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TRF Ltd – Temporary Blip of Slowdown ?

June 5, 2008

TRF’s Q4FY2008 results were mixed bag – (1) revenue below estimates at Rs1.7 bn and 20% yoy growth and (2) net profit in line with estimates at Rs154 mn and 54% yoy growth. For FY2008, TRF reported net profit growth at 59% yoy to Rs322 mn and earnings of Rs58.4/Share, ahead of estimates. TRF is comfortably placed with Rs10 bn order backlog executable in next 24-30 Months. But, the quality of above order backlog is worrisome with presence of fixed price contracts.

Despite a below expected revenue growth, EBIDTA growth at 47% yoy to Rs228 mn was in line with estimates. We attribute this to 150 bps expansion in EBIDTA margins to 13.5% in the current quarter. This is largely driven by change in revenue mix with high margin Products Division contributing 25% of revenues in Q4FY2008 against 20% in Q4FY2007.

TRF has outstanding order backlog of Rs10 bn as on 31st March 2008.

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