Aksh Optifibre: Signs of revival - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Aksh Optifibre: Signs of revival

May 8, 2002

For full year ended March '02, Aksh Optifibre has continued to report a healthy growth in topline. Over the past two financial years, the company has more than doubled net sales. Growth in turnover is likely to have been generated by ramp up in operating rates.

  QoQ   YoY  
(Rs m) 3QFY02 4QFY02 Change 4QFY01 4QFY02 Change
Net Sales 431 526 22.0% 515 526 2.2%
Other Income 3 4 44.6% 10 4 -56.3%
Expenditure 402 466 16.0% 365 466 27.8%
Operating Profit (EBDIT) 29 60 103.7% 150 60 -60.1%
Operating Profit Margin (%) 6.8% 11.4%   29.1% 11.4%  
Interest 9 10 3.3% 5 10 85.2%
Depreciation 16 12 -25.8% 11 12 8.2%
Profit before Tax 7 42 547.6% 143 42 -70.6%
Tax (7) 11   13 11  
Profit after Tax/(Loss) 14 32 126.7% 131 32 -75.9%
Net profit margin (%) 3.2% 6.0%   25.4% 6.0%  
No. of Shares 22.0 22.0   22.0 22.0  
Diluted earnings per share* 2.5 5.7   23.7 5.7  
P/E ratio         10.2  
(annualised)            

Having said that, much of the stabilisation in operations seems to have been achieved in 4QFY01. The quarter constituted 40% of full year sales. Consequently, the YoY effect has been wiped out, which impacted growth in 4QFY02. Further, with a meltdown in the telecom service sector, especially long distance telephony, telecom companies dramatically scaled back their network expansion plans over 2001. Write offs of high priced acquisitions made during the go-go years of 2000 & large capacity installations for projected demand in voice, data & video transmission, which never materialised, seems to have led to near bankruptcy of U.S companies. Across the Atlantic, much of these reasons plus exorbitant bids for 3-G licenses in 2000 led to strained balance sheets. Consequently, over the past year, several telecom companies hived off divisions to increase liquidity.

(Rs m) FY01 FY02 Change
Net Sales 1,274 2,032 59.5%
Other Income 24 12 -47.2%
Expenditure 1,039 1,723 65.7%
Operating Profit (EBDIT) 234 309 31.9%
Operating Profit Margin (%) 18.4% 15.2%  
Interest 26 31 20.9%
Depreciation 23 54 134.0%
Profit before Tax 209 236 13.0%
Tax 18 47  
Profit after Tax/(Loss) 191 189 -0.9%
Net profit margin (%) 15.0% 9.3%  
No. of Shares 22.0 22.0  
Diluted earnings per share 8.7 8.6  
P/E ratio   6.8  

The cutback in telecom equipment demand severely dented demand-supply equation of optic fibre cables leading to a sharp drop in cable prices in FY02. Making matters worse for industry was global capacity additions during FY01. Consequently, the industry took a double hit, as demand evaporated and additional supply came onstream. The sharp dip in optic fibre prices was a reflection of the challenging dynamics.

OPM of the company came under pressure, as expenses increased at a faster clip compared to sales. Growth in expenditure is largely due to higher production during the fiscal. The decline in OPM suggests that raw material prices did not fall commensurately with OFC prices. Having said that, the sequential improvement in operating margins is a silver lining, reversing the deteriorating trend over 2Q and 3QFY02. This could indicate that the industry has bottomed out and certain amount of pricing power has returned. Also, higher sequential sales figure compared to the previous two quarters suggests an improvement in demand for optic fibre cables.

At Rs 58, the scrip trades on a multiple of 6.8x FY02 earnings. Over the past four quarters the stock has traded in a valuation band of 5x-8x. Global telecom service providers are not yet out of the woods. A recovery can be expected in 2003. Having said that, network rollout of private sector operators and incumbent players -- BSNL & MTNL -- could lift domestic demand. Also, China could be the wild card.


Equitymaster requests your view! Post a comment on "Aksh Optifibre: Signs of revival". Click here!

  

More Views on News

AKSH OPTIFIBRE Announces Quarterly Results (1QFY20); Net Profit Down 106.6% (Quarterly Result Update)

Aug 13, 2019 | Updated on Aug 13, 2019

For the quarter ended June 2019, AKSH OPTIFIBRE has posted a net profit of Rs 9 m (down 106.6% YoY). Sales on the other hand came in at Rs 770 m (down 44.7% YoY). Read on for a complete analysis of AKSH OPTIFIBRE's quarterly results.

AKSH OPTIFIBRE Announces Quarterly Results (4QFY19); Net Profit Down 217.8% (Quarterly Result Update)

May 30, 2019 | Updated on May 30, 2019

For the quarter ended March 2019, AKSH OPTIFIBRE has posted a net profit of Rs 106 m (down 217.8% YoY). Sales on the other hand came in at Rs 761 m (down 55.0% YoY). Read on for a complete analysis of AKSH OPTIFIBRE's quarterly results.

AKSH OPTIFIBRE 2017-18 Annual Report Analysis (Annual Result Update)

Jan 29, 2019 | Updated on Jan 29, 2019

Here's an analysis of the annual report of AKSH OPTIFIBRE for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of AKSH OPTIFIBRE. Also includes updates on the valuation of AKSH OPTIFIBRE.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

AKSH OPTIFIBRE SHARE PRICE


Sep 18, 2020 (Close)

TRACK AKSH OPTIFIBRE

  • Track your investment in AKSH OPTIFIBRE with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MORE ON AKSH OPTIFIBRE

AKSH OPTIFIBRE - HATHWAY CABLE COMPARISON

COMPARE AKSH OPTIFIBRE WITH

MARKET STATS