Telco Net Profit Jumps 46% To Rs 330.5cr

While its net profit stood at Rs 330.53 crore during the first half of 1996-97 against Rs 226.53 crore in the corresponding period last year, sales swelled from Rs 3386.58 crore to Rs 4661.75 crore.

The aggressive marketing of its vehicles resulted in the company achieving new records in vehicle sales which rose by 22.15 per cent from 81,260 in the six months of 1995-96 to 99,261 in the current year.

There was, however, an increased interest burden of Rs 130 crore during the first half compared with Rs 69 crore in the corresponding period last year. The high interest burden is following Telco entering the international market with a GDR issue aggregating $200 million.

 

Punters at the BSE could not react to Telco's performance as the unaudited results were announced after the market closed. The stock opened at Rs 418 and rose to a high of Rs 425 to end the day at Rs 412.50.

Telco's operating margins zoomed by 60 per cent from Rs 409.7 crore to Rs 658.24 crore. Analysts say Telco's performance was sales driven and the results were better than their expectations. However, they warned of slowdown in sales in the coming months.

Prime Broking's V S Hariharan said the sales promotion has resulted in higher expenditure which rose significantly by 34.5 per cent. During the first half of the current year Telco's expenditure amounted to Rs 4003.5 crore as against Rs 2977 crore in the corresponding period last year.

However, the higher expenditure is offset by high operating margins since the "company was reaping the benefits of economics of scale," he added.

Another analyst said Telco's domestic sales jumped from 74,555 vehicles to 93,320 vehicles. The sale is mainly significant on the light commercial vehicle (LCV) division under which the Sumo is classified. "The higher profit margin realisation is because of higher sale of Sumo," he said. The company produces 3,200 Sumo vehicles a month.