Eveready Industries rose 1.37% to Rs 158.65 after the battery maker's standalone net profit jumped 216% to Rs 58.02 crore in Q2 September 2020 from Rs 18.38 crore in Q2 September 2019.On a standalone basis, net sales rose 7% year on year to Rs 372.63 crore in Q2 September 2020 from Rs 348.28 crore in Q2 September 2019. The announcement was made after market hours on Friday, 13 November 2020.
Profit before tax (PBT) jumped 209% to Rs 65.2 crore in Q2 September 2020 over Q2 September 2019. Current tax expense rose sharply to Rs 11.83 crore in Q2 September 2020 compared with Rs 3.55 crore in Q2 September 2019.
Operating EBITDA soared 140% YoY to Rs 75.77 crore in Q2 September 2020 from Rs 31.59 crore in Q2 September 2019. While, EBITDA margin improved to 20.3% in Q2 September 2020 as against 9.1% in Q2 September 2019.
The company said turnover for the quarter did recover part of the losses of the previous quarter aided primarily by healthy sales in the battery and flashlight segments. As the economy opened up more fully the segments of Lighting and Appliances also somewhat recovered from a poor Q1 but still under-performed in comparison to the previous year. The core segments of batteries and torches registered significant turnover increases over the corresponding quarter of the previous year attributable to a healthy demand coupled with a sharp reduction in cheap Chinese imports. The segments of Lighting and Appliances also witnessed a spike in demand in the run-up to the festive season across the country.
As a result, turnover for the quarter grew by 7% in comparison to that of the previous year. Gross margin was significantly higher by 26% in comparison to the previous year due to a better turnover mix towards the more profitable segments of batteries and flashlights. This coupled with lower employee cost, lower distribution cost, lower promotional spends and lower overheads as the various establishments of the company continued to be run in a restricted manner in the COVID environment enhanced profitability. Consequently, operating EBIDTA was higher by 140% as compared to the previous year. The discontinuance of the packet tea business further helped the company in improving margin and releasing working capital.
Battery volume for the quarter was 7.4% higher than that in the corresponding quarter of the previous year. Flashlight volume was flat in comparison. The turnover growth during the quarter was at 14.1% for batteries and 8.6% for flashlights. Turnover for the lighting segment during the quarter was at Rs 62.1 crore, almost equivalent to the corresponding quarter of the previous year and a substantial recovery from a poor Q1. Turnover for the appliance segment was at Rs 13.5 crore for the current quarter (Rs 5.9 crore in the sequential quarter) as there was an uptick in demand post opening up of the economy from lockdown restrictions though it was still lower than the corresponding quarter of the previous year.
The company said it is expected to maintain high operating margins in the forthcoming quarters.
Commenting on the outlook, Eveready said, "The core categories of batteries and flashlights continued to witnessed a healthy demand, given the sharp decrease in dumped imports from China and the disruptions caused to the unorganized market in the midst of the pandemic. The situation in the battery segment should continue to look positive as imports continue to remain low with the BIS standards having come into force - providing a level playing field to domestic manufacturers. Furthermore, Government focus on restricting imports from China are likely to benefit both the segments. The company Is expected to maintain high operating margins in the forthcoming quarters."
Eveready is the country's market leader of batteries and flashlights - selling more than 1.2 billion batteries and nearly 2S million flashlights
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