India`s R R Kabel posts lower Q3 profit as stiff competition squeezes wires margin
Indian consumer electrical company R R Kabel reported a 3% fall in third-quarter profit on Tuesday, as stiff competition squeezed its margins from the wires segment.
The company's consolidated profit fell to 685.7 million rupees ($7.93 million) for the three months ended Dec. 31 from 709.6 million rupees a year earlier.
Its revenue from operations rose 9% to 17.82 billion rupees, while total expenses jumped 10%.
Its core wires and cables segment, which contributes nearly 87% to the total revenue, registered a 6% year-on-year dip in profit during the quarter.
For further earnings highlights, click (Full Story) KEY CONTEXT
Rising demand from the real estate and power distribution sectors has continued to drive growth for electronic goods manufacturers.
Analysts note that electrical goods makers face intense competition in the high-margin wires segment, where supply outpaced demand.
Rival Polycab and V Guard Industries both missed their third-quarter profit estimates, impacted by margin pressure in the wires business due to commodity price fluctuations.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts' sentiment
months) months)
RIC PE EV/EBI Price/ Revenue Profit Mean # of Stock to Div
TDA Sales growth (%) growth (%) rating* analyst price yield
s target** (%)
R R Kabel Ltd 32.14 21.31 - 18.03 44.45 Buy 9 0.65 0.41
Polycab India 37.73 25.95 4.00 18.02 18.98 Buy 26 0.76 0.53
Havells India 53.07 36.12 4.07 14.91 23.07 Buy 24 0.82 0.66
Crompton Greaves 31.21 21.30 2.39 12.35 25.93 Buy 32 0.70 0.89
Consumer Electricals
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT
OCTOBER TO DECEMBER STOCK PERFORMANCE
-- All data from LSEG -- $1 = 86.5210 rupees
