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Opto Circuits: Optimum performance - Views on News from Equitymaster

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Opto Circuits: Optimum performance

Jan 28, 2009

Performance summary
  • Consolidated topline grew by robust 65.7% YoY on the back of higher sales from its international subsidiaries during the quarter.
  • Expenses grew at a lower rate as compared to topline, enabling EBITDA margins to expand by 70 bps to 28.9% during the quarter.
  • Net profits grew by 47.3% YoY, lower than topline mainly on account of higher interest and depreciation charges.
  • For the nine-month period, the company has recorded a 58.6% YoY jump in consolidated bottomline on the back of 74.2% YoY growth in the topline.


Consolidated financial snapshot
(Rs m) 3QFY08 3QFY09 Change 9mFY08 9mFY09 Change
Net sales 1,273 2,110 65.7% 3,476 6,054 74.2%
Expenditure 914 1,501 64.3% 2,455 4,196 70.9%
Operating profit (EBDITA) 360 609 69.3% 1,021 1,858 82.1%
EBDITA margin (%) 28.2% 28.9%   29.4% 30.7%  
Other income 37 96 159.1% 61 152 147.4%
Interest (net) 28 147 426.7% 73 381 421.8%
Depreciation 8 27 256.1% 22 65 191.4%
Profit before tax 361 531 47.1% 987 1,564 58.5%
Extraordinary items   (0.4)   0 (5)  
Tax 4 5 22.2% 10 15 47.9%
Profit after tax/(loss) 357 527 47.3% 976 1,549 58.6%
Net profit margin (%) 28.1% 25.0%   28.1% 25.6%  
No. of shares (m) 94.2 160.1   94.2 160.1  
Diluted earnings per share (Rs)*         11.7  
Price to earnings ratio (x)**         7.5  
(* annualised, ** on trailing twelve months earnings)

What has driven performance in 3QFY09?
  • The standalone topline of the company grew by 4.6% while the consolidated topline grew by robust 65.7% YoY basis. This point out towards higher growth driven by its international subsidiaries, Eurocor and Criticare.

  • On the operating performance front, operating expenses grew by 64.3% YoY , lower as compared to topline on the back of reduced manufacturing, staff and administration & marketing cost (as % of sales) during the quarter. This enabled operating margins to expand by 70 bps point to 28.9%.

    Cost break-up…
    (Rs m) 3QFY08 3QFY09 Change
    Manufacturing expenses 744 1,223 64.4%
    % sales 58.4% 58.0%  
    Staff cost 60 101 67.8%
    % sales 4.7% 4.8%  
    Adminstration and Marketing 109 177 62.2%
    % sales 8.6% 8.4%  

  • The bottomline of company grew by around 47.3% YoY, lower as compared to topline growth. This was mainly on account of higher interest and depreciation charges. However, had there been no substantial growth in other income, the bottomline would have been lower than this.

What to expect?
At the current price of Rs 88, the stock is trading at a multiple of 5x the company’s expected FY11 earnings estimate. The company’s performance has mostly come in line with our estimates and as such, we do not feel the need to change the same. We remain positive on the stock.

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