In 3QFY23, Unity Foods Limited (UNITY) posted a loss of Rs0.17/share, as compared to an EPS at Rs0.74/share in 3QFY22. This takes 9MFY23 earnings at a loss of Rs0.69/share, as compared to an EPS of Rs1.97 in 9MFY22.

The earnings came lower than expectations for 3QFY23 on the back of higher-than-expected exchange loss. Exchange loss for the quarter clocked in at Rs5.2bn in 3QFY23 against an exchange loss of Rs329mn in 3QFY22.

Gross Margins clocked in at 19% for the quarter, which came higher than our expectation of 13%. Higher gross margins were primarily due to increase in volumetric sales and cost efficiencies achieved through higher capacity utilization during the quarter, as per our channel checks.

Net Sales for 3QFY23 increased by 40% YoY and decreased by 20% QoQ to Rs27.9bn. Higher sales were due to higher international Palm oil prices coupled with increase in volumetric sales contributed by Edible oil and Flour segment, as per our channel checks.

Other Income increased by 69% YoY to clock in at Rs348mn mainly due to higher returns earned on bank deposits.

Distribution Expenses increased by 67% YoY to Rs288mn and Admin Expenses increased by 32% YoY and declined by 4% QoQ to Rs207mn.

Finance Costs for the company have increased by 69% QoQ and 175% YoY to Rs1.04bn mainly due to hike in interest rates and the company has only taken working capital financing during the quarter.

Courtesy – Topline Securities