Atlas Cycles

Atlas Cycles (Haryana) saw some action, though not so good one, post its Q3FY13 numbers which it posted yesterday; they were dismal to say the least. A falling topline pushed down the bottomline. Net sales was down 39% (YoY) at Rs.145 crore. Net profit came in at Rs.84 crore, down 30%. Cycle sales dropped 35% and that of steel tubes which forms a miniscule part of its topline fell by a whopping 97%. And on EBIT levels, the loss from steel tubes was at Rs.1.28 crore and EBIT from cycles fell 4%. Clearly lower demand for cycles and very poor show from steel tubes pushed down the company’s overall performance.

The stock usually has a lot of upward momentum a few days in the run-up to the Union Budget as it is always seen that the Budget gives sops to this sector. In FY13, the Budget hiked customs duty on bicycles from 10% to 30%. That was a great move for the cycles makers, especially those in the organised sector as this hike in duty will restrict cheap imports, especially from China which till date has flooded the Indian bicycle market with very cheap products, making it difficult for the organised sector companies like Atlas to hike prices. But looks like, this duty hike has also not really helped the company. the company’s equity base is pretty small at Rs.3.25 crore and annualized EPS stands at Rs.11.