X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Engineering: Looking at strong FY04 - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Apr 7, 2003

    Engineering: Looking at strong FY04

    While most sectors finished FY03 on a glum note, Engineering companies had a whale of a time. Almost all engineering companies finished FY03 with gains in performance and consequently, in stock price.

    (Share price Rs) 28-Mar-02 31-Mar-03 % Change
    BSE Sensex 3,469 3,049 -12.1%
    S&P CNX Nifty 1,130 976 -13.6%
    Atlas Copco 114 277 142.3%
    Thermax Ltd. 78 138 76.9%
    Tata Honeywell 147 238 62.8%
    Bharat Electronics 127 181 42.3%
    Ingersoll Rand 143 195 36.8%
    Bhel 169 224 32.4%
    ABB 266 294 10.9%
    Crompton Greaves 46 51 10.9%
    Siemens 255 281 10.0%
    L&T 181 185 2.1%
               
    Losers
    Esab India 29 41 -29.4%
    Cummins India 52 53 -1.5%

    The table above reflects the overall positive sentiment towards engineering companies in FY03. This came about through a mix of higher orderflows, government's thrust towards power reforms and productivity gains. A look at the order inflow of the top engineering companies puts forth the the reason for the strength in market capitalisation. Both ABB and Bhel reported record order inflow growth (see table below).

    Order flow…
    Rs bn Order inflow
    in FY03
    Order
    backlog
    backlog as a
    % FY03 turnover
    ABB 13.1 8.8 73.2%
    Bhel 112.5 158.0 140.5%
    Thermax* - 1.9 34.5%
    * nine month period ended December'02

    Consequently, most companies finished FY03 with encouraging topline and bottomline performances. We have illustrated the performance of Bhel, ABB and Thermax to highlight this point. All the aforesaid companies have put themselves neck deep in restructuring when the times were not so good. While Bhel reduced its employee base by nearly 23% to 48,000 in the last 4 years, Thermax too, has rationalised its employees by over 16% in recent times. Though we did not include Siemens in this sample, it is worthwhile to note that even this company rationalised its employee size by 7% in the last one year. These measures too gave a further fillip to the companies bottomline.

    ABB
    (Rs m) FY02 FY03 % change
    Revenues 10,558 12,006 13.7%
    Order inflow 10,920 13,050 19.5%
    PAT 653 972 48.9%
    Net profit margin (%) 6.2% 8.1%  
    Bhel
    (Rs m) FY02 FY03 % change
    Revenues 72,870 75,100 3.1%
    Order inflow 98,550 112,480 14.1%
    PAT 4,680 5,110 9.2%
    Net profit margin (%) 6.4% 6.8%  

    Apart from employee rationalisation, these companies have also been taking a hard look at their product folio’s and aligned them to fit consumer needs. While ABB signed up with the parent as a potential global sourcing base for equipment manufacturing, BHEL started to outsource small manufacturing needs to spend more time on research and development of high end products. Thermax restructured its entire management team filling its board with independent directors thus improving management credibility.

    Thermax
    (Rs m) 9mFY02 9mFY03 % change
    Revenues 2,805 3,594 28.1%
    Order backlog 2,510 1,900 -24.3%
    PAT 63 144 129.1%
    Net profit margin (%) 2.2% 4.0%  

    With the government continuing its focus on power sector reforms, the sector has much to look forward to in the coming years. The focus on building and enhancing our network of roads, ports, airports and railways will also be a boost for the engineering companies in the coming years. The companies burgeoning order backlog indicates a strong FY04 awaiting the sector.

     

     

    Equitymaster requests your view! Post a comment on "Engineering: Looking at strong FY04". Click here!

      
     

    More Views on News

    BHEL: Margins Dip into the Negative (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The company also saw order inflows of Rs 18 billion during the quarter, which was a massive 41% YoY lower than the previous year's quarter.

    Cummins Ltd: Domestic Revenues the Saving Grace (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The domestic economy continues to grow largely in areas which are positively impacted through continuing government investments in infrastructure.

    ABB: Large Orders Remain Muted (Quarterly Results Update - Detailed)

    Aug 2, 2017

    Decisions on government initiatives and private investments were stalled in anticipation of upcoming tax restructure.

    L&T: Amidst a Challenging Business Environment (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Bank credit to industry remained muted and investment momentum was driven mostly by public sector spending.

    L&T: Private Sector Capex Remains in a Tizzy (Quarterly Results Update - Detailed)

    Jul 24, 2017

    Vast majority of private players remain more concerned with debt payback rather than starting new projects.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE CAPITAL GOODS


    Aug 23, 2017 (Close)

    S&P BSE CAPITAL GOODS 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS