| Q403 | % change | | Sales | 14108 | 12755 | 10.61 |
| Other income | 477 | 326 | 46.32 |
| Operating profit | 2646 | 2018 | 31.12 |
| Operating margin | 18.75 | 15.82 | - |
| Net profit | 1419 | 1101 | 28.88 |
| Net profit margin | 10.06 | 8.63 | - |
| EPS (Rs) | 10 | 7.80 | - |
| Trailing 12-month EPS (Rs) | 36.80 | - | - |
| Price-earnings ratio | 14.30 | - | - |
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| 1) The company's operating margin during the year was driven by a combination of factors - volumes, product selling prices, favourable change in product mix, cost cutting measures and higher crude prices. |
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| 2) Petrochemical and refining contributed 97 per cent of revenues and 92 per cent of EBIT for fiscal ended March 31, 2004, compared to 96 per cent and 90 per cent respectively in the previous period. |
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| 3) The company achieved record volumes in petrochemicals and crude throughput. RIL's exports, including deemed exports, were up 30 per cent. |
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| 4) The company's oil and gas production during the year was up 5 per cent compared to last year. KG D6 production is likely from 2006-7 subject to various statutory approvals. |
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| 5) Reliance's refinery recorded 109 per cent of capacity utilisation or 29.6 million tonnes of crude. The full impact of the increased capacity is expected to be reflected from fiscal 2004-05 onwards. |
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| 6) RIL has opened 11 retail outlets while 400 are under construction. It targets to open 2000 outlets by fiscal 2005. |
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| 7) Domestic demand for petrochemicals was up 12 per cent during the year, reflecting the impact of improvement in the economy and stable prices. |
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| 8) Reliance Infocomm acquired 7 million mobile subscribers with a market share of 22 per cent. RIL's investments in Infocomm amounted to Rs 12,000 crore in March 2004. |
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Petrochemical prices are ruling at 50 per cent of peak prices attained in the last cycle. Minimum capacity additions should improve margins while ensuring better operating rates. Infocomm�s profits will add to RIL's profits by way of dividends going forward. Refining margins are also likely to be strong this year, helped by the stiff inventory position, buoyant Chinese demand and tightening product specs in various parts of the world. The company trades at 12 times fiscal 2005 estimates, remaining attractive.
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| IPCL |
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| Rise in raw material prices hits profit growth |
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| IPCL recorded strong sales growth but weak profits for the March 2004 quarter, primarily on account of a sharp rise in raw material prices. Sales were up 91 per cent, but operating margins were down to half that of the same period of the previous year. Net profits declined 32 per cent, excluding the previous period's extra-ordinary expense. For the year, net sales were up 61 per cent while net profit (excluding extra-ordinary expenses) was up 60.68 per cent. |
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| 1) Operating margins for the quarter declined due to increased cost of input on account of reduced availability of gas as ONGC has limited production on account of some pipeline issues. The company had to up its production in Naphtha-based plants which is more expensive. Raw material cost, thus, saw a 183 per cent escalation from Rs 569 crore in the fourth quarter of fiscal 2003 to Rs 1609 crore in the same quarter in fiscal 2004. |
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| 2) Volumes improved during the year, reflecting the upturn in the economy: PP, PE and PVC increased 2.4 per cent to 989,600 tonnes; domestic demand for polymer increased by 12 per cent. |
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| 3) There was an extra-ordinary expense of Rs 144 crore during the year on account of acceptance of voluntary retirement scheme (VRS) by over 1,700 employees. |
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| IPCL | | (Rs crore) | Q404 | Q403 | % change | | Sales | 2620 | 1373 | 90.82 | | Other income | 22 | 51 | -56.86 | | Operating profit | 331 | 345 | -4.06 | | Operating margin | 12.63 | 25.13 | - | | Net profit | 99 | 90 | 10 | | Net margin | 3.78 | 6.55 | - | | EPS (Rs) | 3.99 | 3.63 | - | | Trailing 12-month EPS (Rs) | 11.02 | - | - | | Price-earnings ratio | 16.87 | - | - |
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| Analysts say the bad performance seen in the fourth quarter will not be repeated as the gas situation is comfortable now. "The company has effected a lot of one-time write-offs which will make it healthier in the coming years," says Pushpinder Singh, oil analyst at Refco Global Research. Volumes are likely to grow by 3-4 per cent in fiscal 2005. |
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The company is not planning any capacity expansion and, hence, profits will be driven by better prices, lower interest charges and benefits accruing from the VRS programme and sundry one-time write-off. Product prices are likely to rise further considering that the petrochemical cycle is on an upswing. Analysts peg fiscal 2005 earnings per share in the range of Rs 16-17. At the current price of Rs 189 IPCL trades at about 16 times and remains an attractive bet.
ICICI Bank |
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| Increase in other income drives profits |
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| India's largest private sector bank registered its fourth quarter performance in line with analysts expectations. ICICI bank recorded a 34.86 per cent increase in net profit to Rs 455.40 crore in the March quarter. The rise was driven by a 82.17 per cent surge in other income which in turn came on the back of a 65 per cent increase in fee-based income. Net profit growth was significantly lower than that of operating profit (107.45 per cent to Rs 583.01 crore) mainly due to provisions and deferred tax adjustments. |
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| ICICI Bank | | (Rs crore) | Q404 | Q403 | % change | | Interest earned | 2257.8 | 2434.01 | -7.24 | | Interest expended | 1730.05 | 1995.64 | -13.31 | | Net interest income | 527.75 | 438.37 | 20.39 | | NIM (%) | 23.37 | 18.01 | - | | Other income | 745.87 | 409.43 | 82.17 | | Operating profit | 583.01 | 281.04 | 107.45 | | OPM (%) | 19.41 | 9.88 | - | | Net profit | 455.4 | 337.68 | 34.86 | | NPM (%) | 15.16 | 11.88 | - | | EPS (Rs) | 7.39 | 5.51 | - | | Trailing 12-month EPS (Rs) | 26.66 | - | - | | Price-earnings ratio | 10 | - | - |
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| 1) The increase in net interest income was driven lower interest rates and re-financing old liabilities - a rise of 20.39 per cent to Rs 527.75 crore during the quarter. |
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| 2) Interest earned decreased by 7.24 per cent to Rs 2257.80 mainly due to the lower interest rate scenario. However, net interest income remained unaffected as lower income was offset by a 13.31 per cent decline in interest expended to Rs 1730.05 crore. |
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| 3) Net interest margins improved from 18.01 per cent to 23.37 per cent, driven by low cost deposits. Low cost deposits formed 41 per cent of incremental deposits and 23 per cent of the total deposit base. Incremental deposits stood at Rs 19,939.27 crore and total deposits at Rs 68,108.58 crore. |
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| 4) Treasury gains stood at Rs 212 crore, up from Rs 70 crore the quarter, mainly due to gains from sale of shares held by the erstwhile ICICI Bank's project portfolio. |
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Analysts believe that a thrust on retail lending (retail forms 54 per cent of loans) and better asset management will help the bank see growth in the coming years. ICICI Bank's retail deposits grew 60 per cent over the year compared to the system retail deposit growth of 15 per cent. Their net non-performing assets (NPA) stood at 2.87 per cent as on March 31, 2004, compared to 4.92 per cent in the previous year. "We expect an EPS of Rs 30-32 for FY05," says an analyst from a foreign brokerage. Currently, for a price of Rs 315 the stock trades at a P/E of about 10 times its FY05 earnings.
Glaxo Pharma |
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| Spurt in other income boosts bottomline |
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| Glaxo SmithKline Pharmaceuticals (GSK) reported a 43 per cent increase in net profit at Rs 50.19 crore for the first quarter ended March 31, 2004, compared with a net profit of Rs 35.09 crore in the corresponding quarter of the previous year. A big spurt in other income, which went up by 38 per cent to Rs 7.60 crore, contributed to the bottomline growth. Net sales for the quarter stood at Rs 332.31 crore, up 17.40 per cent from Rs 282.86 crore in the previous year |
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| Glaxo SmithKline | | (Rs crore) | Q1CY04 | Q1CY03 | % change | | Net sales | 332.31 | 282.86 | 17.48 | | Other income | 7.6 | 5.5 | 38.18 | | Operating profit | 78.14 | 49.75 | 57.07 | | OPM (%) | 23.51 | 17.59 | - | | Net profit | 50.19 | 35.09 | 43.03 | | Net margin | 15.1 | 12.41 | - | | EPS (Rs) | 6.7 | 4.7 | 42.55 | | Trailing 12-month EPS (Rs) | 26.44 | - | - | | Price-earnings ratio | 24.78 | - | - |
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| 1) GSK's operating margins improved to 23.51 per cent compared to 17.59 per cent in the previous year, while net margins improved to 50.19 per cent from 43.03 per cent. |
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| 2) The company's pharmaceutical business recorded a 21.43 per cent growth to Rs 292.07 crore (against a market growth of 10.30 per cent) while growth in other businesses - primarily consisting of veterinary formulations, feed supplements and lab equipment - was stagnant at Rs 47.78 crore against Rs 47.15 crore during the same period in 2003. |
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| 3) The company accounted for exceptional items of Rs 5.89 crore for the quarter, which relate mainly to the cost of separation and retirement benefits to management staff at its Bangalore factory. |
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| 4) The company's board has approved the scheme of amalgamation for the merger of Burroughs Wellcome (India) with the company. The merger is subject to approval from the Bombay High Court. GSK's first-quarter results do not include financial results of Burroughs Wellcome. |
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| The company has warned that the strong sales performance of the first quarter was unlikely to be sustainable in the next three quarters. First-quarter sales for this year is better than the performance in the same period in 2003 which had been affected by the then-prevailing confusion over the transport strike and the implementation of VAT. |
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| According to analysts, the bottomline growth of last two years which has been mainly driven by restructuring efforts and procurement efficiencies is unlikely to be maintained in the long-term. Analyst estimates indicate a 8 per cent topline growth for the merged entity of Burroughs Wellcome and GSK and a 20 per cent bottomline growth. |
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| However, lack of new product launches, inflexible pricing strategy, a product range mainly catering to the slow-growing segments and intense competition are expected to limit topline and bottomline growth in the future. |
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The scrip trades around Rs 667 levels at a P/E of 24x.
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| Grasim |
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| Higher volumes lift net |
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| Grasim, the flagship company of Aditya Birla group, recorded a net profit of Rs 282.07 crore for the fourth quarter of FY04, against a net profit of Rs 0.50 crore for the same period in the previous fiscal. The better performances came on the back of all-round growth by way of higher production, volumes and realisations. |
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| However, it has to be kept in mind that Q4 FY03 profit was pulled down by Rs 168.60 crore because of loss from sale of shares of MRPL. Excluding that, the net profit increase for Q4 FY04 works out to be 66.80 per cent. Net sales rose 27.40 per cent for the quarter, driven by strong growth in the sponge iron and cement business. For FY04, Grasim reported a 112 per cent higher net profit at Rs 779.26 crore, up from Rs 367.58 crore in FY03. Net sales rose 13.20 per cent to Rs 5233.27 crore, compared with Rs 4623.34 crore. |
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| Grasim | | (Rs crore) | Q4 FY04 | Q4 FY03 | % change | | Net sales | 1553.21 | 1219.19 | 27.4 | | Other income | 72.06 | 55.72 | 29.33 | | Operating profit | 441.26 | 243.74 | 81.04 | | OPM (%) | 28.41 | 19.99 | - | | Net profit | 282.07 | 0.49 | - | | Net margin | 18.16 | 0.04 | - | | EPS (Rs) | 30.76 | 0.05 | - | | Trailing 12-month EPS (Rs) | 54.29 | - | - | | Price-earnings ratio | 22.05 | - | - |
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| 1) Grasim's operating margins improved to 28.41 per cent in Q4 FY04, against 19.99 per cent for Q4 FY03, helped by higher sales volume and cost cutting measures in operations and logistics. |
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| 2) The company's interest costs during the quarter declined 13.60 per cent to Rs 35 crore (Rs 40.60 crore). Tax outgo also increased substantially to Rs 128 crore, compared to Rs 24 crore in the same period in FY03. |
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| 3) Grasim's cement business posted a 7 per cent growth in both production and sales volumes. An increase in the production of blended cement from 35 per cent to 45 per cent of the total output has resulted in greater operational efficiency, which resulted in a 130 per cent jump in segment profits to Rs 133.15 crore during the last quarter, while margins improved 872 basis points to 18.60 per cent. |
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| 4) The sponge iron business posted a 12 per cent growth in production and a 11 per cent growth in terms of sales volumes during the year. Realisations in the segment improved by 44 per cent. |
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| 5) Production and sales volume growth of viscose staple fibre (VSF) were flat though realisations improved by 6 per cent. Chemical business posted a 4 per cent growth in terms of production and sales volumes. |
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| 6) The board has recommended a dividend of 140 per cent for the year. The total payout on this account will amount to Rs 144.80 crore, an increase of 40 per cent over the dividend paid in the previous year. |
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According to analysts, Grasim is well poised to take advantage of the current boom in the cement industry. With the acquisition of Cemco expected to be completed within the next three-six months, the company is expected to have better synergies apart from savings on the cost front. According to Bhavin Chedda, analyst with domestic securities firm, Pioneer Intermediaries, Grasim is likely to post 20 per cent earnings growth in FY05. Currently ruling at Rs 1,236 levels at a P/E of 22x, there is still a lot of steam left in the stock.
