Bombay Dyeing disappoints

Bombay Dyeing is on a slump today, the stock price showing the disappointment over the poor Q1FY16 numbers. The stock, which had closed yesterday at Rs.87 is currently down at Rs.82, a slip of almost 6%.

For Q1Fy16, when the company posted a net sales of Rs.393 crore, a drop of 27% (YoY), there was no doubt that the quarter was ending in a disappointment. And it did – with operating costs at Rs.399 crore, a 64% drop in other income, and 17% rise in interest outgo at Rs.63 crore, it ended with a net loss of Rs.53 crore v/s loss of Rs.54 crore in previous Q1. Is loss in Q1 becoming a seasonal thing for the company?

Textile segment was the culprit, showing a loss of Rs.5 crore at EBIT levels and revenue falling 35%. This fall was mainly on account of the closure of its Ranjangaon unit, which has been sold off. Realty did well with a 131% jump in EBIT at Rs.22 crore on a turnover of Rs.42 crore. Polyester showed an improvement in EBIT margins from 1.77% to 2.66%. Clearly, for the company, which equates its brand value with textiles, its earning is more from realty than the other two segments. The company needs to first trim its debt which will help the bottomline. Realty sector is currently down and if that remains the bread winner then it could have a bumpy ride ahead.

The company is developing two realty projects – one is the Island City Center at Dadar; it completed 40-storeyed luxury residential towers and is currently developing two towers named ONE ICC and TWO ICC. They are over eighty two floors each. The other project is Wadia International Center , at Worli. This is made up twenty-five acres of business and residential area.