Capitaline

Results 22-Oct-22

Analysis

Rajratan Global Wire

Lower demand of bead wire impacted performance

Rajratan Global Wire consolidated net sales declined 6.89% to Rs 224.56 crore in Q2FY23 compared to Q2FY22. Operating profit margin has declined from 21.01% to 16.78%, leading to 25.65% decline in operating profit to Rs 37.68 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 56.08% to 62.54%. Purchase of finished goods cost fell from 1.88% to 0.30%. Employee cost increased from 3.46% to 4.10%. Other expenses rose from 16.83% to 16.84%.

Other income rose 195.52% to Rs 1.98 crore. PBIDT fell 22.77% to Rs 39.66 crore. Provision for interest rose 10.08% to Rs 4.26 crore.

PBDT fell 25.44% to Rs 35.4 crore. Provision for depreciation rose 11.37% to Rs 4.31 crore.

Profit before tax down 28.71% to Rs 31.09 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 7.78 crore, compared to Rs 11 crore. Effective tax rate was 25.02% compared to 25.22%.

Minority interest was nil in both the periods. Net profit attributable to owners of the company decreased 28.52% to Rs 23.31 crore.

Equity capital stood at Rs 10.15 crore as of 30 September 2022 to Rs 10.15 crore as of 30 September 2021. Per share face Value remained same at Rs 10.00.

Promoters’ stake was 65.00% as of 30 September 2022 ,compared to 65.00% as of 30 September 2021.

Commenting on the performance, Mr. Sunil Chordia, CMD, Rajratan Global Wire Ltd said

“This quarter was marked by lower demand for bead wire due to lower production of tyre companies in Thailand who are majorly exporting tyres to Europe and USA. This pulled down our overall profitability. However, we used this period to introduce improvements to our overall productivity through TPM projects and digitisation of our factories.

I am happy to share with you that we have now received our Environmental Impact Assessment (EIA) approval for the expansion in Thailand, which paves the way for moving to 60,000 TPA production capacity in November’22. We are in talks with new customers in Korea, Vietnam and Europe to cater to from this expanded capacity.

Further, we have completed 50% of the construction at Chennai, where we are setting up the greenfield facility for 60,000 TPA. We have already initiated market surveys for the entire European region in preparation for this upcoming capacity.

Overall, we are confident to deliver 20% CAGR (in volumes) over the next 3-5 years and all our efforts are aimed towards this growth to Outperform.“

For year-to-date (YTD) results analysis

Net sales of Rajratan Global Wire have increased 12.40% to Rs 475.99 crore. Operating profit margin has declined from 20.47% to 18.99%, leading to 4.26% rise in operating profit to Rs 90.39 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 58.14% to 61.54%. Purchase of finished goods cost fell from 2.36% to 0.04%. Employee cost increased from 3.64% to 3.79%. Other expenses rose from 15.79% to 16.03%.

Other income rose 346.05% to Rs 3.39 crore. PBIDT rose 7.23% to Rs 93.78 crore. Provision for interest rose 11.42% to Rs 8.39 crore.

PBDT rose 6.83% to Rs 85.39 crore. Provision for depreciation rose 13.47% to Rs 8.59 crore.

Profit before tax grew 6.14% to Rs 76.80 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 18.95 crore, compared to Rs 17.83 crore. Effective tax rate was 24.67% compared to 24.64%.

Minority interest was nil in both the periods. Net profit attributable to owners of the company increased 6.09% to Rs 57.85 crore.

Equity capital stood at Rs 10.15 crore as of 30 September 2022 to Rs 10.15 crore as of 30 September 2021. Per share face Value remained same at Rs 10.00.

Promoters’ stake was 65.00% as of 30 September 2022 ,compared to 65.00% as of 30 September 2021 .

The scrip is trading at Rs 996

Rajratan Global Wire : Consolidated Results
Particulars	2209 (03)	2109 (03)	Var.(%)	2209 (06)	2109 (06)	Var.(%)	2203 (12)	2103 (12)	Var.(%)
Net Sales	224.56	241.17	-7	475.99	423.66	12	892.86	546.54	14
OPM (%)	16.8	21.0		19.0	20.5		20.3	16.9
OP	37.68	50.68	-26	90.39	86.7	4	181.59	92.11	35
Other Inc.	1.98	0.67	999	3.39	0.76	999	2.0	1.63	39
PBIDT	39.66	51.35	-23	93.78	87.46	7	183.59	93.74	35
Interest	4.26	3.87	10	8.39	7.53	11	15.43	13.39	0
PBDT	35.4	47.48	-25	85.39	79.93	7	168.16	80.35	44
Depreciation	4.31	3.87	11	8.59	7.57	13	15.52	14.1	17
PBT before EO	31.09	43.61	-29	76.8	72.36	6	152.64	66.25	52
EO	0	0		0	0		0	0
PBT after EO	31.09	43.61	-29	76.8	72.36	6	152.64	66.25
Taxation	7.78	11	-29	18.95	17.83	6	28.31	13.12	23
PAT	23.31	32.61	-29	57.85	54.53	6	124.33	53.13	61
EPS (Rs)*	#	#		#	#		24.5	10.5
Notes
* EPS is on current equity of Rs 10.15 crore, Face value of Rs 2, Excluding extraordinary items.
# EPS is not annualised
bps : Basis points
EO : Extraordinary items
Figures in Rs crore
Source: Capitaline Corporate Database

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