V-Mart, Manaksia, Whirlpool Global and few other companies posted better third-quarter results.
This column celebrates companies that defied the demonetisation gloom (‘there will be blood on the streets’) with better third-quarter results.
V-Mart
If you analyse V-Mart’s Q3 (December quarter) performance, you would believe that the greater the cash crunch, the more India bought from V-Mart’s stores.
The company’s total income of Rs 327 crore in Q3 FY17 was the highest in five quarters.
Turn to EBIT (earnings before interest and tax): Rs 25 crore to Rs 0.33 crore to Rs 15 crore to loss Rs 2 crore to a profit of Rs 43 crore. An interest of Rs 85 lakh in Q2 was Rs 1.11 crore in the quarter just ended with a corresponding interest cover of more than 40x.
By jove! Narendrabhai could send a clipping of this column to my irate CM (chief minister) with the question: ‘Where is the problem?’
Manaksia Industries
This Kolkata-based engineering company is the market leader in the manufacture of caps and closures.
The company reported a rocker of a show -- an EBIDTA (earnings before interest, depreciation, tax and amortisation) of Rs 14.72 crore during Q3 FY17 with an interest cover in excess of 5x.
The Rs 11.38 crore net profit was more than four times the figure in the preceding quarter.
The company has outlined business restructuring plans that could enhance its multi-country manufacturing presence and enhance asset sweating. Value play it appears.
Whirlpool Global
Whirlpool’s matching of Q3 FY16 performance in the demonetisation quarter would have been creditable enough, but the company reported a near-50 per cent PAT (profit after tax) increase: a bottomline of Rs 38 crore in Q3 FY16 became Rs 55 crore in Q3 FY17.
Total income increased around Rs 10 crore across the two periods; PAT increase was higher at Rs 17 crore!
The only perceptible demonetisation impact: increased interest outflow from Rs 1.57 crore in Q2 FY17 to Rs 2.24 crore in Q3 FY17. Appears to be a brand for all seasons.
NATCO Pharma
The company has posted the kind of results that it will like to frame on its walls and remember in, say 2032, as the quarter that defined its personality.
Just look at three numbers: what PBT (profit before tax) it reported in Q3 FY16 (Rs 49 crore), what it reported in Q2 FY17 (Rs 90 crore) and what it reported in Q3 FY17 (Rs 248 crore) for the argument to be sealed.
A Rs 11 earnings per share in the last quarter. Is this sustainable?
There is a clue in the quarterly results: the company announced a second interim dividend of Rs 6 per share, which most managements will announce only if they are likely to report as good or better results.
C&C Construction
Contrarian play. The company reported its highest revenues in five quarters, a sharp increase in consolidated quarterly EBIDTA (around Rs 163 crore) and one of those rare occasions when quarterly EBIT was higher than interest outflow.
A market cap of less than Rs 60 crore makes C&C Construction a classic gamble: if there can be some predictability in the ‘other income’ (Rs 105 crore in the third quarter), then what a play this can be!
Mudar Patherya is a stock market writer, tracking corporate earnings and investor psychology to gauge where markets are not headed.
