HBL Engineering (517271) Q4 04/05 earnings summary

Executive summary

• FY05 net sales reached Rs 283.80 crore; net profit rose to Rs 18.45 crore from Rs 8.66 crore, with EPS of Rs 9.19 versus Rs 4.31.

• Strategy centers on technology-led niche manufacturing, specialized batteries, railway signaling and defence electronics, with exports and systems integration as growth drivers.

Financial highlights

• Gross sales Rs 325.75 crore versus Rs 192.38 crore; net sales Rs 283.80 crore versus Rs 169.02 crore in FY04.

• Operating profit before interest, depreciation and extraordinary items was Rs 42.62 crore versus Rs 23.40 crore; finance cost rose to Rs 9.69 crore from Rs 6.77 crore.

• Net profit Rs 18.45 crore versus Rs 8.66 crore; FY05 included Rs 1.36 crore of extraordinary losses/non-recurring costs versus Rs 0.10 crore in FY04.

• Proposed dividend Rs 1.50 per share, or 15%, versus 12% in FY04; dividend and corporate tax were expected to absorb Rs 3.43 crore.

Outlook and guidance

• FY06 sales estimate Rs 380–400 crore; expected annual sales growth of Rs 120 crore for the next 3 years, supported by roughly Rs 140 crore of capex planned for Oct 2005–Sep 2007.

• Added VRLA, tubular, NCPP, silver-zinc and torpedo battery capacity was in progress, with completion expected by 31 May 2006; SBI sanctioned a Rs 30 crore expansion loan.

• Nicad battery export unit planned for the Vizag SEZ, with production targeted for September 2006; two additional plants were planned at Bhoothpur and Vizianagaram.

• FCCBs were planned to fund faster capacity expansion; a 1:15 rights issue was in progress to fund the SEZ unit and address minimum public-float requirements.