Other income spurs engineering bottomline - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Other income spurs engineering bottomline

Aug 3, 2000

The quarter ended June 30, 2000 is a mixed dose for engineering companies. The collated quarterly performance of some of India's top engineering companies has shown an encouraging jump of 112% in net profits (compared to the corresponding quarter in June, 1999). But the turnover during the quarter logged in a minor decline.

(Rs m) Jun-99 Jun-00 Change
Sales 7,259 7,221 -0.5%
Other Income 218 391 79.6%
Expenditure 6,451 6,551 1.5%
Operating Profit (EBDIT) 808 670 -17.0%
Operating Profit Margin (%) 11.1% 9.3%
Interest 104 40 -61.9%
Depreciation 230 233 1.3%
Profit before Tax 705 810 14.8%
Other Adjustments -28 389
Tax 208 202 -2.9%
Profit after Tax/(Loss) 469 997 112.4%
Net profit margin (%) 6.5% 8.4%
*Sample incudes: Alfa Laval, Ingersoll Rand, Grindwell Norton, Wartsila NSD,
Siemens, Cummins and Sandvik Asia

An 80% jump in other income is largely responsible for the sharp jump in bottomline despite the decline in turnover. In the current quarter, the sector was also helped by a whopping Rs 389 m, which came in as extraordinary income. On the positive side, there are signs of financial restructuring in the sector. This is indicated by a significant 62% decline in interest costs. This restructuring has also contributed to the spurt in bottomline.

The worrying aspect continues to be the stagnant topline and the resultant decline in operating margins. This is a sign of difficult market conditions, which has put pressure on margins. If this trend continues, the engineering sector could be in for rough times both financially as well as on the bourses.

Equitymaster requests your view! Post a comment on "Other income spurs engineering bottomline". Click here!


More Views on News

Mazagon Dock Shipbuilders IPO: Should You Apply? (IPO)

Sep 29, 2020

Should you bet on this public sector defence shipbuilder?

More Views on News

Most Popular

Stocks that Could Shine More than Gold After Diwali (Profit Hunter)

Nov 17, 2020

If the markets become volatile over the next few months, do this.

Not Infosys or Wipro. India's Next Wealth Creators Could Be Drone Stocks (Profit Hunter)

Nov 25, 2020

India's drones directorate signals the next big defence tech multibaggers.

How the New Margins Will Impact You (Fast Profits Daily)

Nov 25, 2020

The new rules on margins will come into effect from 1st December. Are you ready?

How to Build the Best Trading System (Fast Profits Daily)

Nov 20, 2020

In this video, I'll show you how to make the best trading system.

An Eraser and Some Pencils (The Honest Truth)

Nov 17, 2020

Ajit Dayal on the road ahead for the world after covid.


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Nov 27, 2020 (Close)