Pix came out with a decent set of Q1 numbers. What is most heartening, are the growing Sales of 120.31 Crs., a growth of 21% over Q1 of last year. This despite plant not working at optimum capacity due to the simultaneous expansion being carried out in the same premises. The Co. is well on its way to doing 600 crs of Sales in the current year.
Let us ignore the high other income of 6.32 Crs. for the current qtr. as it inflates profits & complicates matters!
The Gross margins are well on their way to normalcy. The Cost of Sales is down to 40.76% in Q1 as opposed to 45% in the previous Q4, which was 39.86% for the whole of PY 21-22. This should fall further in the coming qtrs. This means that the high raw material costs of Q4 are to a large extent being passed on. With falling commodity prices, they should get back to normal sooner than earlier anticipated.
What has perhaps upset a few investors is the further fall in operating margins in Q1 to 21%. This is due to the steep hike in employee cost, up from 22.18 crs in previous qtr to 28.54 crs. Employee cost unfortunately is loaded at the front end, as it is increased at the beginning of the year. Its impact will not be felt as much for the year as a whole as Sales grow to about 600 crs. I suspect, for the full year. as a percentage of sales & profits, the employee cost will be at about the same level as last year. If only mgts. take their annual salary hikes in Q3 or Q4, this would not be felt as much!
So all in all, things are moving in the right direction. Pix has created enormous shareholder value over the last 2-3 years, and I feel the party is a long way from getting over. With booming exports, growth looks more predictable now than it did three years ago. So keep the faith guys!!
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