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| Geometric Software |
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| Drop in other income drags profits |
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| Geometric Software's performance were a mixed bag. While revenues grew by 13.27 per cent to Rs 309.16 crore, profits saw a decline of 8.7 per cent to Rs 63 crore due to a significant drop in other income. However, the performance for FY04 has been better with topline and bottomline improving y-o-y by 26 per cent and 27 per cent respectively. This was mainly on account of a good performance in the company�s services (projects) business which has been a consistent growth driver for Geometric over the past few quarters. |
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| For FY05, the management has projected revenues and profits to grow 35-40 per cent and 27-31 per cent respectively. |
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| Geometric Software | | (Rs crore) | Q404 | Q304 | % change | | Sales | 309.16 | 272.94 | 13.27032 | | Other income | 11.22 | 22.89 | -50.983 | | Operating profit | 84.83 | 77.00 | 10.16883 | | OPM (%) | 27.44 | 28.21 | - | | Net profit | 63.00 | 69.00 | -8.69565 | | Net margin | 20.38 | 25.28 | - | | EPS (Rs) | 9.99 | - | - | | Trailing 12-month EPS (Rs) | 31.38 | - | - | | Price-earnings ratio | 15.45 | - | - |
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| 1) Foreign exchange gains witnessed a 71 per cent y-o-y decline in the quarter and was instrumental in the drop in other income. |
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| 2) Operating margins have taken a hit, and have fallen by 70 basis points in the period due to an increase (as a percentage of revenues) in personnel and travel expenses. |
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| 3) The share of onsite revenues rose from 12 per cent of services revenues in FY03 to 17 per cent in FY04. |
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| 4) The company's services (projects) business grew by 32 per cent y-o-y, and now contributes around 90 per cent (86 per cent in FY03) to revenues, thanks to the high-end engineering services. |
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| 5) However, revenues from the products division actually declined 9 per cent on a y-o-y basis in 2004. |
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| 6) Revenue contribution from partners and industrial customers grew from 15 per cent of revenues in FY03 to 25 per cent in FY04. |
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| 7) The company's board has recommended a bonus issue in the ratio of 1:1 and a dividend payout of 13.6 per cent amounting to Rs 5.5 per share for FY04. |
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At the current price of Rs 485, the stock is trading at a P/E of 15.45x. Analysts say the fact that Geometric derives its revenues from the highly volatile global manufactuing and engineering industry is a matter of concern. However, the increase in revenue contribution from its partners and industrial customers augurs well on the visibility front and investments in the stock could be undertaken at lower levels for the long term.
