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Punjab Tractors: A consistent performer - Views on News from Equitymaster
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  • Nov 1, 2001

    Punjab Tractors: A consistent performer

    While all other tractor majors have reported a dismal second quarter performance, Punjab Tractors (PTL) has once again outperformed the industry. Though turnover fell by 3.2%, there is a notable rise in market share. It has also managed to improve on profitability through tight cost control measures.

    (Rs m) 2QFY01 2QFY02 Change 1HFY01 1HFY02 Change
    Sales 2,465 2,385 -3.2% 4,607 4,590 -0.4%
    Other Income 9 37 311.1% 17 37 117.6%
    Expenditure 1,989 1,913 -3.8% 3,742 3,698 -1.2%
    Operating Profit (EBDIT) 476 472 -0.8% 865 892 3.1%
    Operating Profit Margin (%) 19.3% 19.8%   18.8% 19.4%  
    Interest - 23   - 38  
    Depreciation 44 43 -2.3% 88 88 0.0%
    Profit before Tax 441 443 0.5% 794 803 1.1%
    Tax 132 133 0.8% 238 239 0.4%
    Profit after Tax/(Loss) 309 310 0.3% 556 564 1.4%
    Net profit margin (%) 12.5% 13.0%   12.1% 12.3%  
    No. of Shares (eoy) (m) 60.8 60.8   60.8 60.8  
    Earnings per share (Rs)* 20.3 20.4   18.3 18.6  
    (*annualised)         8.1  

    Despite severe contraction in demand for tractors, PTL has managed to increase market share to 21.4% for the first half of the current financial year as compared with 18.5% last year. While industry volumes fell by more than 20%, PTL's volume declined by just 3% resulting in a higher market share.

    Outperforms industry…
    (Nos) 1HFY01 1HFY02 Change (%)
    Industry 120,048 100,114 -16.6%
    Punjab Tractors 22,149 21,470 -3.1%
    Market share (%) 18.5% 21.4%  

    Given the sluggishness in demand for tractors, pricing has been under pressure for the last three quarters. Despite this weaker demand scenario, PTL's margins have increased by 50 basis points to 19.8% in 2QFY02. The performance of the company for the first half is even encouraging with operating profit increasing by 3%.

    The scrip is currently trading at Rs 151 on a P/E multiple of 8.1x annualised 1HFY02 earnings.



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