Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Telco: 1QFY04 revenues up 43% - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 21, 2003

    Telco: 1QFY04 revenues up 43%

    Tata Engineering (Telco) has posted yet another impressive quarterly result. Led by a sharp rise in commercial vehicle and passenger car sales, the company has posted a 43% rise in net sales and a significant growth in net profit for FY04.

    (Rs m) 1QFY03 1QFY04 Change
    Net sales 17,477 25,009 43.1%
    Other Income 69 105 51.2%
    Expenditure 15,463 21,808 41.0%
    Operating Profit (EBDIT) 2,014 3,201 59.0%
    Operating Profit Margin (%) 11.5% 12.8%  
    Interest 800 538 -32.8%
    Depreciation 895 930 3.9%
    Profit before Tax 388 1,838 373.5%
    Extraordinary items - (202) -
    Tax 108 634 485.6%
    Profit after Tax/(Loss) 280 1,003 258.3%
    Net profit margin (%) 1.6% 4.0%  
    No. of Shares (m) 319.8 319.8  
    Diluted Earnings per share (Rs)* 3.5 12.5  
    P/E Ratio (x)   17.4  
    (* annualised)      

    Overall CV volumes have increased by 25% to 28,235 units in 1QFY04, primarily led by a 19% rise in medium and heavy CV sales (both domestic and export sales volumes). CV sales continue to remain strong on the back of positive growth in the industrial sector in 1HCY04 and demand arising out of replacement of old trucks. Though freight rates during the last quarter were relatively weak compared to 4QFY03, it is seasonal in nature.

    Telco, in its annual report, had stated that it expects industry CV sales to grow by 7%-8% in FY04. Passenger car sales have more than doubled in 1QFY04. But it has to be remembered that Telco had a planned shut down in its car plant in the same period last year due to which volume growth in 1QFY03 was subdued. As a result, car sales is on the higher side in 1QFY04. As far as the geographical mix of volumes is concerned, exports have risen by 98% as compared to a 45% growth in domestic volumes.

    First quarter snapshot…
    (Nos) 1QFY03 1QFY04 Change
    M/HCVs 15,254 18,106 18.7%
    LCVs 7,337 10,129 38.1%
    UVs 6,744 7,003 3.8%
    Cars 11,429 25,154 120.1%
    Total 40,764 60,392 48.2%
    Source: Company website

    The rise in operating margins have to be viewed in the context of benefits arising out of higher capacity utilisation. This is in line with our full year operating margin estimate of 12.8%. Other income has shown a sharp spurt as it includes Rs 103 m towards trade investment sold in the year 1999-2000 that are recognised in 1QFY04. Telco had indicated that it would repay debt to the tune of Rs 5 bn in FY04 and accordingly, interest cost is lower in the first quarter of this fiscal. Extraordinary adjustments here pertain to the write-off of cost under Employee Separation Scheme to the tune of Rs 199 m, which has resulted in lower profits for 1QFY04.

    The stock currently trades at Rs 218 implying a P/E multiple of 17.4x annualised 1QFY04 earnings (11.8x FY04E earnings). FY04 has a lot to offer to the company. CMIE's expectations of a sharp rise in food grain output and GDP growth could translate into higher CV demand for goods transportation (the relaxation in inter-state transportation of food grain, in this context, bodes well for the sector as a whole). With exports to Rover also expected to gain momentum in the second half, passenger car sales for Telco is expected to look up. Though valuations are on the higher side for the CV company at the current juncture, looking at the long term, Telco seems to be well placed to capitalise on any rise in CV demand. That said, the passenger car division continues to remain an area of concern and therefore, increases the risk profile of the stock.



    Equitymaster requests your view! Post a comment on "Telco: 1QFY04 revenues up 43%". Click here!


    More Views on News

    Tata Motors Ltd: Another Disappointing Quarter, Management fails to Perform! (Quarterly Results Update - Detailed)

    Aug 14, 2017

    Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.

    Tata Motors Ltd: Dismal Quarter, Long way to go! (Quarterly Results Update - Detailed)

    Feb 16, 2017

    Tata Motors Ltd has announced its financial results for the third quarter of the financial year 2016-17 (3QFY17).

    Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins! (Quarterly Results Update - Detailed)

    Aug 2, 2017

    GST realted cost impacts Margins, Management expects good year ahead.

    Hero Motocorp Ltd: Riding on the Scooters Growth, Maintains Margins! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Good Recovery in the Scooters market, expects pick up in exports too.

    Bajaj Auto Limited: Recovery in Exports but Domestic Disappoints! (Quarterly Results Update - Detailed)

    Aug 1, 2017

    New Export Markets picking up, Management expects good recovery in domestic Three wheeler market.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 16, 2017 (Close)


    • Track your investment in TATA MOTORS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Detailed Financial Information With Charts