Crompton Greaves tryst with restructuring continues. FY02 was a momentous year for the company, as it turned back into the black. The first quarter of FY03 is a continuation of that trend. Crompton recorded 6% topline growth YoY and finished the quarter with a Rs 6 m profit, as compared to Rs 57 m loss reported in 1QFY02.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
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The company's operating margins improved by 70 basis points. However, the continuing high interest outgo and depreciation provisioning took a toll on profits. Had it not been for a higher other income, Crompton would surely have finished the quarter in the red. The reason for higher other income is not been given in the press release of the company.
The company's stock price had shot up in anticipation of a much improved performance to 52 week high at Rs 60 levels recently. However, even after all the restructuring and change of management (the company now forms part of the BM Thapar Group), the 1QFY03 performance (though better than last year) is not really eye catching. Thus the counter retraced its steps on the bourses yesterday.
One positive for the company in near future is the news that Crompton divested its shareholding comprising 760,000 equity shares in CG Newage Electrical Ltd. at a price of Rs 220.50 per share a few days back. The consideration (Rs 168 m) will be accounted for in the September quarter. Thus the next quarter should see a much better bottomline growth.
However, all said and done, Crompton Greaves operational performance leaves much to be desired. The company would also have to clear income tax, excise and sales tax demands aggregating to Rs 277 m relating to FY02 some time in future, which would dampen its recovery in FY03.
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