CMC’s Net Profit Grows By 52%

CMC announced its results post market hours on Monday, April 15, 2013. Although the company’s Q4FY13 numbers look somewhat disappointing on the margins front, its yearly performance has been robust.

In Q4FY13, revenues of CMC rose to Rs 523.97 crore from Rs 492.97 crore in the previous quarter, marking a growth of 6.29%. At the same time, its EBIT declined by 3.62% and net profit increased by a mere 0.46% sequentially. This clearly shows that the margins have taken a hit during this quarter. The company’s operating profit margin and net profit margin declined by 147 basis points and 68 basis points respectively.

On a yearly basis however, the performance of CMC has been rather robust. Revenues grew by 31.21% to Rs 1927.86 crore, EBIT by 44.67% to Rs 293.61 crore and net profit by 51.66% to Rs 230.23 crore. The year has seen significant margin improvement with a rise in operating profit margin and net profit margin of 142 basis points and 161 basis points respectively.

A significant improvement has been taking place in the financials of CMC as a result of a better business mix and operating cost efficiencies. The Systems Integration business, which constituted to 58% of the company’s total revenues in FY13, grew by a robust 35.02% as compared to FY12. It was this very segment that also caused the moderate Q4FY13 results, as it declined by 13.93% sequentially.

CMC has been aiming for uniform growth across its SBUs. It added a total of 80 new clients in FY13 and has seen a good traction in the verticals of BFSI (Banking, Financial Services and Insurance), energy, utilities and hi-tech. It maintains its target of growing better than the industry standards.

Overall, the company’s business mix looks healthy and we maintain our positive outlook on the prospects of CMC.