BPL Limited, the consumer electronics major, has reported another depressing quarterly result. Both sales and profits in the first quarter ended 30th June 2001 have fallen by 19.3% and 46.3% respectively.
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The turnover for the quarter was lower on account of fall in sale of traded products namely, refrigerators and washing machines, aggregating Rs 450 m. The company has also discontinued the sales of dry cell batteries and emergency lanterns, which are being sold directly by the subsidiary company, BPL Soft Energy Systems Limited. The turnover of dry cell batteries and emergency lanterns during the corresponding period of the previous year was Rs 110 m. If one were to exclude the transfer of the division, sales have dropped by 16.8% and excluding both the aforesaid adjustments, sales have dropped by 4.9% in the first quarter of the current year.
However, the encouraging aspect is the sharp growth on the export front. While total exports have touched Rs 235 m, CTV exports were at Rs 117 m, a growth of 150% compared with the corresponding quarter of the previous year (49.7% of total exports).
The discontinuation of dry cell division and pruning of traded goods has resulted in a significant fall in operating expenses by 21.5% to Rs 2,645 m. As a result, margins have improved by 250 basis points in 1QFY02. Though the company might continue to reap benefit as a result of realignment of business during the year, margins might not increase commensurately due to pricing pressure. It must be remembered that BPL had lost market share in the 20' inches and 21' inches segment in the first quarter of the current year. Also, barring its CTV division, other divisions like refrigerators and audio systems continue to remain a drag on its profitability.
Though operating profit increased by 2.3% in the aforesaid quarter, higher interest and depreciation charges have affected profit growth at the net level. Net profit has fallen by 46.3% to Rs 102 m in 1QFY02.
The scrip is currently trading at Rs 48 at a P/E multiple of 3.3x the annualised 1QFY02 earnings. On the annualised sales of Rs 12,012 m, market capitalisation to sales works out to 0.1 times. The stock has been on the decline for the last six months ever since the SEBI barred BPL from tapping capital markets. This coupled with the fall in profitability and market share have done no good to the company's prospects.
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