Month: June 2008

Emco posted a net sales growth of 36% YoY to Rs 3.4bn for Q4FY08 and 44% to Rs 9.4bn for the full fiscal. Project division revenues have picked up pace during H2FY08, contributing 30% of net sales for the fiscal. Management expects an even higher revenue share from this division in FY09, at 45%. EBITDA margins were up by 155bps during Q4FY08 to 14.2% and by 50bps for FY08 to 13.7%. Net profit saw a growth of 98% YoY for the quarter and 59% for the year.

Emco’s order book stands at Rs 11bn, which is 1.2x FY08 sales. The healthy order backlog and bright outlook for the project division indicate good revenue flows over the next two years.

Emco is trading at 10x one-year forward P/E, which is a 61% discount to peer company, ABB.

TCI’s Net sales rose by 12.7% YoY to Rs3.3bn. However, sales are not comparable YoY due to the hive off of fuel pump stations. Excluding the revenues generated from the fuel pumps, sales rose by 17.8%
YoY.

EBITDA grew by 9.9% YoY to Rs 229 mn. EBITDA margins were stable YoY but improved substantially by 188bps QoQ to 7.0% due to improved performance from the TCI Seaways division. depreciation. Interest cost grew by 38.5% YoY to Rs 43 mn due to higher borrowings. Depreciation fell by 104.5% YoY to (Rs 2.5 mn) due to a change in the depreciation policy.

TCI’s supply chain division has added new customers like ITC foods division, Ceat Tyres, P&G, Spinach, etc. TCI also added ~8.0 lac sq ft of warehouse space during FY08. XPS, the Courier division of TCI recorded a 20% growth.

Despite the ongoing sluggishness in American corporate profits (BFSI segment), overall US IT spending remained robust in 1Q08. Most Indian IT services companies have acknowledged delays/slowdown in ramps especially for Financial Services customers in 1H08, but expect a recovery in 2H08.

Indian IT players continued their market share gains in the global arena with 35% YoY revenue growth in Q1-2008. Offshoring is likely to be the mega-trend for IT Services and expect Indian IT players to continue to gain market share.

Technology spending as a percentage of profits peaked in Q1-2000 and has constantly declined since then and is currently holding at 25-30% levels.

Yesterday we reported about the hike in petroleum products and excise duties. Post-hike, the Wholesale Price Index is expected to rise by 55 bps only on account of the hike in these 3 products.

The hikes also meant increase in consumer’s burden by Rs211 bn (US$4.9 bn or 0.39% of GDP) and the government will bear tax losses amounting to Rs226.6 bn (US$5.3bn or 0.42% of GDP) in F2009 (12 months ended March 2009).

The combined central plus state deficit including the off-budget expenditure items is expected to be about 8.9% of GDP in F2009 (from 9.3% earlier).