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Punjab Tractors Ltd

May 12, 2008

Punjab Tractors (PTL) for Q4FY08 reported robust 105% YoY recurring net profit growth to Rs267mn on low base (Q4FY07 was affected post the acquisition by Mahindra & Mahindra due to restructuring exercise undertaken, which included sharp reduction in inventory & debtors).

Revenues rose 29.5% YoY to Rs2.9bn on the back of 23.8% YoY volume growth – domestic volumes rose 23% YoY and exports surged 63.6% YoY. In Q4FY08, the company registered market share gains of 240bps YoY to 10.5%. EBITDA margin rose 400bps YoY and 50bps QoQ to 13%, driving 87.8% YoY EBITDA growth.

For FY08, the company registered muted revenue growth of 2% on the back of 6.6% sales volumes decline; it also lost market share 20bps to 9.1%, registered EBITDA margin contraction of 160bps to 10% and 7% decline in recurring net profit to Rs652mn.

Post restructuring, the company seems to be back on TRACK. Existing Investors can HOLD.

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