation went up by 12 per cent to Rs 6.04 crore (Rs 5.40 crore). With a tax provision of Rs 10.53 crore (Rs 9.34 crore), the company reported a net profit of Rs 21.02 crore (Rs 19.05 crore). The stock currently trading at Rs 265 discounts its June quarter annualised EPS of Rs 33.31 by eight times and is fully priced at these levels.


Though in recent times auto ancillaries firms have been doing comparatively well of, the performance of Munjal Showa Ltd for the first quarter ended June 30 has turned out to be an exception. Net sales was up 6 per cent at Rs 94.83 crore during the reporting quarter compared with Rs.89.50 crore in the corresponding previous quarter. Operational costs have gone up by 10 per cent to Rs 86.21 crore (Rs 78.44 crore) hitting margins hard. Operating profit was down 22 per cent to Rs 8.62 crore (Rs 11.05 crore). Other income had a huge rise at Rs 1.39 crore as against Rs 0.10 crore earned in the same period last year. In times when companies have been gaining heavily on reduced interest costs, Munjal Showa’s interest cost has gone up by 67 per cent to Rs 0.07 crore (Rs 0.04 crore). Depreciation was up 11 per cent at Rs 1.78 crore (Rs 1.60 crore). Net profit at Rs 5.38 crore is down 10 per cent from Rs 6.01 crore in the corresponding previous quarter. The stock currently trades at Rs 153 discounting its June quarter annualised EPS of Rs 26.92 by sixtimes.

Company        Total Income       Net profit        Equity       O. Income       EPS*

Kochi Refineries       2630.70       169.30       138.50       7.40       48.90 Himatsingka Seide       29.42       11.35       19.12       3.69       23.74 Pidilite Industries       166.13       21.02       25.24       1.88       33.31 Munjal Showa       94.83       5.38       8.00       1.39       26.92

Figures in Rs crore; * annualised

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