hawkins results out
sales drop 9% from 81cr to 73.8cr.
NP down 7% from 5.24cr to 4.89cr.
hardly any significant improvement in NP margin.
stock is down by over 8%
Q1/Fy 13-14 Results outā¦
Total Income DOWN 8.7% to 75.31 Cr from 82.52 Cr.
EBIDTA FLAT at 7.57 Cr v/s 7.61 Cr.
Net Profit DOWN 6.7% to 4.89 Cr from 5.24 Cr.
EBIDTA margin is 10.1% v/s 13.9% (MQ-13) and 9.2% (JQ-12)
NET Profit margin is 6.5% v/s 9.5% (MQ-13) and 6.4% (JQ-12)
Total Raw material costs as a %ge to Income is 37.9% v/s 43.9% (MQ-13) and 42.9% (JQ-12)
Employee costs to Income is 14.3% v/s 11.1% (MQ-13) and 13% (JQ-12)
Advertisement expenses to Income is 4.4% v/s 0.3% (MQ-13) and 5% (JQ-12)
Discounts offered to Income is 6.8% v/s 9.4% (MQ-13) and 7.5% (JQ-12)
Other expenses to Income is 26.6% v/s 21.4% (MQ-13) and 22.3% (JQ-12)
Financial costs to EBIT is 12% v/s 5.3% (MQ-13) and 9.3% (JQ-12)
Tax Rate 33.5% v/s 30.7% (MQ-13) and 32.5% (JQ-12)
Reduction in Raw material costs, Lower discounts, and lower spends on Adverts helped EBIDTA
Lesser other income and 27% rise in financial costs did in Net Profits.
EPS 9.25 v/s 9.92
Recorded TTM (sum of 4 quartr) diluted EPS: Rs. 63.82
At 02:30 pm on 30/07/2013, stock on BSE trading at Rs. 1851/- down 7.4%
the whole theory of margin expansion has to wait another quarter at least.
despite about 5% decrease in raw material cost and apparent 7% price hike, margins dont improve.
i donāt understand if there was supply problem with lots of demand ā¦ how come sales down on Q-o-Q basis even after Sales problem resolved.
)
Result ko dekh kar lagta hai ki hum ab kisi ko muh dikhane layak nahi bache.
Imagine I am shouting like Sunny Deol in film Damini 
ive never waited so long for nothing
the whole theory of margin expansion has to wait another quarter at least.
despite about 5% decrease in raw material cost and apparent 7% price hike, margins dont improve.
Very bad set of results, With de-accelerating growth, and a PE of 30+, How much the dividend yield will protect the price is to be seen, Major supports broken now on weekly charts, this becomes a sell on rallies now.
Note: Looks like the last man standing (Consumers and Pharmaās) are throwing away the towel now.
purchase of stock in trade 1027 vs939(june12)
change in investory of finished goods, wip and stoc -1310 vs -637(june 12)
anyone have any commnets on this
Sun raha hai tuā¦ ro raha Hun main.
I think a poor show by ttk prestige was an indication that demand is slowing down. Poor results by Hawkins confirm same. I was stupid enuf to add on 2000, had some spare money, reminds me of peter lynch bladder theory, should have waited for results.
I think problem was with demand side bcos supply side issues should be a thing of the past with all the problems now resolvedā¦ Disappointing set of results.
As manish madnani says, how much the dividend yield protects the stock needs to be seenā¦
Usually most of the damage is done in first two days in such cases and because of illiquid nature of the stock and stock being in relatively stronger hands, tomorrow should provide an idea where the floor for stock price could be.
**
Hiteshbhai:
Problem is with demand side- do you mean demand for hawkins brand or slowdown in consumption ?
Would you hold or look to exit on rallies?
thanks
i donāt understand if there was supply problem with lots of demand ā¦ how come sales down on Q-o-Q basis even after Sales problem resolved.
I
** results.As **
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be.
**
I was surprised at last quarter itself because the revenue growth was not impressive considering there was no supply issue. Now this quarter is a shocker. I think everyone assumed that the demand is so high that all that produce will get sold. However, if you look at the past data, you can see that they never shown good revenue growth. Lesson learned is never buy turnaround story until you see it. Banking on margin expansion is risky because gain in raw material etc will be negated by something else.
