Connect with Us
Moneylife - Facebook Moneylife - Twitter Moneylife - Linkedin Moneylife - Youtube Moneylife Rss feed

Moneylife » Investing » Stocks » Yuken India net profit crashes down 82%, stock down over 10%

Yuken India net profit crashes down 82%, stock down over 10%

    • 0 Comments, Be the first to comment

Moneylife Digital Team | 29/10/2012 06:10 PM | 

Higher depreciation, increased finance cost and higher salaries led to a drastic drop in the bottomline of Yuken India, a parts and ancillary manufacturer

Yuken India, a parts and ancillary manufacturing company, has reported abysmal results for the quarter ended 30 September 2012. Its net profit plummeted by 82% year-on-year (y-o-y), to Rs41 lakh. However, its net sales declined marginally, by 5% y-o-y, from Rs40.61 crore recorded on 30 September 2011, to Rs38.70 crore for the current September quarter. The culprits were higher depreciation, interest costs and higher salaries. The stock tanked by 10.98% on Bombay Stock Exchange (BSE) and ended the day at Rs150.40.

An analysis of Moneylife database on the company shed some light on the reason for poor performance. In fact, this is the first time in four years that sales have actually declined. Until then, it had been growing steadily and consistently. Global economic troubles meant that the export market was challenging, with demand falling. However, what is worrying the company is its operating parameters. Its operating profit plummeted by a whopping 47%, which is way below its three-quarter y-o-y average of -13%. Higher salaries meant retention of talent in tougher times. It suffered badly only in the last two quarters, whereas before that it was growing steadily. However, the biggest blow was the net profit, which declined by 82%. This was due to higher depreciation and finance cost, which increased by around 66% and 50%, respectively. Despite this, the company has a decent return on equity (ROE) of 18%. Its valuation is on the lower end, with market capitalization at over five times operating profit.

The company has a tie-up with Yuken Kogyo Company (YKC), based out of Japan, which holds 40% of the joint-venture while Indian promoters—Benefic Investments and Finance, along with the Rangachar family—hold around 12.54%. This shareholding pattern has been the same for a long time, indicating total commitment to the business. In the past 34 years, YIL has achieved the fastest growth rate in the oil hydraulics segment in India. Most manufacturers of original equipment have accepted YIL as their preferred partners for hydraulics.

Yuken India manufactures pumps and valves for major industrial segments including steel plants and steel mills, machine tool manufacturers, plastic machinery manufacturers, defence, automobile manufacturers, hydraulic presses, drill rig manufacturers, power projects and the cement industry.

Post Comment

More in Moneylife

Moneylife Foundation Credit Help Get Informed +516 views


Post your Comment

Alert me when new comment is posted on this article
 Please read our Moderation Policy and Terms of Use before posting


How Safe Is Your Building


Thank you sir for making such a complex subject easy to understand.
Tahir sayed.
Mohd.Tahir Sayed


Beat the Index Easily Moneylife Digital Team

Igarashi Motors: When promoters defeated 74% non-promoter shareholders Moneylife Digital Team

Be the first to comment
Daily Newsletter

1,00,000 Readers

Follow Moneylife
DNL facebook icon DNL linked in icon DNL twitter icon DNL youtube icon DNL rss icon
Moneylife Magazine

Grab a Discount Coupon here

What's your say?

Will the RBI cut rates in its monetary policy review on 29th Sept 2015?
Can't Say
Enter Code : secure code
    change code

What you said

Will the Smart City Mission make cities smart and peopler smarter?

Thanks for casting your votes! View Previous Polls

Join Over 100,000 Awesome Readers

  1. News that Mainstream media does not always cover
  2. Views that are bold and unbiased
  3. Reports that focus on your interests as consumer, investor & citizen