Apr 20, 2001|
Wartsila: On an uneven keel
Wartsila India has posted a net profit of Rs 36 m for the quarter ended March 31, 2001, a huge 200% jump as compared to Rs 12 m it reported in the corresponding period last fiscal. Turnover for the 1QFY02 is up by a significant 51%.
|Operating Profit (EBDIT)
|Operating Profit Margin (%)
|Profit before Tax
|Profit after Tax/(Loss)
|Net profit margin (%)
|No. of Shares (eoy) (m)
|Diluted Earnings per share*
|Current P/e ratio
Wartsila is India's largest manufacturer and supplier of 1 MW - 6 MW DG sets which have the advantage of being able to adapt its engines to a variety of fuels. It has a market share of over 65% of the total genset production in India (> 1 MW range). Diesel Gensets (DG) of smaller size can be put together to make one large power generating unit.
The company improved its operating margins by a significant 260 basis points. A 33% reduction in interest costs added to the improved performance. As a result it doubled its net margins in 1QFY02.
However, the company is not a very consistent performer. In FY01, for the first half of the year, the company's bottomline declined by a significant 43% YoY. But the company bounced back in the September ended 3QFY01 and recorded a huge 204% jump in bottomline. The company finally finished FY01 with a marginal 3% growth in bottomline and an 8% growth in topline.
Added to that, the company`s orderbook has shrunk. As on March 31, 2001 orders for power plants to be executed during the year were Rs 694 m, as against Rs 1,415 m on March 31, 2000.
Though the stock gained nearly 8% today based on the good results, the inconsistent track record of Wartsila does not inspire confidence for the future. At Rs 88 the stock currently trades at a P/e multiple of 7.4 times its annualised 1QFY02 earnings. This is very low compared to its peers in the industry. ABB for example, quotes at a P/e of 17 times FY01 earnings and Siemens quotes at 12 times its annualised 1QFY02 earnings. Wartsila has been historically given a lower rating because of its uneven track record and it is unlikely to change anytime in the near future.
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