Unitech: Profits grew by 52% in Q3FY13

On a consolidated basis, it posted increase in revenues and net profits on a YoY basis. The company's revenue grew by 25.46% to Rs 644.72 crore as compared to previous year’s December quarter. In the same period, the company’s profit has increased by 52%. Its revenue increased largely due to an increase in business from real estate segment followed by transmission towers and property management segments. It other income grew by 3.5% in this quarter on a yearly basis.

The company's major revenue driver is the real estate segment, which contributed 79.5% of the total revenue while, transmission tower and property management segments contributed 10.29% and 5.05% respectively. The growth exhibited by these segments is 18.24%, 140% and 21% respectively. 

UL's total expenses increased by 28.3% in the December ended quarter of FY13 against the same period in FY12. The expenses majorly increased due to a huge rise in raw material costs (cement, steel and other materials), higher real estate & construction expenses and a hike in employee expenses. Raw material expenses increased by 110.2% on a YoY basis, while the real estate & construction expenses and employee expenses increased by 38.61% and 22.91% respectively. The above items form almost 71% of the total sales and therefore such an increase has resulted in the anaemic growth of the company’s operating profit.

The company witnessed a growth of a mere 3.04% in its operating profit on a YoY basis. The operating profit reached Rs 100.95 crore in the December 2012 quarter against Rs 97.97 crore in Q3FY12. However, the huge rise in raw material price has impacted the company's operating profit margin, which declined by 304 basis points to 15.66% on a YoY basis.

UL's bottomline showed a growth of 52% in Q3FY13, to Rs 84.17 crore on a YoY basis. Interestingly, UL's net profit margin has shown a growth of 209 basis points to 13.29% in Q3FY13 as compared to Q3FY12. This growth was mainly due to a decline in the finance costs by 68.95% and a reduction in tax expenses by 11.36% on a YoY basis. 

The company has also witnessed a decline in the profit from its largest segment - Real Estate - by 10%, which remains a concern. Moreover, the stock of the company was hammered down a few sessions ago due to issues relating to corporate governance, and we would therefore advise our readers to stay away from the scrip as of now.