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Emco: Turnaround on the cards

Aug 9, 2011

Emco has announced its first quarter financial results for 2011-2012 (1QFY12). The company has reported 58.5% YoY growth in sales. It also posted a net profit of Rs 17.4 m in 1QFY12 against a loss in the same quarter previous year. Here is our analysis of the results.

Performance summary
  • Standalone topline increased 58.5% YoY during 1QFY12.
  • The company reported operating profit of Rs 186 m in 1QFY12 compared to an operating loss of Rs 255 m in 1QFY11.
  • The company posted net profit of Rs 17.4 m against a loss of Rs 259.3 m in the same quarter previous year.

    Standalone financial performance
    (Rs m) 1QFY11 1QFY12 Change
    Sales 1,186 1,880 58.5%
    Expenditure 1,441 1,694 17.5%
    Operating profit (EBDITA) (255) 186  
    Operating profit margin (%) -21.5% 9.9%  
    Interest 91 111 22.5%
    Depreciation 46 49 6.5%
    Profit before tax (392) 26  
    Tax (132) 8  
    Extraordinary items, net of tax - -  
    Profit after tax/(loss) (259) 17  
    Net profit margin (%) -21.9% 0.9%  
    No. of shares (m)   65.1  
    Diluted earnings per share (Rs)*   (2.59)  
    P/E ratio (x)*   NA  
    * On a trailing 12 months basis
    # Excluding extraordinary items

    What has driven performance in 1QFY12?
    • Emco's standalone topline increased by 58.5% YoY during the quarter.

    • Emco's operating margins increased to 9.9% during 1QFY12. The company reported operating profit of Rs 186 m during the quarter compared to a loss of Rs 255 m in 1QFY11 due to healthy growth in sales (operating leverage).

    • The company reported a net profit of Rs 17.4 m during the quarter vis--vis a loss of Rs 259 m in 1QFY11 due to strong performance at the operating level.

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