The parade of some of the most interesting first-quarter corporate performances continues.
Here is the evidence:
Vivimed Labs: In the first quarter of the current financial year, the company reported its best Ebitda (earnings before interest, taxes, depreciation and amortisation) in four quarters of nearly Rs 67 crore, rising from Rs 51 crore in the immediately preceding quarter.
Even as this should have been good enough, there is a remarkable bonus: Interest outflow has declined sharply from Rs 24.51 crore to Rs 15.21 crore within a space of a single quarter (the lowest in five quarters) - interest cover of four-plus.
It would be exciting to extrapolate: If the company even maintains its first quarter performance, that could be an Ebitda of Rs 265 crore coupled with an interest cover of 5x (the company has gone public in its annual report of a projected interest outflow of Rs 55 crore in the current year against Rs 80 crore in the previous year) against a market capitalisation of around Rs 800 crore (after Thursday's sell-off).
Even as the market may still be discounting the balance sheet restructuring, the kicker could come from the likely ANDAs in the US. This looks like an interesting play.
Prime Securities: The Mohinder ‘comeback’ Amarnath of the stock market. The company encountered dramatic roller-coasters in the last decade.
This is what it has translated into: No debt or broking income; only capital market advisory services. Prime is now an advisory pure-play, possibly the only one of its kind in the markets.
The results of the past two quarters indicate the company could have successfully reinvented itself: A pre-tax and pre-exceptional income profit of Rs 5.30 crore in the past quarter of the last financial year and Rs 4.14 crore in the first quarter of the current year.
Equity Rs 13.28-crore (face value Rs 5). Market capitalisation of around Rs 60 crore. If the company can sustain this performance for the remaining quarters, there might be more money to be made on the re-rating than earnings growth.
Venky’s: My first suspicion when I saw the company’s performance was that there must have been a typo error.
Consider the Ebitda sequence in the last five quarters: Rs 53 crore, Rs 28 crore, Rs 28 crore, Rs 55 crore and Rs 91 crore.
In the last quarter, the company generated a profit larger than the combination of the two preceding quarters.
What I love is the sequential interest outflow: Rs 20 crore, Rs 21.5 crore, Rs 22 crore, Rs 21 crore and Rs 21 crore (other income has been averaging Rs 8-10 crore per quarter incidentally).
Now, let us work out the bargain: If the company can report an annualised version of its first quarter less 20 per cent (factoring unforeseens!) that could be an Ebitda of around Rs 290 crore on a market capitalisation of Rs 720 crore. Chicken feed in my opinion (pun deliberate).
Photograph: Danish Siddiqui/Reuters
Mudar Patherya is a stock market writer, tracking corporate earnings and investor psychology to gauge where markets are not headed.
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