Rane (Madras) advances 15% on strong December quarter results

In Q3FY21, the company reported a net profit of Rs 5.50 crore against a net loss of Rs 7.2 crore in year-ago quarter

Shares of Rane (Madras) moved higher by 15 per cent to Rs 285 on the BSE in intra-day trade on Wednesday after reporting a consolidated net profit of Rs 5.50 crore for the quarter ended December 2020 (Q3FY21) on the back of strong revenue growth. The company, a manufacturer of steering and suspension products and light metal casting components, had posted a loss of Rs 7.20 crore in Q3FY20.

Total revenue during the quarter under review increased by 35.8 per cent year-on-year to Rs 435.20 crore as against Rs 320.50 crore in the corresponding quarter of the previous fiscal. EBITDA (earnings before interest, taxes, depreciation, and amortization) margin improved 336 basis points (bps) to 9 per cent for Q3FY21 as against 5.7 per cent in Q3FY20. The margin expansion due to the cost reduction initiatives and higher volume helped to mitigate unfavourable mix and material cost increase.

The company said its US subsidiary experienced a 13 per cent drop in sales impacted by lower vehicle demand in the US due to Covid-19 and lower volumes from key customers. Despite operational improvements, the drop in volumes resulted in a higher loss, it said.

The management said the company saw a strong recovery in the demand environment in Q3. This was well supported by the production ramp-up in the plants. Cost reduction initiatives continued to yield results. “We are seeing volatility in customer schedules as they experience supply constraints on certain components. We continue the cost control measures to manage the commodity price increases,” the management said.

At 02:46 pm, Rane (Madras) was trading 14 per cent higher at Rs 284 on the BSE as compared to a 2 per cent decline in the S&P BSE Sensex. The stock hit a 52-week high of Rs 302 in February 2020. A combined 235,000 equity shares had changed hands on the counter on the NSE and BSE so far.