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| HLL |
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| Price cuts hit operating margins |
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| FMCG major, Hindustan Lever reported utterly disappointing numbers for the March quarter. While the company's net sales were marginally down, its net profits declined by a significant 23 per cent y-o-y, the steepest fall in five years. The company's operating margins declined by nearly 90 basis points as price competition in the company's key business of soaps and detergents seems to have taken a toll. In fact, all the key segments of HLL have seen declines in PBIT margins this quarter. |
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| HLL | | (Rs crore) | Q105 | Q104 | % change | | Sales | 2353.34 | 2370.93 | -0.74 | | Other income | 71.35 | 148.45 | -51.93 | | Operating profit | 359.91 | 383.39 | -6.12 | | OPM (%) | 15.29 | 16.17 | - | | Net profit | 294.88 | 382.92 | -22.99 | | Net margin | 12.53 | 16.15 | - | | EPS (Rs) | 5.36 | - | - | | Trailing 12-month EPS (Rs) | 8.03 | - | - | | Price-earnings ratio | 17.58 | - | - |
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| 1) The domestic FMCG business of the company grew by 3.1 per cent y-o-y while revenues from continuing business witnessed a 3 per cent growth in the period. |
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| 2) The domestic home and personal care (HPC) segment recorded 7 per cent volume growth. However, value growth was lower at 3.5 per cent, owing to price reductions in key categories of detergents and also shampoos. |
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| 3) The company's oral care segment witnessed volume and value erosion. This was due to the base effect from a huge volume surge in April 2003 following the 15 per cent price cut. |
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| 4) Revenues from the food business improved marginally by 1.4 percent. However, power brands within this segment grew at nearly 8 per cent y-o-y. |
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| 5) The company's high margin personal products business saw a tepid revenue growth of only 3.7 per cent y-o-y while the segment's PBIT margins also saw a marginal decline. |
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| 6) The company�s beverages business of the company, however, continued to improve, reporting a 2.7 per cent revenue growth with its coffee business showing a 21 per cent volume growth. |
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At Rs 141.20, HLL trades at a P/E of 17.58x. Analysts say the company would be unable to maintain its high operating margins and RoIs going forward. They say while competitive pressures from the lower end-regional players has stabilised, there is a re-emergence of strong players such as P&G, Tata Tea and Colgate. In the longer term, the rapid expansion of organised retailers is likely to be another cloud on margin growth. On valuations, though prices have corrected, they are still at a premium for a business facing intense competitive pressures and price deflation.
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| Patni Computers |
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| IPO-related expenses impact net margins |
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| Patni Computers results were disappointing on both the topline and bottomline fronts. Revenues fell 2.6 per cent on a sequential basis to Rs 312.73 crore while net profit slipped by 11.10 per cent to Rs 55.96 crore in the same period. Patni�s initial public offering (IPO) was successfully concluded during the quarter. An amount of $1.02 million (one-time IPO-related expenses) has been fully expensed in the quarter. |
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| The quarter also saw revenue contribution from GE at a historically low level. Expenses also mounted, increasing as a percentage of revenues in the period. |
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| Patni Computers | | (Rs crore) | Q104 | Q403 | % change | | Sales | 312.73 | 321.27 | -2.6582 | | Other income | 3.96 | 3.88 | 2.061856 | | Operating profit | 66.65 | 69.68 | -4.34845 | | OPM (%) | 21.31 | 21.69 | - | | Net profit | 55.96 | 62.95 | -11.1041 | | Net margin | 17.89 | 19.59 | - | | EPS (Rs) | 4.77 | - | - | | Trailing 12-month EPS (Rs) | - | - | - | | Price-earnings ratio | - | - | - |
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| 1) Net margins declined from 19.6 per cent to 17.9 per cent on a sequential basis, largely impacted by IPO-related expenses. |
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| 2) Selling, general and administrative (SG&A) expenses increased by 4.7 per cent over the preceding quarter. SG&A expenses were sequentially higher due to the cost of additional sales people hired during the quarter. |
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| 3) Sales and marketing expenses witnessed an increase of 7.8 per cent on a sequential basis while they rose 19.4 per cent from the previous corresponding quarter. |
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| 4) Revenue contribution from GE stood at 36.0 per cent of revenues in Q1 2004 compared to 37.8 per cent in the preceding quarter. |
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| 5) Contribution to revenues from accounts other than GE have increased 51.1 per cent in Q1 2003 to 64 per cent in Q1 2004 on the enhanced revenue base. |
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| 6) On the human resources front, Patni added 1,526 employees in 2003, taking the total staff strength to 7,096. During 2004, the company is likely to scale up its employee base by adding 2,000 staff. |
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| Patni trades at Rs 219.60 on the BSE. Analysts say the negative blip in revenues and earnings may mostly be a one-time thing and the maleficent effects of IPO-related expenses would wear off going forward. However, they say margins would continue to be under some pressure due to the company implementing its annual compensation increments in the next |
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