Blowout results:
A few observations:
Topline up more than 50 per cent yoy while bottom line has zoomed 350 per cent.
Profit margins in the core business is up 15 per cent as against 10 per cent in the year ago period.
Final dividend on enhanced equity from bonus shares also declared.
Softer raw material prices have helped, but management has managed to keep construction expenses under control so as to make the most of operating efficiencies. Better still finance costs have come down which shows that cash flows are being managed better.
Management is finally cutting down on debt after asserting at past AGMs that it is great to run a business with Other People’s Money (CMD’s words). May be it is the fear of banks that are squeezing highly indebted companies, but it makes good sense for share holders: both long and short term borrowings are down by a good measure.
Trade receivables are high, but this is a problem while dealing with government agencies.
Management seems to have executed much of its pending order book which has fallen from Rs 3097 cr to Rs 2656 cr.
At CMP of Rs 435, the stock is 22 times trailing earnings. What appeared to be a slightly over valued stock this morning looks poised for an upside!
disclosure: holding in core portfolio.