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Sandvik Asia: Higher expenses take toll

Apr 27, 2001

Sandvik Asia has declared a miniscule 1% growth in turnover during the 1QFY02. Since its expenditure has shot up by 12%, its operating margins have declined by 910 basis points to 11.4%. This has also taken a toll on its bottomline which has shrunk by 41% to Rs 24 m YoY.

(Rs m) 1QFY01 1QFY02 Change FY01
Net Sales 450 454 0.9% 1,937
Other Income 9 25 173.9% 91
Expenditure 358 402 12.4% 1,677
Operating Profit (EBDIT) 92 52 -43.9% 260
Operating Profit Margin (%) 20.5% 11.4% 13.4%
Interest 12 12 1.3% 57
Depreciation 23 25 7.0% 106
Profit before Tax 66 40 -39.4% 188
Tax 26 16 66
Profit after Tax/(Loss) 41 24 -40.6% 123
Net profit margin (%) 9.1% 5.3% 6.3%
No. of Shares (eoy) (m) 1.9 1.9 1.9
Earnings per share* 87.7 52.1 66.0
Current P/e ratio 15.6 12.4
*(annualised)

Its material costs escalated by 43% to Rs 285 m during the quarter. This was one of the primary reasons for its expenditure jump.

Going by its 1QFY02 performance, the outlook for Sandvik doesn't look too enthusing. At the current price of Rs 816 the stock trades at a P/e multiple of 16 times its annualised 1QFY02 earnings.

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