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Hawkins: Margin expansion led growth
May 31, 2016

Hawkins declared results for the quarter ended March 2016. The company's revenues came in flat, while profits rose by 32% YoY. Here is our analysis of the results:

Performance summary
  • Revenues came in flat during the quarter.
  • Operating profits rose by about 29% YoY as margins expanded by 3% to 13%.
  • Net profits rose by 32% YoY.
  • During full year FY16, revenues and profits grew by 6% YoY and 26% YoY.
  • Board declares dividend of Rs 60 per share (Rs 45 per share in FY15); translating to a yield of 2.4%

    Financial snapshot
    (Rs m) 4QFY15 4QFY16 Change FY15 FY16 Change
    Net sales 1,573 1,572 0.0% 5,145 5,444 5.8%
    Expenditure 1,414 1,369 -3.2% 4,637 4,764 2.7%
    Operating profit (EBIDTA) 158 204 28.5% 508 679 33.8%
    EBITDA margin (%) 10.1% 13.0% 9.9% 12.5%
    Other income 6 9 48.4% 38 33 -15.0%
    Depreciation 14 8 -41.8% 36 35 -3.6%
    Interest cost 11 11 -2.6% 37 34 -6.8%
    Exceptional items 0 0 0 -40
    Profit before tax 139 194 39.0% 473 602 27.3%
    Tax 43 66 54.8% 152 199 30.9%
    Effective tax rate 31% 34% 32% 33%
    Net profit 97 127 31.9% 321 403 25.6%
    Net profit margin (%) 6.1% 8.1% 6.2% 7.4%
    No. of shares (m) 5 5
    Diluted earnings per share (Rs)* 84
    Price to earnings ratio (x) 30

    *On a trailing-twelve month basis

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INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

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DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report.
  2. Equitymaster has financial interest in Hawkins.
  3. Equitymaster's Associates and Research Analyst or his/her relative doesn't have any financial interest in the subject company.
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