Dear All,
Forwarding you the Result Flash on CCCL for 4QFY2011 with a Neutral recommendation.
Key highlights from the results
CCCL posted a disappointing set of numbers for the fourth consecutive quarter. The top-line of the company grew by mere 1.1% yoy to `643.0cr (`636.3cr) which was marginally lower than our estimate of `675.0cr. We believe this consistent disappointment on the top-line front, inspite of healthy order book at 2.3x FY2011 revenues, indicates that the company is facing some problems on the execution front. However, the shocker came at the operating front, as the company posted abysmal EBITDA margins of 3.5% (11.4%) a drop of 790bps, against our expectations of 150bps dip. On a sequential basis as well margins saw a decline of 620bps. The main reason for decline in margins is the jump of 710bps yoy in the materials cost as a percentage of sales and 170bps yoy increase in subcontracting cost. The company has cited error in estimation of material cost for fixed price contracts which has led to this disaster. Further as per management fixed price contracts form 21% of the overall order book which might face margin pressure. Hence, we are expecting overall margin pressure to continue in coming quarters given the quantum of fixed price contracts. This translated in Bottom-line de-growth of 95.5% on yoy basis.
Quarterly Performance (Standalone)
| Y/E March (` cr) | 4QFY11 | 4QFY10 | 3QFY11 | % Chg (yoy) | % Chg (qoq) | FY2011 | FY2010 | % Chg |
| Net Sales | 643.0 | 636.3 | 496.2 | 1.1 | 29.6 | 2136.7 | 1950.0 | 9.6 |
| Total Expenditure | 620.5 | 563.9 | 447.9 | 10.0 | 38.5 | 1985.6 | 1767.0 | 12.4 |
| Operating Profit | 22.5 | 72.3 | 48.3 | (68.9) | (53.5) | 151.0 | 183.0 | (17.5) |
| OPM (%) | 3.5 | 11.4 | 9.7 | (790)bp | (620)bp | 7.1 | 9.4 | (230)bp |
| Interest | 12.0 | 14.6 | 12.6 | (17.4) | (4.8) | 47.3 | 31.3 | 51.3 |
| Depreciation | 3.5 | 2.9 | 3.4 | 19.6 | 3.3 | 12.9 | 10.0 | 28.8 |
| Non Operating Income | 0.9 | 2.4 | 1.4 | (62.9) | (38.6) | 5.0 | 6.3 | (19.3) |
| Nonrecurring items | 0.0 | (5.4) | 0.0 | - | - | 0.7 | 0.0 | - |
| Profit Before tax | 7.8 | 51.8 | 33.8 | (84.9) | (76.8) | 96.6 | 148.0 | (34.7) |
| Tax | 3.3 | 18.2 | 11.6 | (81.6) | (71.2) | 33.8 | 49.1 | (31.2) |
| Net Profit before JV share | 4.5 | 33.6 | 22.2 | (86.6) | (79.7) | 62.9 | 98.9 | (36.4) |
| Share of pfts to JV partner | 3.0 | 0.0 | 5.5 | 0.0 | 0.0 | 12.2 | 5.4 | 0.0 |
| Net Profit after JV share | 1.5 | If you do not want to receive any newsletters,visit this link 
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