Comment

Aditya Birla Nuvo reported better-than-expected numbers for the first quarter, with consolidated net profit at Rs 148.87 crore as against a loss of Rs 35.29 crore in the same quarter last year, as the mainstay financial services business performed well and life insurance and branded garments businesses started contributing to profits.

The diversified conglomerate, which is a holding company for Aditya Birla group businesses like garments, financial services, manufacturing and IT & IT enabled services, reported an 18.5% jump in its consolidated net revenues to Rs 3,810 crore in first quarter of this fiscal as almost all the segments showed decent growth.

Revenues from financial services (contributing 32% of overall sales) grew 23% year on year to Rs 1,227 crore on the back of an 18% growth in total premium income from its life insurance business.

Branded garments business revenues went up 37% to Rs 348 crore on improved footfalls and launch of new outlets, while the manufacturing segment —-textiles, fertilisers, carbon black, rayon yarn and insulators —- showed 23% growth to Rs 970 crore.

Sales from the telecom segment, where it has a 25.4% stake in Idea Cellular, were at Rs 926.40 crore, up 15% year on year, led by strong growth in minutes of usage.

The company’s bottomline was aided by strong improvement in earnings before interest, tax, depreciation and amortisation (Ebidta), or operating profits, and lower interest expenses during the quarter.

Ebitda surged almost 102.5% to Rs 467.05 crore, led by a revival in financial services and garments businesses. Interest costs, on the other hand, declined 28% year on year to Rs 120.55 crore in the first quarter.

Life insurance business was a turnaround story —- it contributed Rs 9 crore to the net profit as against a loss of Rs 111 crore in same period last year, driven by focus on operational and distribution channel efficiencies and expanding in force book size.

As a result, the segmental net profits from financial services (including asset management business and other financial services) stood at Rs 54 crore compared with a loss of Rs 100 crore.

Ebidta from the garments division also improved to Rs 19 crore as against a loss of Rs 25 crore in the year-ago quarter due to restructuring of operational expenditure and cost control initiatives. The manufacturing businesses, which saw Ebidta growth of 37% to Rs 172 crore, benefited from higher sales and lower costs in the carbon black division, leading to Ebitda margins increasing to 18% from 16% during the same period last year. The only drag was from the telecom segment where the profits shrunk almost 30% on account of competitive pressures.

The company has over the last year undertaken several restructuring exercises and hence the quarterly results are not exactly comparable to the year-ago quarter.

The Aditya Birla Nuvo stock did not react much to the results and closed the day marginally lower (0.35%) at Rs 772.35 on the Bombay Stock Exchange.