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  • Bharti Airtel - Buy
    Bharti Airtel recently announced its Q2 results with good numbers, but not upto the expectation.

    Revenues increased by 9% to Rs.98.45 billion Y-o-Y and net profit up by 15% to Rs.23.7 billion Y-o-Y. Net margin was at 24%, relatively higher than a year before.

    Here are some positive notes:

    1. Customer based increased to more than 110 million as on Sep'09. This is up by 42% from last year same period.
    2. Net debt came down to Rs.42 billion, lowest in last five consecutive quarters
    3. Return on equity (RoE) is consistently above 30% for the past five quarters (though it was down from 36% in Sep'08)
    4. Net debt-to-EBITDA was at 0.26, lowest in last five consecutive quarters. This is due to the decrease in net debt.
    5. Interest coverage at 56, highest in last five quarters

    Here are some concerns:

    1. Average revenue per user (ARPU) came down to Rs.252, from Rs.331 in Sep'08.
    2. Market share in mobile services fell to 23.5% from 24.6% a year earlier.
    3. Operating expenses increase over last five quarters (though slightly less than previous quarter)
    4. Return on capital employed (RoCE) was at 26%, compared to 36% in Sep'08.
    5. Capital productivity (annualized revenue/capex) was down at 64% from 73% during last Sep'08.


    Share price is at Rs.292, approaching its 52 weeks low, Rs.290. The stock touched Rs.495 (its 52 weeks high) and hence the stock is currently trading at deep discount. Moreover the trading volume is at around 6.5 million.

    Considering its positive fundamentals and free-falling stock price, Bharti Airtel is a 'GOOD' pick now. Investors considering long term investments with 1-2 years investment horizon, can make a call now.

    Disclosures: No Positions
    Tags: Telecom
    Oct 31 12:57 pm | Link | Comment!
  • Strong Oil Demand Forecast and BOLT Technology
     
    FY 2009 Results
     
    Top line revenues down by 21% to $48.9 million for the fiscal year ended June 30, 2009. This is mainly due to the decrease in sales in two main reporting segments: seismic energy sources and seismic energy source controllers. More than $11 million decrease in sales reported in seismic energy sources segment. This is followed by air gun replacement systems segment (decreased by more than $2 million) and seismic energy source controllers segment (decreased by $0.6 million).
     
    Only segment that witnessed growth in sales was underwater cables and connectors. Sales from this segment went up by $1.4 million, from FY’08.
     
    However gross profit margin increased to 49% for the year, compared to 46% in 2008. This is due to the higher price level and decrease in material costs.
     
    BOLT uses high quality steel in its manufacturing process, hence any drastic increase or decrease in prices of steel could adversely affect the profit margin of the company. Cost of sales was 51%, lowest in last five years. This somewhat helped the company to achieve the highest net profit margin of about 22% in 2009.

     
    40% of revenues from just three major customers
     
    Top three customers (Schlumberger (16%), Compagnie Generale (15%) and Petroleum Geo-services (9%)) constitute 40% of sales in 2009. This is a real concern for any investors, though the company was able to book orders from other clients as well. 
     
    Risk Factors
     
    -          Oil price movements affect the sales of BOLT directly; Increase in oil prices improve the marine seismic activities, which in turn increases the sales
    -          Global economic conditions affect the demand for oil and gas products. This in turn will have an impact on BOLT’s top line revenues
    -          Dependency on few major customers for major portion of revenues
    -          85% of sales from outside US
     
     
      
    Relation between Oil Price and BOLT’s Sales
     
    There’s a correlation of more than 0.5 between the oil price and sales. This however clearly do support that BOLT’s sales don’t rely wholly on oil price movements.
     
     
    International Energy Agency (IEA) recently increased its demand forecast for global oil demand in 2009 & 2010 to 84.4 mb/d and 85.7 mb/d respectively. This is strongly supported by increasing demand in North America and non-OECD Asian countries[1]. Hence BOLT could report an increase in sales in 2010 as the projections for oil demand and price seems to be optimistic.
     
    Strong Fundamentals
     
    BOLT’s average return on equity (RoE) in last five years stands at a healthy 18.5% and return on assets (RoA) at 16.1% for the same period.
     
     
     
    2005-009
    RoE
    18.5%
    RoA
    16.1%
    EBIT margin
    26.2%
    Net profit margin
    19.0%
    Sales/Share ($)
    4.8
     
     
    Cash and cash equivalents increased by 34% Y-o-Y to $25.69 million in 2009. Moreover the company does not hold any long term liabilities.
     
    BOLT spends an average 1% of sales on research and development activities. This helps the company to use latest technology based products to clients and also improve its manufacturing processes efficiently.
     
     
    Valuation
     
     
     
     
    P/E
    10.17
    P/B
    1.60
    P/S
    2.18
    P/CF
    10.94
    Market Cap ($ million)
    106.60
    EV ($ million)
    78.87
    EV/Sales
    1.61
    EV/EBITDA
    4.84
     
     
     
      
     
     
     
    Disclosure: No Positions
    Tags: BOLT
    Sep 12 03:40 am | Link | Comment!
  • BOLT Technology (BOLT) Corp – Q3’09 Results Review & FY 2009 Earnings Forecast

     

    Q3’09 Sales Review
     
    Sales for the third quarter ended 31 March’09, was at $12.96 million, a dip of about 18% from a year earlier. However, the gross profit margin showed an upward trend of 32.8% for the quarter. This is mainly because of reduced cost of sales and selling and other expenses. Operating margin is also witnessed an increase and stood at 34%.
     
    Net Income went down by about 12% to $3 million.
     
    Analysis
     
    The major contributor for the decline in sales was seismic energy systems, seismic energy controllers and air gun replacement parts, which were went down by 29% in sales during the quarter.
     
    This decrease in sales is partly offset by sales of underwater cables and connectors, which were up by 5% during the three months ended March 31, 2009.
     
    Slowdown in global seismic exploration activity during the quarter was the reason behind the decrease in sales in seismic energy systems.
     
    Strong Cash Position
     
    BOLT has increased its cash and cash equivalents component by more than 100% in Q3’09. Cash and cash equivalents were at around $24 million.
     
    The company also invested in other short term bank deposits, which helped in increasing the interest income by nearly 200% during the quarter ended March 31, 2009. Interest income during the period stood at $95,000.
     
    R&D Expenses
     
    The company is very keen in improving its products in the category of APG guns and SSMS. This can be inferred from the increase in R&D expenses during the quarter to $65,000, a 10% increase year-on-year.
     
    Strong dependence on some major customers
     
    About 62% of company’s sales were represented by 5 major customers. This again shows the company’s strong dependence on some specified customers. Though the receivables reduced by almost 18%, dependency on some major customers is still to be considered as a ‘weak’ point for the company.
      
    FY 2009 Sales Estimate
     
    Based on the factors such as decreasing demand for the seismic exploration products, volatility in global oil market, decrease in number of global oil explorations (though BOLT’s positive outlook for its products and increase in R&D expenses), the sales for BOLT is expected to witness a decrease in FY 2009.
     
    Estimate of the EPS for the fiscal year 2009 is around $1.49. Sales is expected to be in the range of $54.24 million.
     
    Disclosure: No Positions
    Tags: BOLT
    Aug 02 09:51 am | Link | Comment!
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