Neyveli Lignite Reports Muted Performance For FY13

Neyveli Lignite Corporation (NLC) posted its Q4FY13 result along with its FY13 year end performance after market hours on May 28 2013. 

On a standalone basis, the company's topline stood at Rs 1858 crore, up by just 1.9% in Q4FY2013 against Rs 1824 crore in the same period in FY12. Its net income from operations saw growth of 9.5%, while the Other Income declined by Rs 109 crore to Rs 205 crore in this period.

However, on a consolidated basis for FY13 as a whole, NLC’s revenues grew by 10% to touch Rs 6173 crore. The power generation segment is the major revenue contributor to the company’s business, growing by 14.6% in FY13. The lignite mining segment posted a growth of 10% to add Rs 4075.53 crore to its revenue. Further, on a consolidated basis its Other Income for the fiscal went down by 22% from Rs 748 crore in FY12.

Due to higher employee costs and other expenses, NLC's total expenses jumped by 15% to Rs 4095 crore. Though the company has seen a huge growth in its operating costs, its EBITDA grew to Rs 2590 crore, up 4% from that in the previous year.

Further, due to heavy increase of 29% in finance expenses, NCL’s net profit showed a growth of just 3% to Rs 1458 crore. This rise in finance cost is on account of an increase in long-term borrowings by the company, which stood at Rs 5891.6 crore in FY13 against Rs 5361 crore in FY12.

The huge increase in operating expenses and finance expenses has affected both the EBITDA margin and the net margin of the company by 231 basis points and 152 basis points respectively. Considering the company's bad financial performance, we recommend investors not to invest in this scrip at the current level.

Post the results announcement, the stock is currently trading at Rs 68.15 as on May 29.