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Wartsila: Revving up in third quarter

Oct 24, 2000

Large diesel engines manufacturer, Warsila NSD India Limited, has recorded a significant 204% jump in net profits to Rs 73 m in its third quarter ended September 30, 2000. The company's turnover was up 67% as compared to the corresponding quarter in 1999.

(Rs m) 3QFY00 3QFY01 Change
Sales 707 1,183 67.3%
Other Income 0 2 -
Expenditure 658 1,058 60.8%
Operating Profit (EBDIT) 49 125 155.1%
Operating Profit Margin (%) 6.9% 10.6%  
Interest 4 4 0.0%
Depreciation 6 8 33.3%
Profit before Tax 39 115 194.9%
Other Adjustments 0 -1  
Tax 15 41 173.3%
Profit after Tax/(Loss) 24 73 204.2%
Net profit margin (%) 3.4% 6.3%  
No. of Shares (eoy) 12.0 12.0  
Earnings per share* 11.2 24.3  
Current P/e ratio   3.6  

Wartsila is India's largest manufacturer and supplier of 1 MW - 6 MW DG sets which have the advantage of being able to adapt its engines to a variety of fuels. It has a market share of over 65% of the total genset production in India (> 1 MW range). DG sets of smaller size can be put together to make one large power generating unit.

The company's order book position for power plants stood at Rs 1.5 bn on September 30, 2000. This is almost 50% higher than the company's order book position as on September 30, 1999 (Rs 1 bn). Thes figures signal encouraging trends, indicating that growth is finally taking place in the power sector.

It should be noted that, this December ending company's consolidated first half net profit was down by a whopping 43% to Rs 47 m. Its first half turnover also declined by 23% to Rs 1,622 m.

Wartsila has more than made up for its decline in the first half by putting in such superlative performance in the third quarter. In fact, the company's net profit improved by 12% to Rs 120 m in its consolidated nine months results. The turnover during the nine month period was Rs 2.5 bn (up 8%). Going forward, we expect the company to do well even in the fourth quarter, given its healthy order book position.

At the current price of Rs 88, the stock trades at a P/e multiple of 3.6 its FY01 annualised earnings.

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