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Net Profit of Hitachi Home & Life Solutions declined by 22% to Rs 14.52 crore for the quarter ended June 2010 despite of impressive growth in total income from operations by 34% to Rs 284.34 crore. Forex loss of Rs 3.98 crore as against forex gain of Rs 1.59 crore and increase in the effective tax rate by whopping 1580 bps to 30.4% has restricted growth in the net profit. However, at operating level, margins have expanded by 30 bps to 9.9% resulting operating profit to increase by 39% to Rs 28.21 crore.
Quarterly Performance
Net sales for the quarter ended June 2010 increased by 34% to Rs 281.55 crore and other income from operations rose by 96% to Rs 2.80 crore totaling income from operations up by 34% to Rs 284.34 crore. Operating profit margins increased by 30 bps to 9.9% leading operating profit to increase by 39% to Rs 28.21 crore. The rise in the margins is due to 260 bps fall in consumption cost, as percentage to sales, net of stock adjustments to 64.8%. Staff cost and other expenditure increased by 30 bps to 3.7% and by 110 bps to 20.6%, respectively.
The dip in other income by 76% to Rs 0.73 crore was restricted PBIDT growth to 24% at Rs 28.94 crore. Interest out go marginally decline by 9% to Rs 0.40 crore and depreciation increased by 42% to Rs 3.70 crore resulted PBT before forex to increase by 23% to Rs 24.84 crore. Forex loss of Rs 3.98 crore in the quarter under review compared to forex income of Rs 1.59 crore in the corresponding previous period led PBT to decline by 5% to Rs 20.86 crore. The increase in the tax rate by 1580 bps to 30.4% further pushed net to report a degrowth of 22% to Rs 14.52 crore.
Yearly performance
Net sales increased by 36% to Rs 636.18 crore for the year ended March 2010. Income from operations declined by 7% to Rs 6.36 crore totaling income from operations up by 36% to Rs 642.54 crore. Operating profit margins expanded by 140 bps to 9.4% resulting operating profit to increase by 60% to Rs 60.51 crore. Other income more than doubled (up by 108%) to Rs 7.53 crore and interest cost declined by 43% to Rs 1.51 crore led PBDT to rose by 72% to Rs 66.53 crore. Forex gain of Rs 2.27 crore as against forex loss of Rs 4.03 crore in the corresponding led PBT to increase by 113% to Rs 57.02 crore. Dip in the effective tax rate by 210 bps to 19.1% further boosted net profit to increase by 119% to Rs 46.14 crore.
Other information
The promoter shareholding remains unchanged at 69.90% as on 30 June 2010 as against 31 March 2010.
Valuation
The scrip is trading at Rs 304 on BSE. The TTM EPS worked out be Rs 18.3 and discounting at 16.6 times.
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