I think it will be a good strategy to stick to only secular growth stories even at the cost of short term price correction or time based correction. Over a period of time, price has to catch due to the increased earnings anddecreasedp/e. The best part is that they give you anopportunityto exit with minimal damage in the event of a bad result. Two recentexamplesthat come to my mind are nestle and asian paints. Such a poor result considering the valuation they are trading at. Still no damage done to price. I find it very strange though. ( I am not buying nestle or asian paints at this valuation)
I was surprised at last quarter itself because the revenue growth was not impressive considering there was no supply issue. Now this quarter is a shocker. I think everyone assumed that the demand is so high that all that produce will get sold. However, if you look at the past data, you can see that they never shown good revenue growth. Lesson learned is never buy turnaround story until you see it. Banking on margin expansion is risky because gain in raw material etc will be negated by something else.
I think it will be a good strategy to stick to only secular growth stories even at the cost of short term price correction or time based correction. Over a period of time, price has to catch due to the increased earnings anddecreasedp/e. The best part is that they give you anopportunityto exit with minimal damage in the event of a bad result. Two recentexamplesthat come to my mind are nestle and asian paints. Such a poor result considering the valuation they are trading at. Still no damage done to price. I find it very strange though. ( I am not buying nestle or asian paints at this valuation)
ritul,
I think the whole consumption bull seems to be taking a pause currentlyā¦ Its evident across all the consumption plays.
The problem seems to be more in case of hawkins and to some extent in ttk prestigeā¦
But if economy starts returning to track, (looks like a far fetched dream with the kind of govt and governance we have) these will in all likelihood start firing again.
Regarding selling on rallies, etc, I would like to take a slightly longer term view here and see for next couple of quarters and do some more scuttle butt, and see how their sales are progressing in the dmarts and big bazaarsā¦
One thing I noticed from the titan price movement recently is that those who sold out in panic nearer to 205-210 lost out a good amount of moneyā¦ Now stock is up to 260 and seems quite strongā¦
so the take home message for me is never to buy in a hurry and never to sell in a hurry , the latter esp on bad news.
Personally I think with the kind of brand strength hawkins has, if this management could not translate the brand strength into sales and profits, they should sit back and sell out the whole businessā¦ I think there will be lots of guys willing to pay almost twice the current price to acquire the businessā¦ That way the shareholders will be rid of the vagaries of the old man brahma vasudevaā¦ Wishful thinking though it seems.
Just going by pure numbers, we have a company whose profit has remained flat for four years (this year probably will be the 5th), trading at a PE of close to 30, i.e. multiples comparable to the blue chip FMCG secular growth companies in India which have proved their mettle even in adverse economic conditions. There is no problem paying up for a stock but when one does the call on growth has to be accurate or else there can be a huge risk of PE re-rating, towards the other side.
seems.
I hope he does not influence his son in law as well into his style of running the business. Ftaher in laws can have great influence these days, especially on son in laws 
A little bit off additions on thoughts:
Titan had the liquidity and the problems were well know, also its revenues were not as lethargic as that of Hawkins, so comparing Hawkins with Titan does not add up, another thing is TITAN fall was again due to RBI regulations, the picture will only be clear after they declare their qtrly results, which we will see, To be more specific it looks like there is a serious consumption slump, rather than company specific problems, This wait for one more or two more qtrās is a not going to solve any problems till the RBI does some serious tinkering on the rates front which for the time being is very unlikely. Looking at technicals, i feel the rupee is headed to 65 + levels, no predictions here but the momentum is very strong.
So it is upto an investors own risk appetite and cost of opportunity to hold Hawkins or not, for diclosure, I have sold half off my positions and will unload the rest on any bounce. I wont mind at all buying it at higher levels, till the trend and results are very clear, till then Seeds are better for me than COOKERS.
Hawkins results prima facie looked nothing short of pathetic.But they are not so bad.
The main reason for the sales being down is that Hawkins had raised prices on 1st April, 2013. Also many dealers stocked the cookers before the price hike which is a usual practise. (Its mentioned in the AGM speech)
Hence the actual offtake by dealers in Q1 was lower and hence the sales are down (Which is just due to accouting). To give a perspective, Hawkins sold 6.09 lakh cookers viz 19% less than same Q1 FY13.
Due to the supply constraints it faced, the demand picks up with a lag and hence it will be reflected in further quarters. Also due to the price hike, the cooker volumes grew by only 3% in Jan-June 2013 as compared to 2012.
The company is launching a slew of products before diwali. Its also getting into induction cooktops
I quote the Chairman āI am confident that we shall have a good year in 2013-14ā
Pls read the AGM speech from this link.
https://docs.google.com/file/d/0B37JOofl114eaWtLanZzSy0tRDg/edit?usp=sharing