Salaam to these underdogs

I am writing this column as a salaam to all those companies that made me spill tea on my kurta while I was reading their first quarter results a few days ago.

Star Paper: The world gave up on this company a few years ago. Erratic performance. Absence of scale. Legacy equipment. And, then came the first quarter of 2016-17. This is what struck me: Revenues increased by Rs 8.70 crore in the quarter over the corresponding period of the previous year; profit before tax (PBT) increased by Rs 11.65 crore. Which means, for every rupee added in revenue, the bottom line increase was larger. PBT was Rs 12.76 crore and earning per share Rs 8.18. Here comes the twister: Should one annualise or should one not? Should one assume subsequent quarters will be better, as good or worse? The palm-sized advertisement announcing the company's results offers no clue (which is fair). But, not even bothering to share a word about how the company reported a disruptive performance? A communication opportunity squandered.

Vesuvius India: Everyone, including my mom-in-law, knows that any company remotely connected with the steel sector is a suspect these days. The same logic applies to Vesuvius, which manufactures refractories used in the steel and foundry sectors. I was on the verge of my 'waste of time' pronunciation when I lingered a trifle longer on its first quarter performance: a 23 per cent growth in turnover over the corresponding period of the previous year, pre-tax profit of Rs 36.42 crore (Rs 29.25 crore) and PBT margin of 17.5 per cent (17.35 per cent). Must study this company's business model deeper; this GDP-independent company made more money than most of its downstream customers combined!

IPCA Laboratories: The big question is whether the worst is over for the company. The first quarter performance sends out that signal. Revenues increased by Rs 86 crore between the two quarters; PBT rose by Rs 47 crore. PBT margin strengthened from four per cent to nine per cent. The usual questions: Will this improvement be sustainable? Can one expect better prospects? And here, too, one will need to extend beyond the cryptic financials and smell out other information sources. What an opportunity the company appears to have missed in rebuilding its brand!

Jyothy Laboratories: This personal care products company reported a Rs 36 crore increase in revenues between the two quarters (first quarter of the current financial year compared with the first quarter of the last). PBT jumped nearly Rs 20 crore from Rs 25.6 crore in the first quarter of the last financial year to Rs 45.6 crore during the current financial year. Immediate questions: Did the company reduce costs? Did it increase the proportion of value-added products? Did it substantially reduce interest costs? Yet another instance of the bikini results (they conceal something more exciting than what they reveal) at work. Will need to trawl the net for additional info or dial into analyst conferences.

The author is a stock market writer, tracking corporate earnings and investor psychology to gauge where markets are not headed