Fedders Lloyd Posted A Muted Performance In Q4

Fedders Lloyd corporation, a part of Lloyd group announced its fourth quarter result yesterday (May 14, 2014) for the quarter ended 31 March, 2014. The topline of the company has grown by 10 per cent, while the bottomline has decreased by 10 per cent during Q4FY14 on an yearly basis.

The topline of the company during Q4FY14 stood at Rs 312.6 crore as compared to Rs 284.6 crore during Q4FY13. Looking at the segment wise performance, the revenue from the steel segment which contributes more than 55 per cent of the total revenue has increased by more than 45 per cent on yearly basis, whereas the revenue from the power segment has plunged by more than 16 per cent on yearly basis during the last quarter of FY14 as compared to corresponding quarter of previous year.

The EBITDA of the company was at Rs 34.36 crore, reporting a fall of around 6 per cent on yearly basis during March quarter 2014. While, the operating margin of the company has plunged by around 184 basis points to 11 per cent during the quarter ended 31 March, 2014 as compared to the same quarter of previous year. The operating margin of the company reduced due to increase in cost of raw material and other expenses during the quarter. The cost of raw material as proportionate to sales has increased by 1161 basis points, more than 100 per cent during Q4FY14 against corresponding quarter of previous year. As the inventory of the company is increasing, it is not able to pass on the cost to the consumers.

 The company has reported a net profit of Rs 13.43 crore during Q4FY14 as compared to Rs 14.94 crore during Q4FY13. As far as margin is concerned, the net profit margin has plunged by 95 basis points on yearly basis for the quarter ended March 2014. The reduction in depreciation (down by 50 per cent Y-o-Y) has helped the net profit margin to fall lesser than the EBITDA margin.

On sequential basis too, the performance of the company was disappointing. Though the topline of the company has surged by around 9 per cent, the net profit of the company has plunged by around 19 per cent on quarterly basis for quarter ended 31 March, 2014. The operating margin has plunged by 122 basis points during Q4FY14 against Q3FY14.

Therefore we can conclude that, the increasing cost of raw material and increasing inventory has been the area of concern for the company. At current market price of Rs 51.5, the stock of the company is trading at price to equity (P/E) of 2.8x. The scrip of the company opened at Rs 54.5 on BSE today and it is currently trading at Rs 51.55, down by 4.63 per cent from its previous close.