This was led by lower-than-expected raw material costs RM/sales came in at 71.9% (down 80bps q-q) compared to our estimate of 72.9%. Higher operating income would have helped margins. PAT came in at Rs 554 crore, 6% above consensus and 12% above our expectations. Higher beat at PAT level is due to higher non-op other income and lower tax rate.
Higher-than-expected margins are positive. There could be a minor positive stock reaction on these results.
Net sales came in at Rs 6,510 crore compared to our estimate of R6480 crore. EBITDA margin came in at 13.7%; compared to our estimate of 13.2%. RM/sales came in at 71.9% vs our 72.9% forecast. Employee cost/sales came in at 3.6% compared to our estimate of 3.8%. Other expenses/sales came in at 10.8% vs our 10.1% assumption. Other income came in at Rs 123 crore vs our forecast of R100 crore. Effective tax rate during the quarter was 25.2% vs our estimate of 26.9%. The company declared a dividend of Rs 65/share (Rs 60/share in FY13).