VSNL: Inflection point? - Views on News from Equitymaster

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VSNL: Inflection point?

Jun 23, 2004

VSNL announced its FY04 results yesterday and there seems to be no indication that the fall in revenues and bottomline may be stemmed going forward. The company reported a topline and bottomline decline of 30% and 52% YoY respectively for FY04. For the March quarter, the fall in topline stood at 15% while the fall in bottomline was 57%. The significant fall in the topline has led to a 880 basis fall in operating margins. Huge expenditure on voluntary retirement scheme (VRS) has added to the woes.

(Rs m) 4QFY03 4QFY04 Change FY03 FY04 Change
Net sales 9,146 7,781 -14.9% 45,385 31,635 -30.3%
Other income 1,237 351 -71.6% 2,740 2,076 -24.2%
Expenditure 6,811 6,116 -10.2% 33,978 26,481 -22.1%
Operating profit (EBDITA) 2,335 1,665 -28.7% 11,407 5,154 -54.8%
Operating profit margin (%) 25.5% 21.4%   25.1% 16.3%  
Interest            
Depreciation 400 496 24.0% 1,466 1,717 17.1%
Profit before tax 3,172 1,520 -52.1% 12,681 5,513 -56.5%
Extraordinary items (87) (56)   (136) (80)  
Tax 1,174 642 -45.3% 4,743 1,656 -65.1%
Profit after tax/(loss) 1,911 822 -57.0% 7,802 3,777 -51.6%
Net profit margin (%) 20.9% 10.6%   17.2% 11.9%  
No. of shares (m) 285.0 285.0   285.0 285.0  
Diluted earnings per share (Rs)* 26.8 11.5   27.4 13.3  
P/E ratio (x)         10.2  
(* annualised)            

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