Despite loss No bear trend MOSER BAER INDIA

Fundamentally a sound company, it posted a higher net loss in first quarter ended 30^th June 2008, yet its share price today rules mid way between the 52-week high and low.

It posted a net revenue of Rs.478.93 crore, as against Rs.471.05 crore in Q4FY08. EBITDA for the quarter was at Rs.53.46 crore, translating into an EBITDA margin of 10.8%. It posted a net loss of Rs.103.98 crore as against a net loss of Rs.71.72 crore in Q4FY08. This net current loss in the current Q1 fiscal includes a forex loss of Rs.28.27 crore. This means 28% of the net loss of the company was on account of this forex loss and rest from operational losses.

And undeterred by the loss, yesterday the company’s wholly owned photovoltaic (PV) subsidiary entered into definitive agreements to raise Rs. 411 crore from a consortium of global investors, including Nomura, CDC Group, Credit Suisse, Morgan Stanley, IDFC PE, and IDFC. This is to fund the subsidiary's ambitious growth plans. More importantly, this transaction values Moser Baer's PV business at Rs. 6,350 crore ($1.44 billion).

So what does this mean in light of the net loss it posted in Q1FY09? The company is currently undergoing some transitional pains and once this entire integration is absorbed, the company would stabilize. In the first quarter, the capacity expansion of the solar photovoltaic was completed, commencing commercial production of panels using thin film technology. It is the largest module of its kind in the world manufacturing state-of-the-art Generation 8.5 panels. It has received TUV certification for crystalline silicon modules, which significantly benefits the company’s market position and should result in enhanced revenues.

The entertainment unit of the company released about 60% of the 10,000 home video titles it has acquired across multiple languages. It has also acquired Sony BMG’s home video catalogue. Currently the entertainment business has two Hindi and five Tamil films under production. All seven are to be released over the next two quarters.

Q2 could see some more of the pain but by Q4 of this fiscal, the company is expected to bounce back with vigour. Good time to acquire with a long term perspective.
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