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International Combustion has posted arid results for the quarter ended September 08. Although its topline improved by 17%, OPM fell drastically by 240 bps to 15.9% on the back of increase in its major cost heads. Profit margins of Mineral and Material Processing Handling segment, which occupies major pie of the business, fell by whooping 390 bps to 26.3%. Further with increase in effective tax rate by 180 bps, Net Profit of the company has tumbled by 4%.
International combustion is a manufacturing company which serves all major core industries with a specialized range of products. Its product portfolio includes Geared motors, Gear boxes, Vibrating Screens & Feeders, Bulk material handling equipment, Rubber/Polyurethane screens Decks and Liners, Raymond Grinding Mills, Air Classifiers and Flash Drying System.
Quarterly Performance:
For the quarter ended September 08, Net sales improved by 17% to Rs 27.12 crore. Mineral and Material Processing Handling segment (MMPH) improved marginally by 7% and contributed 73% of sales. The Geared Motor & Geared Box (GMGB) has improved by glorious 56% and contributed 27% to the total sales. However OPM was under pressure and fell by whooping 240 bps to 15.9%, and restricted profits at the operating level to have a flat growth of 1% to Rs 4.30 crore. The fall in OPM was attributed to rise in employee cost by 120 bps to 13.1% and 180 bps to 15.6% of sales net of stock adjustments. But the consumption cost has decreased by 110 bps to 55.6%.
Further, the other income fell by 72% to Rs 0.05 crore and interest cost fell by 50% to Rs 0.07 crore. The marginal increase in depreciation by 4% pulled down PBT by 1% to Rs 3.49 crore. The PBIT segment margins of GMGB segment increased by whooping 1080 bps to 14.5% but could not restrict the eroding margins due to dip in MMPH segment (83% of total) by 390 bps to 26.3% due to its lower weightage (17% of the total). Added to this, effective tax rate increased by 180 bps to 35.5% and thus Net Profit looked pale by 4% to RS 2.25 crore
Half yearly Performance:
The performance for the half year ended September 08 was moderate with topline increase by 16% to Rs 50.33 crore. Segment wise, revenues from GMGB has improved by 58% and contributed 26% of the total; and MMPH segment rose marginally by 6% and contributed 74% of total sales. However, fall in OPM by 220 bps to 19.0% pulled back operating profits by 4% to Rs 9.57 crore. The dip in OPM is due to spike in employee cost by 100 bps to 13.5% and other expenditure by 90 bps to 15.1%.
Other income increased by 9% to Rs 0.35 crore in the half year ended September 08. The interest cost fell by 33% and depreciation increased by 8% to Rs 1.57 crore led PBT to Rs 8.21 crore (up by 4%). The MMPH segmental margins fell by 250 bps to 31.7% and constituted 89% of total. However, GMGB margins, which constitutes 11% of the total, improved by whooping 830 bps to 10.9%. As the effective tax rate increased by 80 bps to 35.6%, Net profit stood marginally up by 3% to Rs 5.30 crore.
Other Information:
- The scrip has closed at Rs 180.00 as on 23 October 08.
- The promoter’s shareholding % was constant at 53% as on quarter ended September 08.
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