MTNL: Tumbling profitability - Views on News from Equitymaster

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

  • MyStocks

MEMBER'S LOGINX

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

MTNL: Tumbling profitability

Oct 31, 2001

Mahanagar Telephone Nigam Limited (MTNL) has posted a 14.5% drop in net profits for the second quarter ended September 30, 2001. The transition into a 12% revenue sharing regime has had a significant impact on profitability of the company.

(Rs m)2QFY012QFY02Change1HFY011HFY02Change
Sales 15,212 16,211 6.6% 29,220 31,164 6.7%
Other Income 775 851 9.8% 1,237 1,372 11.0%
Expenditure 9,372 9,962 6.3% 17,692 19,163 8.3%
Operating Profit (EBDIT) 5,841 6,250 7.0% 11,528 12,001 4.1%
Operating Profit Margin (%)38.4%38.6%39.5%38.5%
Interest 17 2 -90.7% 41 20 -51.7%
Depreciation 1,933 2,060 6.6% 3,885 3,922 0.9%
Profit before Tax 4,665 5,039 8.0% 8,838 9,432 6.7%
Tax 191 1,215 536.7% 673 2,285 239.7%
Profit after Tax/(Loss) 4,474 3,824 -14.5% 8,165 7,147 -12.5%
Net profit margin (%)29.4%23.6%27.9%22.9%
No. of Shares (eoy) (m) 630.0 630.0 630.0 630.0
Diluted number of shares 630.0 630.0 630.0 630.0
Earnings per share (Rs)* 28.4 24.3 51.8 45.4
(*annualised)

While income from basic telephony services grew by 6.6%, value growth in FY02 is expected to be on the negative territory in light of the tariff restructuring effected by the Telecom Regulatory Authority of India (TRAI) last year. Besides, growth in basic subscriber base is also expected to slow down, as the company operates in two cities viz. Mumbai and Delhi where tele-density is amongst the highest in India.

Since MTNL operates in Category 'A' telecom circles, the shift from fixed license fee of Rs 900 per active basic subscriber line to 12% revenue share has resulted in a 114% rise in license fees for 2QFY02. For FY01, license fee as a percentage of total revenue stood at 6.2% and a shift into a revenue share regime will double its license fee outgo in the current financial year. But a decline in network charges has prevented the operating margins from a sharp fall. However, MTNL has provided for national network charges on an adhoc basis in the current quarter pending final formulae to be arrived at with Bharat Sanchar Nigam Limited (BSNL).

Tax liability has increased sharply for the first half of the current year due to a higher provising for deferred taxation. This has also resulted in a 14.5% fall in net profit to Rs 3,824 m for 2QFY02.

The scrip is currently trading at Rs 129 on a P/E multiple of 2.8x the annualised 1HFY02 earnings. We had estimated a 2% fall in net profits for the current year based on a license fee of Rs 900 per active subscriber line. Now with MTNL moving into a revenue share agreement in the current year itself, we expect the company to report a 18.5% fall in profits for FY02.

Equitymaster requests your view! Post a comment on "MTNL: Tumbling profitability". Click here!

  

More Views on News

Top Stocks Riding the 5G Wave in India (Views On News)

Dec 3, 2021

The 5G revolution is unfolding at a faster rate than you would expect. Here's how you can hop on to this ride.

1,300% in One Year - Are You Kidding Me? (Views On News)

Nov 29, 2021

An amount of Rs 1 lakh invested in the midcap stock a year ago would have turned into Rs 15 lakh today.

Bharti Airtel's Humongous Rights Issue to Open on 5 October. Key Points Investors Should Know (Views On News)

Sep 23, 2021

Shares of Bharti Airtel trade near record high ahead of rights issue.

This Company has Quietly Built an Enviable Startup Portfolio (Views On News)

Sep 22, 2021

The startups era has just begun, and it will provide massive opportunities to those who can spot the right trends at the right time.

More than 450% Gains for Tejas Networks in the Past Year. What Next? (Views On News)

Aug 18, 2021

Shares of Tejas Networks are up 173% since January 2021. Is the rally justified?

More Views on News

Most Popular

Tata Steel vs SAIL: Which Stock is Better? (Views On News)

Jan 13, 2022

With government initiatives set to boost the steel sector, find out who has a better chance of coming out on top.

These 5 Penny Stocks are Held by Rakesh Jhunjhunwala. Worth a Look? (Views On News)

Jan 18, 2022

Rakesh Jhunjhunwala is holding these penny stocks in his portfolio for several years now.

Tech Mahindra's CTC Acquisition: Too Expensive? (Views On News)

Jan 18, 2022

Tech Mahindra's acquisition of European IT-company fails to excite investors.

Time to Buy Energy Stocks (Fast Profits Daily)

Jan 14, 2022

Energy is a sector that looks set to take off. It's time to get in.

5 Hidden Tata Group Companies to Add to Your Watchlist (Views On News)

Jan 18, 2022

Here's all you need to know about these five Tata group stocks that aren't as popular as the others.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

MTNL SHARE PRICE


Jan 25, 2022 (Close)

TRACK MTNL

MTNL - FRANCE TELECOM COMPARISON

COMPARE MTNL WITH

MARKET STATS