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PSI : Performance disappoints

Feb 2, 2001

PSI has shown a disappointing performance for 4QFY01. Its revenue growth, QoQ basis, has been quite low at just 12% and the net profit is up by 9.3%. This is despite a 1384% jump in other income and a positive tax inflow of Rs 13 m. If we exclude this the profits would have actually dropped by 56%.

(Rs m) 3QFY01 4QFY01 Change FY00 FY01 Change
Sales 208 233 12.0% 598 830 38.9%
Other Income 1 15 1384.0% 13 20 57.6%
Expenditure 158 204 29.3% 480 657 37.0%
Operating Profit (EBDIT) 50 29 -42.8% 118 173 46.7%
Operating Profit Margin (%) 24.0% 12.3%   19.7% 20.8%  
Interest 1 2 91.0% 5 4 -13.6%
Depreciation 8 8 2.8% 13 25 89.1%
Profit before Tax 42 33 -20.6% 112 164 45.7%
Tax 0 (13)   8 (8) -193.9%
Provision for contingencies 0 0   0 0  
Profit after Tax/(Loss) 42 46 9.3% 104 171 64.0%
Net profit margin (%) 20.2% 19.7%   17.5% 20.6%  
Extraordinary item 0 11   0 11  
Net profit 42 57 35.4% 104 182 74.5%
No. of Shares (eoy) (m) 7.3 7.6   7.6 7.6  
Diluted number of shares 7.6 7.6   7.6 7.6  
Diluted Earnings per share* 23.0 24.2   13.7 22.5  
*(annualised)            
P/E (at current price) 13.3 12.7   22.3 13.6  

However, the real disheartening factor is the drop in operating margins from 24% in 3QFY01 to 12% in 4QFY01. This is because its other expenditure has almost doubled. The company claims this includes compensation for termination of business. Currently this figure is not available separately.

However, one area that PSI has shown improvement is that its employee costs have come down from 52% of revenues in 3QFY01 to 45% of revenues in 4QFY01. On a YoY basis the total income figure has gone up by 18.2% and the net profit has risen by 72% in 4QFY01. The figures are quite low compared to the industry standards.

At a current market price of Rs 307, the stock is trading at a P/e multiple of 13.6 times its FY01 annualised earnings.

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