Hi Friends,
The results of Pressman Advertising are out. Although the result look good compared to previous quarter, the YoY comparison shows that its a bit stagnant.
Income was Rs.10.74 crore and net profit was Rs.1.78 crore during the quarter. This looks poor compared to Sep 2013 quarter when sales were Rs.10.14 crore with profits of Rs.2 crore.
If we look at the half year ended Sep 2014 the sales was Rs.19.51 crore with profits of Rs.3 crore, while Sep 2013 show sales of Rs.19.73 crore with profits of Rs.4 crore (approx.). The overall growth compared to past figures has not been good. The only good part is the net profit margins which have been in the range of 15-20% (roughly), which feel is good.
Can someone with knowledge/experience in advertising confirm if 15-20% net profit margin is good or comparable to industry standards? I’m not sure of this.
The other interesting aspect I observed is that their clientele in private sector is increasing gradually though they may never reach the level of O&M, Lintas and other big names. There is good demand from financial services firms, private companies, etc. Some companies that are planning to go for IPOs or those requiring public relations services seem to be working with Pressman. I found this on their list of clients and from press-releases - so please do your own due diligence.
The volatility in performance is understandable given that its a small cap company. Although its not a typical start-up its small-size would mean dependence on certain projects, clients, etc. Last year (FY 14) they have done a revenue of Rs.38 crore. This first half of FY 15 they have done Rs.19.5 crore. Lets hope they cross previous year’s sales by a good margin. The profit growth is not good, which is understandable for a small co., but their margins have been stable and decent enough to sustain operations for a longer time. From the results I find the returns on equity to be around 25%, which looks good.
As Rohit mentioned its not a known name in advertising industry. Moreover, their style of functioning may be a bit old fashioned. Although they may not be great advertising guys with crores of billings they still have their niche and are building client base.
As expected no fund or institution has picked up stakes, and neither is the stock covered by research houses or brokerages. So its not popular as such. Moreover, there is not much of value unlocking or a big trigger now (since the change of name of the company).
I invite senior and other value pickers to share their comments or feedback about my points. It would be helpful or valuable for me and others who are tracking this company.
**Disclosure: **I have invested in this stock. The above points may not be accurate so do your own due diligence.