KRONE Communications is a joint venture of Krone GmbH and KEONICS, providing connectivity solutions. Due to the changing technology, the company is still in the process of shifting from wireline to wireless segment. The company ends its fiscal on 30th October, so its results for the period ended 31st July 2008, represents the third quarter performance.
The performance for current Q3 on a YoY has not been very good. Though the company showed a smart 35% rise in net sales, the 43% rise in operating expenses, which ate away more than 90% of its sales, affected the bottomlines. EBITDA was down 12% and OPM slipped from 18.28% to 11.92%. PBT was down 11% and PAT was down 12%. NPM slipped from 10.37% to 6.73%.
The main culprit was the soaring price of its raw materials – mainly copper and plastic. With the prices of the metal cooling down during the last few days, it should help the company recoup and bounce back.
A debt free company, its equity stands at just Rs.4.60 crore of which 62% is held by its parent company - ADC GmbH Germany. In 2005, the ADC group came out with statuary open offer to acquire 23% stake at Rs 92, but the offer did not go through as shareholders did not bite the bait as prevailing price at that time was Rs 130 on BSE. Good they did not as even today, it is quoted much above the offer price! Or maybe the parent company would now make another offer at a much higher price?
Cyclically, its fourth quarter is the best and hopefully, it will help the company turn the tide back in its favour. The slowdown in the IT sector had a direct bearing on its Q3 performance but the company hopes to overcome this by concentrating more on the telecom sector. It also exploring opportunities with OEMs for new products, with higher value adds. Currently quoted at Rs.115, stay invested.
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