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Dismal performance by Raymond - Views on News from Equitymaster
 
 
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  • Oct 25, 2000

    Dismal performance by Raymond

    Raymond Limited has posted a net loss of Rs 1,500 m in 2QFY01 compared to a profit of Rs 498 m in 2QFY00. The loss is primarily on account of loss on sale of steel division, which the company sold to EBG India for a consideration of around Rs 3,870 m. Even if we exclude this loss, profits have declined by 48% to Rs 259 m. However, the results are not comparable since 2QFY00 sales includes contribution from both cement (sold to Lafarge India) as well as steel plant.

    (Rs m) 2QFY00 2QFY01 Change
    Sales 3,647 3,393 -7.0%
    Other Income 49.4 51.0 3.2%
    Expenditure 2,645 2,690 1.7%
    Operating Profit (EBDIT) 1,002 703 -29.8%
    Operating Profit Margin (%) 27.5% 20.7%  
    Interest 273 285 4.7%
    Depreciation 242 210 -13.4%
    Profit before Tax 537 259 -51.7%
    Other Adjustments - 1,760 -
    Tax 39 - -
    Profit after Tax/(Loss) 498 (1,500) -
    Net profit margin (%) 13.7% -  
    No. of Shares (eoy) (m) 75.1 75.1  
    Diluted number of shares (m) 75.1 75.1  
    Diluted Earnings per share 26.5 -  
    (annualised)      
    Market cap/Sales - 0.51  

    Operating margins has fallen sharply from 22% in 1HFY00 to 15% in 1HFY01. Though interest cost has gone up by 5% in the second quarter, for 1HFY01, this has come down by 4%. The net margins are expected to show notable improvement since Raymond would receive more than Rs 11 bn as sales proceeds (Rs 4 bn for steel plant and Rs 7 bn for cement plant). If the company were to utilise this towards retiring its high cost debt, Raymond would become debt-free.

    However, garment business is increasingly becoming competitive and prospects for both textiles and fabric division does not look promising. Therefore, we expect the company's topline to drop by as much as 30% for FY01.

     

     

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