Torrent Cables Q3FY13 Net Down 3%, To List On NSE

In Q3FY13, Ahmedabad-based Torrent Cables has reported a strong 51% growth in its topline to Rs 98.27 crore on a year on year basis. But its net profit has declined by 3% to Rs 6.3 crore YoY due to the rise in the raw material costs as well as rupee depreciation. However, on a sequential basis, it has seen an over twofold rise, which provides a positive spin on the results.

Talking to us, the company’s CFO Amit Agrawal said that the growth of 51% during the quarter is led by the strong volumes growth. However, he also said that the high growth rate is not sustainable and may come down.

Torrent Cables, which manufactures cables for the power sector, uses copper as its main raw material. The company has reported a decline in its EBITDA margins on YoY, as the copper prices climbed to higher levels. During the quarter, the price of copper was about USD 8000 per tonne against about USD 7500 per tonne in Q3 FY12. The rupee remained at 54 against the dollar during the quarter compared to Rs 51 against dollar a year ago, which also added to the margin pressures.

Overall, in the in the elapsed quarter, its EBITDA margins came down to 10.5% compared to 16% a year ago. On a sequential basis, though, the margins have improved by 400 basis points, giving hope that it may show some improvement in the March 2013 quarter.

The company also has seen its interest expenses coming down sequentially as well as on a yearly basis. The effective tax rate was at 25% compared to 28% in the September 2012 quarter.

Torrent Cable's CFO has said that the company will get listed on the NSE soon, though he did not give an exact time frame for this. The listing on the index would see the daily volumes in the counter going up, due to which the company may get a better valuation.

We had recommended this scrip to our readers in DSIJ’s Low Priced Scrip column (Issue no. 25 dated December 2, 2012), at a price of Rs 93. It is currently trading at Rs 94.50. We recommend holding the scrip over the next 6 months, with a target price of Rs 105.