Nelcast reported 32% rise in net profit to Rs 7.91 crore on 3% drop in net sales to Rs 133.36 crore for the third quarter ended December 2015. Excellent performance at the operational level coupled with drop in interest and depreciation charges were the main reasons for the rise in profit for the quarter. PAT would have increased further but for almost four-fold rise in tax provision. AT PBT level, profit soared 73%.
Nelcast is India's largest producer of Ductile Iron Castings and a leading producer of Grey Iron Castings. Their products cater to the Global Automotive, Tractor, Construction, Mining, Railways and General Engineering sectors.
Quarter Performance
The OPM during the third quarter ended December 2015 rose by 380 bps to 12.7% due to decreased raw material expenses. Raw material cost (as a % to sales, net of stock) fell by 1100 bps to 44%. Other expenses (% of sales net of stock) rose by 370 bps to 20%. Employee expenses rose 60 bps to 6.9%. Power and fuel expenses (% of sales net of stock) rose by 250 bps to 16.5%.
Thus the operating profit rose by 47% to Rs 16.97 crore. Other income stood at Rs 50 lakh, lower by 48%. After 4% drop in depreciation cost to Rs 3.15 crore and 5% drop in interest expense to Rs 1.96 crore, PBT rose 73% to Rs 12.36 crore. After 2100 bps rise in tax rate, tax provision stood 290% higher at Rs 4.45 crore. Thereafter, net profit stood at Rs 7.91 crore against profit of Rs 5.99 crore in previous corresponding quarter, a rise of 32%.
Nine Month Performance
Net sales for the first nine months ended December 2015 rose 3% at Rs 431.2 crore.
The OPM during the first nine months ended December 2015 rose by 360 bps to 11.9% due to decreased raw material and other expenses. Raw material cost (as a % to sales, net of stock) fell by 920 bps to 47.2%. Other expenses (% of sales net of stock) rose by 300 bps to 18.3%. Employee expenses rose 30 bps to 6.5%.
Thus the operating profit rose by 49% to Rs 51.5 crore. Other income stood at Rs 1.39 crore, lower by 2%. After 1% drop in depreciation cost to Rs 9.52 crore and 14% rise in interest expense to Rs 5.39 crore, PBT rose 74% at Rs 37.98 crore. After 740 bps rise in tax rate, tax provision stood 125% higher at Rs 12.51 crore. Thereafter, net profit stood at Rs 25.47 crore against profit of Rs 16.23 crore in previous corresponding period, a rise of 57%.
For the fiscal ended March 31, 2015, the company's net profit stood at Rs 21.96 crore, drop of 2% on 6% rise in net sales at Rs 544.88 crore.
Promoter's stake stands at 74.42% as on December 2015.
Shares of Nelcast are currently trading around Rs 60 at BSE.