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Gammon India reported impressive 1QFY12 results as standalone EBITDA came up 13% yoy
and 20% above our expectations after swinging to a loss in last quarter. We await the
management call (tomorrow) to see if the numbers were boosted by some one off items or if the
progress is sustainable.
Margin bounced back sharply leading to 20% EBITDA surprise
Net sales came at Rs.13.9bn, up 6% yoy but down 20% qoq. RBS estimate was Rs.13.7bn.
There was a loss of Rs.22.5mn on account of inventory policy change from FIFO to weighted
average. We treat it as one off for comparison purpose.
Adjusted EBITDA margins were at 9.0%, up 57bps yoy and up 138bp from our estimates as
other contractual expenses declined sharply by 260bp yoy to 37.3% of net sales. The lower
contribution from the legacy low margin contracts could be the reason, but we wait for the
management call to ascertain if there were some one off items also.
Normalized EBITDA came at Rs.1.25bn, up 13% yoy (vs a loss of Rs.530mn in 4QFY11). Our
forecast was Rs.1.04bn.
Net interest expenses declined 10% qoq (up 41% yoy) to Rs.521mn; RBS forecast was
Rs.590mn. Considering the high interest rate environment, we wait for management's
explanation to check if it was boosted by some one time income.
Tax rate came at 34.4% vs 26.7% in 4QFY11 and 19.9% in FY11. RBS estimate was 32.5%.
Normalized net profit came at Rs.314mn, down 3% qoq (4QFY11 loss was Rs.1bn). RBS
estimate was Rs.139mn as the EBITDA level surprise widened at PAT level.
Normalized EPS for the quarter came at Rs.2.3
The company also announced a final dividend of Rs.0.40/share taking the full FY11 dividend
to Rs.0.80/share.
It seems that the company was able to minimize the impact of lower margin legacy contracts
on its numbers sooner than expected. However, the possibility of some one time gains can
not be ruled out and hence we wait for management call scheduled on Wednesday 11:00am
before reviewing our forecasts.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Gammon India reported impressive 1QFY12 results as standalone EBITDA came up 13% yoy
and 20% above our expectations after swinging to a loss in last quarter. We await the
management call (tomorrow) to see if the numbers were boosted by some one off items or if the
progress is sustainable.
Margin bounced back sharply leading to 20% EBITDA surprise
Net sales came at Rs.13.9bn, up 6% yoy but down 20% qoq. RBS estimate was Rs.13.7bn.
There was a loss of Rs.22.5mn on account of inventory policy change from FIFO to weighted
average. We treat it as one off for comparison purpose.
Adjusted EBITDA margins were at 9.0%, up 57bps yoy and up 138bp from our estimates as
other contractual expenses declined sharply by 260bp yoy to 37.3% of net sales. The lower
contribution from the legacy low margin contracts could be the reason, but we wait for the
management call to ascertain if there were some one off items also.
Normalized EBITDA came at Rs.1.25bn, up 13% yoy (vs a loss of Rs.530mn in 4QFY11). Our
forecast was Rs.1.04bn.
Net interest expenses declined 10% qoq (up 41% yoy) to Rs.521mn; RBS forecast was
Rs.590mn. Considering the high interest rate environment, we wait for management's
explanation to check if it was boosted by some one time income.
Tax rate came at 34.4% vs 26.7% in 4QFY11 and 19.9% in FY11. RBS estimate was 32.5%.
Normalized net profit came at Rs.314mn, down 3% qoq (4QFY11 loss was Rs.1bn). RBS
estimate was Rs.139mn as the EBITDA level surprise widened at PAT level.
Normalized EPS for the quarter came at Rs.2.3
The company also announced a final dividend of Rs.0.40/share taking the full FY11 dividend
to Rs.0.80/share.
It seems that the company was able to minimize the impact of lower margin legacy contracts
on its numbers sooner than expected. However, the possibility of some one time gains can
not be ruled out and hence we wait for management call scheduled on Wednesday 11:00am
before reviewing our forecasts.
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