Electrosteel Cast

The company declared the Q2 numbers yesterday during the market hours and the stock reacted accordingly; it closed higher by 11.25% at Rs.22.25. The market was gung-ho with the numbers. Compared to a net loss of Rs.17.34 crore in Q1FY13, the company in current Q2 has posted a net profit of Rs.37.04 crore, up almost two times the net profit of Q2Fy12. Its net sales rose 9% on a YoY  but to prevent it from getting once again into the red, it reduced its operating expenses from eating away over 100% of its topline like in Q1FY13 to 86% of the total income. Sequentially, costs are down 5%.

The company, in current Q2 has a MTM of Rs.53 crore but it has not provided for the same in the numbers calculated as it has already provided Rs.69 crore  for such losses in its previous years balance sheet and continues to remain in the accounts. The company has a large debt, which as at 30th Sept 2012 stood at Rs.1806.52 crore. In Feb’12, the company received forest stage-I clearance for its iron ore mines located at Kodolibad, Jharkhand, from Ministry of Forests and Environment (MOEF).It is hoping to get stage-II clearance soon and if and when that comes through, maybe by Q4Fy13, it can can develop the mine and resume production. The mine has reserves of 91mn tonnes with 64% iron content.