Srikalahasthi pipes posted it's annual results on 12 may 2017. For March quarter ended sales stood at 432.20 Cr.(Net Profit 31.19 Cr.) which was 291.56 Cr.(Net Profit 40.10 Cr.) for December Quarter and 315.05 Cr.(Net Profit 46.12 Cr.) for FY16Q4. for FY17 Sales stood at 1177.87 Cr(Net Profit 158.80 Cr.). which was 1145.61 Cr.(Net Profit 140.2 Cr.) in FY16.
If we look at this data we can say that the quarterly as well as yearly results were bad, some people also told that "Srikalahasthi Pipes posted very bad result" (i agreed with them and if i saw this type of results for any other company before 3 years i told the same. Because that time i compared sales and profits qoq/yoy.)
Now, come to the point we have to check the reason for sharp fall in Net Profit for March quarter. now analyse detailed results they spent 73.81 Cr. for Purchase of traded goods and which is not necessary to come in each quarter as you can see in the results for previous 3 quarters it was NIL and it was 29 Cr, for FY16.
purchase of traded goods not belongs to Raw materials (i can say this because the showed it separately for each year) and it may be higher this year because of expansion. already highlighted this as well in my tweet on the day of result. so now, we can say that results were not bad.
Srikalahasthi pipes recommend dividend 6INR/SHARE. annual eps@35.25 . See sr. No. IV-b pic.twitter.com/Ba5VlQNZZd— Mayank Sharma (@mynkbrst) May 12, 2017
What is next trigger?
On the result day i told my calculated EPS for FY18 around 70.
let's do some calculation for that, as discussed above the purchase of traded goods is not applicable for each quarter and if they show the expenditure for the same in my view it may be around 20-30 Cr. So, I can add 50 Cr. in to the profit of March quarter which was 31 Cr, so Sri may post Net Profit around 81 Cr. (EPS of 20) or 70 Cr. (EPS of 17.5) and annual EPS may come around 70-80.
Beside this i got great news for srikalahasthi pipes is that it may become debt free from Q1FY18. click here
->Company having great size of opportunity and its products DI Pipes will be in great demand for next five years as South India facing water shortage.
-> Market share of Company is 95% in south and 15% in India.
-> Benefits of expansion of DI Pipes capacity will be seen in FY18 revenue.
you can see the small calculations for margins, revenue and earnings i posted earlier.Rain is not in our hand but, if govt. Work for solve the drinking water crisis! One can see the size of opportunity for srikalahasthi pipes https://t.co/iue6T7bRnp— Mayank Sharma (@mynkbrst) February 5, 2017
Not able to login blogger so short story for my favorite script is here 😇🤗 #superbullis on #srikalahasthipipes https://t.co/ubeEmaxSxg— Mayank Sharma (@mynkbrst) May 17, 2017
This is short Calculation which i do for srikalahasthi pipes. as, they are on expanding the coke oven plant capacity there are chances to some pain may come in financials( My calculations may go wrong). But my view for srikalahasthi pipes is purely long-term.
It may give 3-5X returns from CMP@340 in next 3-5 years.
disc: i am not SEBI registered analyst. Do your own research before invest in any stock or consult financial expert.
