Salzer manufactures Load Break Switches, Wiring Ducts, Terminal Connectors, Selector Switches, Ammeter Switches, Voltmeter Switches, DC Disconnectors, Electro Magnetic Relays and Magnetic Wires besides Modular Wiring Accessories and Allied Specialty Products.

June 2018 quarter

Three Months Figures for the Q1FY19 includes the revenue from an undertaking as acquired from Salzer Magnet Wires Limited on a slump Sale basis as a going concern on March 08, 2018 under Business Transfer Agreement. Hence the Figures for Q1FY19 are not comparable to the extent with Q1FY18 and Q4FY18.

In June 2018 quarter net sales rose 21% to Rs 126.47 crore. OPM grew 100 basis points to 11.0% which saw OP rise 33% to Rs 13.97 crore.

Exports contributed to 15% of total revenues.

Other income fell 92% to Rs 16 lakh and interest cost grew 17% to Rs 4.68 crore. After providing for depreciation (up 16% to Rs 3.11 crore), PBT grew 9% to Rs 6.35 crore.

As taxation went up 1% to Rs 1.80 crore (tax incidence fell from 30.5% to 28.4%), PAT grew 12% to Rs 4.54 crore.

FY 2018 results

In FY 2018 sales rose 14% to Rs 442.77 crore. OPM improved 60 basis points to 12.0% which saw OP grow 21% to Rs 53.28 crore.

Other income fell 43% to Rs 3.10 crore and interest cost went up 2% to Rs 14.91 crore. After providing for depreciation (up 18% to Rs 10.54 crore), PBT grew 19% to Rs 30.94 crore.

As taxation grew 25% to Rs 10.92 crore (tax incidence grew from 33.6% to 35.3%), PAT grew 15% to Rs 20.02 crore.

All major business divisions did well

Industrial Switchgear accounted for 37.1% of total revenues and grew 18% on account of demand across sectors like renewable, railways, telecom. 3 phase dry type transformer, its new product launched in FY18 gained traction as per expectations.

Buildings Products accounted for 7.8% of total revenues and grew 87% on the back of launch of new products like MCB's, Salzer Branded wires.

Wires & Cables accounted for 55.1 % of total revenues and grew 22% mainly on account of consolidation of Salzer Magnet Wires.

Management comments

Commenting on the results, Rajesh Doraiswamy, Joint Managing Director, Salzer Electronics Ltd said: "I am happy to share that this quarter once again, we have demonstrated good growth in our revenues. This growth has come from all across our three key businesses. We have seen a good growth from our newly launched products of wire harness and three phase dry type transformers. The building segment grew by more than 85% year on year, as we added new products like MCB's and Salzer Branded wires to the retail segment.

Our product mix and increased contribution from higher margin products led to a growth in EBIDTA. I believe this is an indication of our efforts to offer good quality and high margin products and improve our operational efficiencies.

We expect this margin to sustain and our endeavour continues to remain on profitable growth and margin improvement. We are also making inroads into new industry like solar investors for three phased transformers, elevators industry for wire harness and locomotives.

Our focus always remains on adding new high margin products, reach out newer geographies and offer customized solutions to our clients. We are constantly looking for new opportunities for technical associations to strengthen our base of product offering."

Valuation

The stock trades at Rs 158.