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Pentamedia Graphics: Lacklusture performance - Views on News from Equitymaster
 
 
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  • Apr 18, 2001

    Pentamedia Graphics: Lacklusture performance

    Pentamedia Graphics has posted a drop of 8% in revenues for 4QFY01 compared to 3QFY01. On a quarter on quarter basis (QoQ) the company the net profit figure has dropped by a significant 36%. In the fourth quarter of FY01 the operating margins for the company has gone up by more than 600 basis points. This is due to a QoQ drop in employee costs of about 65%, which is on account of the company reducing its direct overseas staff costs.

    (Rs m) 3QFY01 4QFY01 Change FY00 FY01 Change
    Sales 1,579 1,450 -8.2% 3,930 5,524 40.6%
    Other Income 35 3 -92.2% 74 178 139.0%
    Expenditure 1,006 831 -17.5% 2,468 3,592 45.5%
    Operating Profit (EBDIT) 573 619 8.2% 1,462 1,932 32.1%
    Operating Profit Margin (%) 36.3% 42.7%   37.2% 35.0%  
    Interest (16.40) 47.20   61 13 -78.0%
    Depreciation 88 206 133.0% 418 529 26.6%
    Profit before Tax 535 369 -31.0% 1,058 1,567 48.2%
    Other Adjustments (3.70) - -100.0% 714 -  
    Tax - 31.50   68 32 -53.4%
    Profit after Tax/(Loss) 532 338 -36.5% 1,703 1,536 -9.9%
    Net profit margin (%) 33.7% 23.3%   43.3% 27.8% -35.9%
    Profit after Tax/(Loss)# 535 338 -36.9% 990 1536 55.1%
    Net profit margin (%)# 33.9% 23.3%   25.2% 27.8%  
    Earnings per share*# 49 31   23 35 55.1%
    (annualised)            
    P/E (x)         2  

    However, the company has not cut operational costs. The costs for multimedia development and webcast have infact gone up from 50% of revenues in 3QFY01 to 53% of revenues in 4QFY01.

    The net profit figure has taken a hit because the company has provided for 3 times the interest for FY01 in the fourth quarter alone. Similarly, depreciation for the fourth quarter was 38% of the figure for the FY01. Also, the company has provided for all the tax for FY01 in 4QFY01. On a Year on Year (YoY) basis the company has clocked a growth in revenues for 4QFY01 of 25% and the rise in net profits is 150%.

    Animation, Special Effects and Web Entertainment contributed to 56%, 21% and 23% of the turnover respectively, during the fourth quarter of FY01. While the contribution for Animation and Special Effects to the turnover is same as that for the last quarter the contribution of web entertainment has gone up from 3% to 23%.

    The plans of acquiring film Roman has run into rough weather as Pentamedia now wants to pay for the acquisition in cash and stocks as proposed to all cash deal earlier.

    At the current market price of Rs 61, the stock is trading at a P/E multiple of 2 times its FY01 earnings.

     

     

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