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Adlabs: Revenue mix boosts profitability

Jan 29, 2001

Adlabs has declared a 125% increase in the net profit on the back of a 32% improvement in the topline. The company's operating margins have also improved to 38.8% from 23.3% in the corresponding quarter of last year. The increase in profitability is primarily due to change in the revenue mix of the company.

(Rs m) 3QFY00 3QFY01 Change
Sales 85 112 32.3%
Other Income 3 6 101.3%
Expenditure 65 69 5.4%
Operating Profit (EBDIT) 20 44 120.9%
Operating Profit Margin (%) 23.3% 38.8%  
Interest - 2  
Depreciation 3 3 0.4%
Profit before Tax 20 46 125.2%
Other Adjustments      
Tax - -  
Profit after Tax/(Loss) 20 46 125.2%
Net profit margin (%) 23.9% 40.7%  
Earnings per share* 7.54 16.99  

The company derives its revenues from two sources one the processing of films and the second is the trading of negatives. The current quarter has seen a decisive shift in revenues towards the former, primarily due to high profile releases such as 'Mohabbetein' and 'Mission Kashmir' in the current quarter. The company earns relatively higher margins on the processing of films than it does on the trading of negatives.

In the current quarter however, Adlabs has not provided for tax. The management has stated that the provision would be made based on full year results. This could possibly be due to the fact that the quarterwise results could fluctuate considering the releases that take place in the next quarter.

The stock quotes at a price of Rs 92, which implies an earnings multiple of 5.4 times FY01 annualised earnings.

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