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.
MTNL: Margins take a pounding - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Apr 26, 2001

    MTNL: Margins take a pounding

    Mahanagar Telephone Nigam Limited (MTNL), the basic service provider in Mumbai and Delhi, has reported a 52% rise in net profits to Rs 16,535 m for the year ended 31st March 2001. The net Income from services have also gone up by 11% to Rs 57,320 m. The reason for this higher sales growth is primarily on account of the reduction in domestic long distance telephony rates, which has increased the paid call minutes. This in turn has aided higher growth for the company.

    (Rs m) 4QFY00 4QFY01 Change FY00 FY01 change
    Sales 14,965 13,414 -10.4% 51,822 57,320 10.6%
    Other Income - 501   1,747 2,485 42.2%
    Expenditure 7,546 7,828 3.7% 32,393 33,984 4.9%
    Operating Profit (EBDIT) 7,419 5,586 -24.7% 19,429 23,336 20.1%
    Operating Profit Margin (%) 49.6% 41.6%   37.5% 40.7%  
    Interest - 3   84 62 -26.3%
    Depreciation 1,429 1,625 13.7% 7,093 7,184 1.3%
    Profit before Tax 5,990 4,458 -25.6% 13,999 18,574 32.7%
    Extraordinary items - (450)   (1,630) (1,589)  
    Tax (825) 405   1,491 450  
    Profit after Tax/(Loss) 6,815 3,603 -47.1% 10,878 16,535 52.0%
    Net profit margin (%) 45.5% 26.9%   21.0% 28.8%  
    No. of Shares (eoy) (m) 630.0 630.0   630.0 630.0  
    Diluted number of shares 630.0 630.0   630.0 630.0  
    Earnings per share (Rs)       17.3 26.2  

    The company's performance for the fourth quarter, however, is rather dissappointing. While income from services have dropped by 10%, the fall is operating margin is profound. The operating margins have fallen by 790 basis points to 42%. But interestingly, as per the company's press release, operating margins have gone up from 37.5% in FY00 to Rs 40.7% in FY01. Since the company had reported a drop in operating margins in the first three quarters as well as the fourth quarter, the sharp rise in margins seems a trifle confusing.

    Having said that, operating costs as a percentage of sales has come down from 62.5% in FY00 to 59.3% in FY01. Both the staff costs as well as the national network charges that accounted for more than 41% of the costs in FY00 have fallen in the current year.

    Declining costs…
    (% of sales) FY00 FY01
    Staff cost 21.0% 19.2%
    Admin/operative exp 14.9% 14.2%
    License fee 6.3% 6.3%
    National network charge 20.3% 19.6%
    Total costs 62.5% 59.3%

    The scrip is currently trading at Rs 150, at a P/E multilple of 5.7x the FY01 earnings. On the sales of Rs 57,320 m, market capitalisation to sales works out to 1.6 times (market capitalisation is Rs 94,500 m).

     

     

    Equitymaster requests your view! Post a comment on "MTNL: Margins take a pounding". Click here!

      
     

    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    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!

    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

    MTNL SHARE PRICE


    Aug 22, 2017 (Close)

    TRACK MTNL

    MTNL - FRANCE TELECOM COMPARISON

    Compare Company With Charts

    COMPARE MTNL WITH

    MARKET STATS