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TVS Srichakra: Rise in Depreciation Hits Profit Growth - Views on News from Equitymaster

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  • Dec 8, 2017 - TVS Srichakra: Rise in Depreciation Hits Profit Growth

TVS Srichakra: Rise in Depreciation Hits Profit Growth
Dec 8, 2017

TVS Srichakra announced results for the second quarter and half year ended September 2017. While the revenues grew by 1% YoY, net profits were down 17% YoY.

Performance Summary
  • Revenues for the quarter grew by 1% YoY, while for the first half of the fiscal, they were up by 3% YoY.
  • Operating profit growth was flat and margins remained stable at 14% in 2QFY18. For the first half of the fiscal, however, operating profits declined by 22% YoY as margins contracted by 3.5%.
  • However, net profits fell by 17% YoY largely on account of higher depreciation charges and interest costs. For the half year, a fall in operating profits coupled with the rise in depreciation charges and interest costs led to the 39% YoY fall in net profits.
  • Financial Snapshot
    (Rs m) 2QFY17 2QFY18 Change 1HFY17 1HFY18 Change
    Net sales 5,620 5,675 1.0% 11,187 11,571 3.4%
    Expenditure 4,826 4,878 1.1% 9,577 10,315 7.7%
    Operating profit (EBDITA) 794 797 0.4% 1,611 1,256 -22.0%
    EBDITA margin (%) 14.1% 14.0%   14.4% 10.9%  
    Other income 22 20 -7.9% 40 48 20.1%
    Depreciation 124 178 44.5% 243 338 38.9%
    Interest 50 70 40.3% 93 150 60.8%
    Profit before tax 642 568 -11.5% 1,314 816 -37.9%
    Tax 160 167 4.4% 367 237 -35.6%
    Profit after tax/(loss) 482 401 -16.8% 947 579 -38.8%
    Net profit margin (%) 8.6% 7.1%   8.5% 5.0%  
    No. of shares (m)         7.7  
    Diluted earnings per share (Rs)         154.8  
    Price to earnings ratio (x)*         21.4  

    *based on 12 month trailing earnings

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  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report.
  2. Equitymaster has financial interest in TVS Srichakra Limited.
  3. Equitymaster's investment in the subject company is as per the guidelines prescribed by the Board of Directors of the Company. The investment is however made solely for building track record of its services.
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