We look at companies that earn most of their revenues in a single quarter
29-Mar-2023 •Samridh Rela
Spent too much at the Holi party? Feeling the burn now at the end of the month?
Well, it's natural. We all are victims of the seasonality of our spending. And while companies might not have such seasonality in their spending, some companies experience seasonality in their earnings, i.e., they earn more in a specific quarter.
Take the example of companies that manufacture air conditioners. Summer is upon us, and soon there will be a surge in air conditioner sales. Similarly, auto manufacturers record higher sales in the months preceding Diwali.
But this had us wondering, are there companies that take this to the extreme? What we mean is, are there companies that earn most of their revenue in a single quarter while barely seeing any earnings the rest of the year?
Time for some data crunching. We looked for companies with a market capitalisation of above Rs 500 crore that have been making one-third of their yearly revenue and profit after tax in a single quarter for the last five years.
And the names that sprung up surprised us - Kaveri Seed, Tata Investment Corporation and BEML.
And it's not just the past five years. Seems like this trend in their earnings might continue for a while.
In the ongoing financial year, i.e., FY23, Kaveri Seed made more than one-third of its 9M FY23 sales and profit after tax in Q1. Similarly, Tata Investment Corporation accrued more than two-thirds of its 9M FY23 topline and profit after tax in Q2.
We omitted BEML as, historically, it has generated most of its earnings in Q4, which is still ongoing for this fiscal.
And, of course, we couldn't just stop here. We needed to uncover the reason behind this absurd trend. Here's what we found.
Kaveri Seed: Kaveri makes nearly half its revenue from cotton, which is sowed around June. Unsurprisingly, that's when farmers buy the seeds.
Tata Investment Corporation is primarily engaged in the business of investing in listed companies, mutual funds, etc. While most listed companies announce dividends in Q4, shareholders receive the actual dividends in Q2. And as the company's primary revenue source is its investments, it earns most of its revenue in Q2.
BEML: As this company has been exempted by SEBI from publishing segment-wise information, we were unable to find a concrete reason behind its surge in earnings in Q4.
Suggested read: When the fundamentals tell a different story