>Batronics (ICICI Direct)

Dim quarter, but future looks bright...
Bartronics reported its Q4FY09 results with top line at Rs 166.10 crore posting a growth of 56.2% and 21.1% YoY and QoQ respectively. The company surprised on EBITDA margins which stood at 35.23%, improving by 815 bps and 859 bps YoY and QoQ respectively. This was primarily due to invoicing of prior period sales in this quarter. However, the PAT margin declined by 1054 bps QoQ primarily due to higher tax outgo, depreciation and interest expense. The PAT stood at Rs 9.6 crore against our expectation of Rs 13.4 crore, down 52.5% YoY and 61.2% QoQ.

Highlight of the quarter
The company posted a top line of Rs 166.1 crore against its guidance of Rs 95 – 105 crore for Q4FY09. It also managed to improve its EBITDA margins on account of invoicing of prior period sales, the expenses for which were recorded in the last quarter itself. Consequently, the raw material cost as a % to revenue fell from 61% in Q309 to 50% in Q409. However the PAT margin declined significantly due to higher tax outgo (prior period adjustments to the tune of Rs 11.35 crore) and forex loss of Rs 7.27 crores. Without the exceptional items, PAT margin would have been 16.5%

Valuations
At the CMP of Rs 89, Bartronics is trading at 4.1x its FY09 EPS of Rs 21.57 and 2.1x its FY10E EPS of Rs 42.45. We maintain our target price of Rs 106. Our target price discounts FY10E EPS by 2.5x times. We downgrade the stock to PERFORMER.

To see full report: BATRONICS