The consolidated revenue from operations stood at Rs910.6 crore, a robust 37.5% up yoy, on account of stellar performance of the building product division (up 43% yoy) and the custom molding division (up 38.9% yoy; primarily due to Bright Autoplast), and a revival in the textile division (up 30% yoy).
The operating profit increased by strong 57% yoy led by revenue growth and a strong 190-basis-point expansion in the operating profit margin (OPM) to 15.1%.
As far as subsidiaries are concerned, Bright Brothers and Nief Plastics reported strong performance during the quarter. The revenue from Bright Brothers improved by 47% yoy and that from Nief Plast was up by 16% yoy. Zeppelin Mobiles continued to be a drag, posting a 15% year-on-year (y-o-y) decline in the quarterly revenue.
The underlying demand in the monolithic construction business continues to be strong, with the company having a total order book of Rs2,300 crore to be executed over the next 20-22 month period. Further, the company is all set to expand its customer base in this segment, adding various government institutions (currently it is in talks with the Government of Karnataka). In the last 18 months, it has added couple of housing board orders; this will enhance its order repetitiveness from same geographies, leading to better utilisation of local contractors and material sourcing. We expect these initiatives to provide further impetus to the building material segment. Thus we expect the strong demand in the plastic segment (prefabs, monolithic and custom building businesses) to continue to drive the company?s growth in the near to medium term. Further, the revenue per site on rise will lead to optimal use of plastic form work resulting in improved margins. The scenario in the luxury textile business has started improving and we expect that the pain is behind, and going forward, we see incremental positives coming from this business.
We maintain our bullish stance on the company on the back of strong revenue visibility and margin expansion in wake of strong growth in the building material (monolithic as well as prefabs) and the custom moulding divisions coupled with stable performance of the textile business. We expect the company to post an earnings compounded annual growth rate (CAGR) of 22% over FY2010-12E. We maintain our Buy recommendation on the stock with a revised price target of Rs396 (11x FY2012E). At the current market price the stock is trading at 12x and 9.3x its FY2011E and FY2012E earnings respectively.
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