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Crompton Greaves: Margin shocker - Views on News from Equitymaster

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Crompton Greaves: Margin shocker

Jul 20, 2011

Crompton Greaves  has announced the first quarter results of financial year 2011-2012 (1QFY12). The company has reported around 5.9% YoY growth in sales. However, net profits have declined 58.4% YoY. Here is our analysis of the results.

Performance summary
  • Consolidated sales grow by 5.9% YoY during 1QFY12, led by strong performance from the ‘industrial systems’ business. However, growth in “power systems” and “consumer products” was muted at 4.1% and 2.2%, respectively.
  • Operating profits decline by 38.8% YoY during the quarter. The decline in operating profits was due to increase in raw material cost and other expenditure. Raw material cost increased due to rise in commodity prices.
  • Net profits decline by 58.4% YoY due to muted performance at the operating level coupled with an increase in interest and depreciation cost.   
  • During 1QFY12, the consolidated order book stood at 70.8 bn.

Consolidated performance snapshot
(Rs m) 1QFY11 1QFY12 Change
Sales 23,022 24,377 5.9%
Expenditure 20,049 22,559 12.5%
Operating profit (EBDITA) 2,973 1,819 -38.8%
Operating profit margin (%) 12.9% 7.5%  
Other income 183 151 -17.3%
Interest 50 110 118.6%
Depreciation 415 608 46.4%
Profit before tax 2,691.1 1,252.7 -53.5%
Tax 794 475 -40.1%
Minority interest (1) (1)  
Share of profit/(loss) of associate 12 18 45.9%
Extraordinary items      
Profit after tax/(loss) 1,908.5 794.7 -58.4%
Net profit margin (%) 8.3% 3.3%  
No. of shares   641.5  
Basic & Diluted earnings per share (Rs)*   1.24  
P/E ratio (x)*   16.8  

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