UNITY INFRA.........Analysis of Q1 2012 result

The result is flat on QYQ basis but still company have posted EPS of Rs.2.44 in Q1 under tight monetary condition is cheer-able which means that when interest trend starts softening the stock will rock. See the result of other infra company like GMR Infra, Lanco Infra where companies have posted huge losses on account of high interest but Unity infra not only avoided the losses but have maintained its profit level.

While analyzing the result it is seen that financial cost have gone up by Rs.7 crores from Rs.22.20 crores to Rs.29.44 which have dented its net profit adversely which means now management have to work on overtime basis to attack and bring down interest cost.  Though interest cost have gone up but still management have come out successfully in maintaining its profit level reflects management strength to overcome tight monetary condition prevailing in the economy.

 Today WPI inflation for the month of July2012 have comedown to 6.87% which means now ground is ready before RBI to lower down interest rates which means softening of interest rates shall rock unity infra stock. One per cent reduction in interest rates shall bring down rupees nine crores interest cost. Interest over sales in Q1 is 7.45% which can be brought down by covering its huge pending order into actual sales. For example if company can increase sales volume by 100 crores in Q2 which is quite possible then interest over sales cost come down by 1.70% from 7.45 per cent to 5.80%. The second strategy of the management should be to cut down loan by expediting the sale of partial stake in their two SPV where talks are in advanced stage.