Views on Kirloskar Oil Engines 2QFY2016 Results: Angel Broking

Views of Mr. Milan Desai (Research Analyst - Mid Caps, Angel Broking) on Kirloskar Oil Engines 2QFY2016 Results:

2QFY2016 Numbers below our expectation

"For 2QFY2016, Kirloskar Oil Engines (KOEL) reported a disappointing set of numbers. The top-line for the quarter declined by 6.0% YoY to INR 590cr. The poor top-line can mainly be attributed to low contribution from the large engines business which had completed the order for NPCIL in 4QFY2015 and overall sluggishness across most segments. The net raw material cost declined by 286bp YoY to 62.3% of sales while employee expense increased by 79bp YoY to 8.5% of sales, and other expenses increased by 405bp YoY to 21.0% of sales. This resulted in EBITDA margin contracting by 198bp YoY to 8.2%, lower than our estimate of 9.8%. Other income increased by 61.1% YoY to INR 20 and consequently, the net profit remained flat at INR 36cr (against our estimate of INR 37cr). Since the completion of Large Engines order in FY2015, the top-line is expected to remain weak for the current year as there are no orders expected. Currently, we have a NEUTRAL rating on the stock and will update post management interaction."

Shares of KIRLOSKAR OIL ENGINES LTD. was last trading in BSE at Rs.280 as compared to the previous close of Rs. 280. The total number of shares traded during the day was 17127 in over 531 trades.

The stock hit an intraday high of Rs. 287.55 and intraday low of 274.8. The net turnover during the day was Rs. 4830664.

Source : Equity Bulls

Keywords