Elecon’s revenues grew by 1.1% YoY during 2QFY10. The company was able to manage this growth largely due to a strong growth in its material handling equipment (MHE) business (which recorded a 16% YoY growth during the year). On the other hand, its transmission equipment (TE) business saw a fall of almost 18% YoY. As such, the MHE business increased its share in the company’s total revenue to nearly 64% from 56% last year, while the TE business contributed to the balance 36% (44% in 2QFY09).
Elecon’s operating margins contracted by 1.2% YoY during 2QFY10. The reason behind this was higher raw martial costs (both as percentage of sales). On the other hand, employee costs and other expenditure saw a fall as a percentage of sales during the quarter.
Net profits (33% YoY decline) saw a substantial fall due to a to three factors, namely, the fall in operating margins, higher interest costs, and much higher depreciation expenses.
At the current price of Rs 81, the stock is trading at a multiple of 15.4 times its trailing twelve months earnings, this restricts major upward movement short term.
No comments:
Post a Comment