X

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.
HFCL: Benefits from diversification - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Sep 3, 2002

    HFCL: Benefits from diversification

    Himachal Futuristic Communications Ltd. (HFCL) has reported an impressive turnaround in topline performance. After experiencing a 30% slide in FY02 turnover, the company has made a sharp comeback. Having said that, considering the slowdown in the telecom sector and poor performance of telecom equipment players, such topline performance was unexpected.

    (Rs m) 1QFY02 1QFY03 Change
    Sales 1,603 2,045 27.6%
    Other Income 40 32 -19.8%
    Expenditure 1,274 1,634 28.3%
    Operating Profit (EBDIT) 329 410 24.7%
    Operating Profit Margin (%) 20.5% 20.1%  
    Interest 107 257 140.1%
    Depreciation 57 62 9.0%
    Profit before Tax 205 124 -39.7%
    Tax - 21  
    Profit after Tax/(Loss) 205 103 -49.7%
    Net profit margin (%) 12.8% 5.0%  
    No. of Shares 78.8 78.8  
    Earnings per share* 10.4 5.2  
    P/E Ratio   10.8  
    (*annualised)      

    As compared to other key telecom equipment manufacturers that are present primarily in optic fibre cables (OFC), HFCL manufactures a portfolio of telecom equipment. Among the products of the company are optical equipment, microwave communication equipment, CDMA systems, optic fibre cables, set-top boxes and cable modems. Also, the company derives an estimated 35% of revenues from turn-key projects. In our FY02 report, we had mentioned that HFCL is planning to enter manufacturing of set-top boxes, cable modems and CDMA equipment. Basic service providers -- awarded a favourable judgment on wireless in local loop (WLL) -- have entered the limited mobility market based on CDMA technology, which could have driven HFCL revenues. Also, we reckon, cable modems are likely to have witnessed brisk sales, as cable internet gains popularity.

    Growth in operating profits is largely driven by revenues while operating margins (OPM) have declined. However, compared to the previous quarter, operating margins have recovered. The demand for CDMA equipment is likely to have led to a jump in raw material costs. Interest expense of the company has been volatile over the past 6 quarters. After reducing in 4QFY02, interest expense has increased considerably in 1QFY03. Reduced sales & bad investments over the past 18 months could have put pressure on cash flows leading to increased borrowings. Higher interest costs have eaten into pre-tax profits.

    At Rs 57 the scrip is trading on a multiple of 10.8x 1QFY03 annualised earnings. HFCL emerged as the winning bidder for Government owned, Hindustan Teleprinters Ltd. (HTL). HFCL acquired 74% stake in HTL for Rs 550 m. The cable bill, which supports conditional access system, is being reconsidered by parliament. Conditional access system will allow encryption of television channels by broadcasters facilitating the move towards pay channels. Consequently, cable T.V users will require set top boxes for viewing preferred channels, which could trigger demand for the company's product. That said, the company has been associated with several irregularities and investors need to remain wary.

     

     

    Equitymaster requests your view! Post a comment on "HFCL: Benefits from diversification ". Click here!

      
     

    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    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.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    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

    HIMACHAL FUTURISTIC SHARE PRICE


    Aug 21, 2017 (Close)

    TRACK HIMACHAL FUTURISTIC

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

    MORE ON HIMACHAL FUTURISTIC

    HIMACHAL FUTURISTIC - FRANCE TELECOM COMPARISON

    Compare Company With Charts

    COMPARE HIMACHAL FUTURISTIC WITH

    MARKET STATS