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Informist, Monday, Feb. 3, 2025

By Aman Aryan

MUMBAI – Increased cost of raw materials and other expenses along with a high base affected Tube Investments of India Ltd.'s earnings for the December quarter. The company's consolidated net profit fell for the second consecutive quarter, this time at a faster rate, despite it booking a healthy growth in its revenue for the quarter under review.  

The engineering and manufacturing company's consolidated net profit fell 64% on year to INR 1.94 billion due to a high base in the year-ago quarter. This is the highest on-year fall in net profit of the company in at least seven years, according to the data available with Informist. Tube Investments recorded a gain of INR 5.51 billion in the year-ago quarter from its discontinued operations. 

Tube Investments' consolidated revenue for the quarter under review was INR 48.12 billion, nearly 15% higher from the year-ago quarter. The company's revenue has grown for the last 17 quarters in a row, after it fell for six consecutive quarters between the June quarter of 2019-20 (Apr-Mar) and the September quarter of FY21. Sequentially, the company's consolidated net profit and revenue were down 6% and 2%, respectively, for the last quarter of 2024.

Apart from the impact of a high base, a 16% on-year increase in total expenses to INR 44.63 billion also weighed on the company's earnings for the quarter. Its total expenses were mainly driven by a 14% on-year increase in raw material costs and a 19% increase in other expenses during the quarter. Tube Investments' cost of materials consumed for the December quarter was INR 29.49 billion and its other expenses were INR 7.13 billion.

Shares of Tube Investment, which already traded 3.8% lower before the earnings were released, fell further to trade 4.5% lower at INR 3,032.75 on the National Stock Exchange at 1516 IST, after it reported its financials.

The company's board approved an interim dividend of INR 2 per share for the current financial year. It has set Feb. 7 as the record date and Feb. 28 as the last date for the dividend payment. The board also approved spending INR 1.70 billion through internal accruals to enhance the capability and serviceability of the company's fine blanking business. Under the capital expenditure plan, Tube Investments will set up a new facility in western India and will expand the existing manufacturing facility in southern India. The project is expected to be completed by FY26.

Tube Investments is the holding company of some listed companies such as CG Power and Industrial Solutions Ltd. and Shanthi Gears Ltd., with a shareholding of 58% and 70%, respectively. Both the companies have already disclosed their earnings for the December quarter, and they are included in the consolidated financial results of Tube Investments.

CG Power's consolidated net profit for the reporting quarter was INR 2.41 billion on revenue of INR 25.16 billion. On other hand, Shanthi Gear net profit for the same period was INR 262.8 million on revenue of INR 1.58 billion. 

While Tube Investments posted an on-year fall in its consolidated net profit, its standalone net profit for the December quarter rose to INR 1.61 billion from INR 1.58 billion in the year-ago quarter. Its revenue also grew in the December quarter to INR 19.10 billion from INR 18.98 billion a year ago.

The company has a very diversified business with nine different segments. Consolidated revenue from the industrial systems segment, which accounted for 33% of the total revenue, rose 20% on year to INR 15.91 billion for the December quarter. Another important vertical, the engineering segment, posted a 1.4% on-year fall in its consolidated revenue to INR 12.12 billion during the quarter under review. The power systems segment's consolidated revenue for the quarter rose 42% on year to INR 9.20 billion.

Among other segments, metal-formed products, electric vehicles' products, gear and gear products, medical, and others posted on-year growth. However, revenue from the mobility segment fell on year during the December quarter. 

During the quarter, the company signed an agreement to acquire 67% of the share capital of Kcaltech System India Pvt. Ltd. for nearly INR 1.62 billion and completed the acquisition on Jan. 31. 

Tube Investment's free cash flow for the December quarter was INR 700 million compared to INR 660 million in the year-ago quarter and its annualised return on invested capital fell to 43% as of Dec. 31, from 54% a year ago. For the nine months ended December, Tube Investments' consolidated net profit was INR 6.27 billion compared to INR 10.15 billion a year ago and its consolidated revenue was INR 143.15 billion compared to INR 124.00 billion a year ago.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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