Budget rub-off to benefit Goodlass - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Budget rub-off to benefit Goodlass

Mar 8, 2001

Goodlass Nerolac reported a sharp 48% decline in net profits in the third quarter of the current year. This was primarily on account of declining car sales (which affected topline growth) and higher raw material prices. However, prospects for the fourth quarter seems bright in the light of a recovery in car sales and softening input prices.

Third quarter drags margins…
(Rs m) 9mFY00 9mFY01 change
Sales 3,880 4,361 12.4%
Other Income 69 83 20.4%
Expenditure 3,522 3,965 12.6%
Operating Profit (EBDIT) 358 396 10.7%
Operating Profit Margin (%) 9.2% 9.1%  
Interest 65 47 -28.5%
Depreciation 89 136 53.7%
Profit before Tax 273 296 8.6%
Tax 80 83 4.4%
Profit after Tax/(Loss) 194 213 10.3%
Net profit margin (%) 5.0% 4.9%  
No. of Shares (eoy) (m) 15.3 15.3  
Diluted number of shares 15.3 15.3  
Earnings per share* 16.9 18.6  
*(annualised)      

Mr. Yashwant Sinha through his budget seems to have injected the right dose for the automobile companies. The reduction of excise duty on cars to 16% has perked up automobile sales in March. The auto companies have passed on the benefit to the consumers by slashing prices by more than 10%-15% on all cars.

These companies, which were witnessing significant decline in sales in the first three quarters of the current year, will have something to cheer about in the last quarter. Besides, the country’s premier auto company, Maruti has posted more than 15% growth in sales in January 2001, thus gaining considerable market share in the small car segment.

These, we believe, would significantly add to the topline growth of the company, which has slowed down considerably in 3QFY01 (sales grew marginally by 5%). The company is expected to report around 12.5% growth in sales for FY01 to Rs 5,900 m. Though growth in margins might not be commensurate with the topline growth, we expect the company to report a 60 basis points decline in margins at the operating level for the full year (for the first nine months of the current year, operating margin has dropped by 10 basis points to 9.1%).

At the net profit levels, margins are not expected to decline sharply as the company has reduced its interest costs by 29% in 9mFY01 by pruning working capital. Net profit is also expected grow by 12% to Rs 340 m for the full year.

The stock is trading at Rs 113 at a P/E multiple of 6.1x the annualised nine months earnings. On the annualised sales of Rs 5,815 m, the market capitalisation to sales works out to 0.3 times (market capitalisation is Rs 1,728 m).


Equitymaster requests your view! Post a comment on "Budget rub-off to benefit Goodlass". Click here!

  

More Views on News

KANSAI NEROLAC Announces Quarterly Results (1QFY21); Net Profit Down 71.1% (Quarterly Result Update)

Aug 21, 2020 | Updated on Aug 21, 2020

For the quarter ended June 2020, KANSAI NEROLAC has posted a net profit of Rs 427 m (down 71.1% YoY). Sales on the other hand came in at Rs 6 bn (down 59.1% YoY). Read on for a complete analysis of KANSAI NEROLAC's quarterly results.

KANSAI NEROLAC Announces Quarterly Results (4QFY20); Net Profit Down 23.0% (Quarterly Result Update)

May 7, 2020 | Updated on May 7, 2020

For the quarter ended March 2020, KANSAI NEROLAC has posted a net profit of Rs 715 m (down 23.0% YoY). Sales on the other hand came in at Rs 10 bn (down 13.5% YoY). Read on for a complete analysis of KANSAI NEROLAC's quarterly results.

KANSAI NEROLAC 2018-19 Annual Report Analysis (Annual Result Update)

May 30, 2019 | Updated on May 30, 2019

Here's an analysis of the annual report of KANSAI NEROLAC for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of KANSAI NEROLAC. Also includes updates on the valuation of KANSAI NEROLAC.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

KANSAI NEROLAC SHARE PRICE


Sep 18, 2020 (Close)

TRACK KANSAI NEROLAC

  • Track your investment in KANSAI NEROLAC with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MORE ON KANSAI NEROLAC

KANSAI NEROLAC 5-YR ANALYSIS

COMPARE KANSAI NEROLAC WITH

MARKET STATS