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Atul Auto: Demonetization Impacts Volumes and Profitability - Views on News from Equitymaster
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  • Mar 1, 2017 - Atul Auto: Demonetization Impacts Volumes and Profitability

Atul Auto: Demonetization Impacts Volumes and Profitability
Mar 1, 2017

Atul Auto has announced the third quarter results of financial year 2016-2017 (3QFY17). While the topline declined by 11.2% YoY, the bottom-line declined by 23% YoY during the quarter.

Performance summary:
  • Total income declined by 11.2% YoY during 3QFY17. Net sales declined by 11.5% YoY. On the other hand, other operating income increased by 96.1%YoY. Atul Auto sold 11,043 vehicles in 3QFY17 as against 12,609 vehicles in 3QFY16, a decline of 12%. The company has stated that demonetization had a major impact on volumes of the company as the retail market came to a standstill from November. Although, sales in October started well with 5037 vehicles being sold as compared to 4599 in Oct'15, volumes reduced drastically from November with 3450 vehicles (4005 in Nov'15) being sold and further reduced in December with 2556 vehicles (4005 in Dec'15).
  • Operating margins stood at 14% during the quarter. Operating profit declined by 25%. Atul Auto's gross margin for the quarter stood at 27.6%. EBITDA for the quarter decreased to Rs. 189 million compared Rs 251 million in 3QFY17 and Rs 220 Million in 2QFY17. This is mainly due to increase in raw material costs, Employee costs and other expenses. Raw material costs increased due to increase in steel prices.
  • Net profit declined by 23% YoY. This is mainly on the back of decline in operating profit. This was partly offset by an increase in other income (up 207% YoY), decline in tax outgo (down 20.8% YoY).

    Financial Snapshot
    (Rs m) 3QFY16 3QFY17 Change 9MFY16 9MFY17 Change
    Net sales 1,512 1,338 -11.5% 3,989 3,689 -7.5%
    Other operating income 5 10 96.1% 24 24 -2.1%
    Total Income 1517 1348 -11.2% 4013 3713 -7.5%
    Expenditure 1,266 1,159 -8.4% 3,424 3,217 -6.0%
    Operating profit (EBDITA) 251 189 -25.0% 590 496 -15.9%
    Operating profit margin (%) 16.6% 14.0% 14.8% 13.4%
    Other income 4 13 207.0% 12 24 105.1%
    Interest 1 1 40.0% 7 5 -31.9%
    Depreciation 13 13 -0.8% 40 39 -3.3%
    Profit before tax 242 188 -22.3% 554 476 -14.0%
    Tax 82 65 -20.8% 189 165 -12.4%
    Effective tax rate 34.0% 34.6% 34.1% 34.7%
    Profit after tax/(loss) 160 123 -23.0% 366 311 -14.9%
    Net profit margin (%) 10.6% 9.2% 9.2% 8.4%
    No. of shares (m) 22
    Fully diluted EPS (Rs)* 19.12
    P/E (x)* 22.0
    *Based on trailing 12-months earnings
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