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Anant Raj Ind.: Slow and steady - Views on News from Equitymaster
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Anant Raj Ind.: Slow and steady
Jun 7, 2010

Anant Raj has announced its FY10 results. The company has reported a 14% YoY and 15% YoY increase in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Topline grows 14% YoY during FY10. Growth is led by a significant jump in rental income which grows by 207% YoY during the year.
  • Operating margins expand by 2.3% YoY on the back of lower raw material costs and other expenditure (as percentage of sales).
  • Net profits grow almost 15% YoY during the year owing to the expansion in operating margins.
  • Board recommends a dividend of Rs 0.6 (dividend yield of 0.6%)

(Rs m) 4QFY09 4QFY10 Change FY09 FY10 Change
Sales 131 341 159.3% 2,508 2,863 14.2%
Expenditure 81 79 -2.5% 301 278 -7.5%
Operating profit (EBDITA) 51 262 416.5% 2,207 2,585 17.1%
Operating profit margin (%) 38.6% 76.9%   88.0% 90.3%  
Other income 261 126 -51.7% 701 535 -23.7%
Interest 0 48   †††††††††††††† 5 49  
Depreciation 25 (16)   86 107 23.9%
Profit before tax 287 357 24.2% 2,817 2,964 5.2%
Tax 218 59 -72.9% 733 581 -20.8%
Extraordinary gain/(loss) (10) 10   (13) (1) -93.9%
Profit after tax/(loss) 58 308 429.0% 2,071 2,382 15.1%
Share of minority interests (2) (2)   (2) ††† 1  
Net profit 60 309 415.1% 2,073 2,382 14.9%
Net profit margin (%) 44.2% 90.3%   82.6% 83.2%  
No. of shares       †††††††††† 294.7 ††††††††††† 295.1  
Diluted earnings per share (Rs)*         8.1  
P/E ratio (x)*         12.4  

What has driven performance in FY10?
  • The 14.2% YoY growth in Anant Rajís net sales during FY10 was a result of a good performance of the companyís rental income which grew by 207% during the quarter (and contributed 17.1% to the companyís topline). The overall real estate business division, including the rental income and sale of real estate investments saw a growth of 9.2% YoY in topline during the year.

    The companyís other business of ceramic tiles (2.3% of total sales) recorded a fall in sales of 53% YoY during the year. Its contribution to the overall business, however, remains minimal.

  • The Companyís operating margins expand by 2.3% YoY during the year, mainly due to a decrease in both raw material costs and other expenditure.

  • Anant Rajís net profits grew at the pace of 14.9% YoY during FY10. The profit growth was helped by the expansion in operating margins. However, this growth would have been higher were it not for a fall in other income and a substantial increase in interest costs.

What to expect?
At the current price of Rs 100, the stock is trading at a multiple of 5.6 times our FY12 earnings estimates. The company has slightly underperformed our estimates. At current levels though, we remain positive on the stock from a 2 year perspective.

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