Orient Bell - Q3 2013 results review

I have written about Orient Bell here.

Company declared Q3-21013 quarterly results recently. If you look at the numbers y-o-y, results look good.  Company reported a 55% growth in the topline and 45% growth in the bottomline. All growth in topline is not translated into bottomline due to higher depreciation, interest and tax compared to Q3, 2012. 

But this comparison will not be meaningful as a lot many things have happened since Q3, 2012. A review of what has been changed from last quarter will be more meaningful. Remember that triggers for market to realise the value of Company are debt reduction, topline growth & improvement in operating margins and need to be monitored q-o-q.

On q-o-q basis - topline, operating margins remain flat, but interest increased by 13% and bottom line reduced by 13%. So debt is not reduced (probably increased), topline is same and operating margins are also same @ around 10% even though fuel / power charges increased by 12%. Interest coverage is very low at 1.6 and that’s most worrying part.

I will continue to monitor debt position of Company and would like to see reduction in debt / improvement in DE and interest coverage before increasing my position size.

Disclosures: I hold a small position to track the stock. Please note that this is not a recommendation to buy or sell the stock discussed here. Please do your own check before investment.