Southern Ispat Q2 Results update: Be and Make
Strong Show: Net profit of Southern Ispat & Energy rose 878.67% to Rs. 7.34 crore in the quarter ended September 2010 as against Rs. 0.75 crore during the previous quarter ended September 2009. Sales rose 251.02% to Rs. 113.24 crore in the quarter ended September 2010 as against Rs. 32.26 crore during the previous quarter ended September 2009.
| Particulars | Quarter Ended | ||
| | Sep. 2010 | Sep. 2009 | % Var. |
| Sales | 113.24 | 32.26 | 251 |
| OPM % | 8.30 | 3.25 | 155 |
| PBDT | 9.35 | 0.93 | 905 |
| PBT | 9.17 | 0.75 | 1123 |
| NP | 7.34 | 0.75 | 879 |
Highlights for the Q2: OPM of southern Ispat is substantially increased from 3.25% to 8.3% which is very encouraging. The sales, OPMs, NPs are increased and due to GDR issue equity diluted hugely from Rs.11.02cr to Rs.43.74cr and the EPS is at 1.68. Despite the huge changes in balance sheet, Southern managed to post good numbers.
Concerns: After the GDR issue, equity diluted hugely and naturally the promoter stake reduced substantially which is alarming sign. Company officials clarified that after the all merging, amalgamations promoter stake is likely to go above 42%. The whole money raised from the GDR issue and from the debt was used to take-over the “New tech” and “Iron ores”. Promoters using their own money for taking the Kerala sponge iron ltd. And coal mines etc., which increases their stake after the amalgamations which are likely to complete in December.
Conclusion: After the whole amalgamations, expansions only we can get a clear picture of the promoter stake, total equity dilution etc., So, to give the estimations, valuations we need to wait till the December results are out. Those who are invested can stay invested in till the December results are out. If everything goes right as expected then southern ispat is sure multi-bagger stock. Hold it tight the down side risk is very less and risk-reward ration is encouraging.
With thanks
Be and Make
4 comments:
Hi
I am pretty new to stocks, was going through some books and then found The intelligent investor. I like the book it's concepts are cool.
Was trying to find some stocks his way and then I came across Koutons retail, the stock is selling below book value, good earnings in the previous years, good market capitalization, no much debts. What do you think of this stock can you please make a review.
Dear Joseph - It is not all about the BV, PE, EPS and EBITDA etc., We need to consider some other issues also like Credibility of the promoters, cash flows, companies credit rating etc.,
The prices plunged after credit rating agency ICRA suspended Koutons’ LB+/A4 ratings assigned to Rs.300-crore fund based facilities of the retailer.
with thanks
be and make
What does that mean ?
i mean what does this mean.
The prices plunged after credit rating agency ICRA suspended Koutons’ LB+/A4 ratings assigned to Rs.300-crore fund based facilities of the retailer.
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