Indal: Pricing pressure trims growth - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Indal: Pricing pressure trims growth

Jan 21, 2002

Indian aluminium industry continues to suffer from lower price realisations and sluggish volume growth. This is reflected from Indal's financial performance. The company's earnings grew by a marginal 8% on dismal revenue growth of 3% in the third quarter of the current fiscal.

(Rs m)3QFY013QFY02Change
Net sales 3,327 3,426 3.0%
Other Income 26 3 -86.9%
Expenditure 2,646 2,764 4.4%
Operating Profit (EBDIT) 681 663 -2.7%
Operating Profit Margin (%)20.5%19.3% 
Interest 99 94 -5.1%
Depreciation 162 163 0.4%
Profit before Tax 446 410 -8.1%
Extraordinary Adjustments (51) (18)-64.7%
Tax 110 85 -23.2%
Profit after Tax/(Loss) 285 307 7.7%
Net profit margin (%)8.6%9.0% 
No. of Shares (m) 71.1 71.1  
Diluted Earnings per share* 16.0 17.3  
P/E Ratio  4.8  

The company's realisations in the current quarter remained under pressure due to comparatively lower aluminium prices in the December quarter (average of about US$ 1,302 / tonne). This impacted Indal's operating margins, which declined by over 100 basis points. On a QoQ basis, the company has however maintained its operating margins at 19.3%. Increased capacities in the world markets is likely to keep prices under pressure in the near term.

A significant drop of 87% in its other income also trimmed the company's earnings growth. Interest cost on the other hand, continued to decline on the back of its efficient working capital management and refinancing high cost debt by low cost borrowings. Its effective tax rate too declined to 22% from 28% in 3QFY01.

At the current market price of Rs 83, Indal is trading at a P/E of 5x 3QFY02 annualised earnings. Weakening aluminium fundamentals have impacted the company's valuations in the last nine months.

Equitymaster requests your view! Post a comment on "Indal: Pricing pressure trims growth". Click here!


More Views on News

Hindalco Q4 Profit Surges 189% as Demand Surpasses Pre-Covid Level (Views On News)

May 24, 2021

A look into the country's leading aluminium and copper manufacturer's stellar Q4 performance.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

6 Penny Stocks that Rallied 1,000%+ in One Year (Views On News)

Dec 6, 2021

These penny stocks shed their penny status by surging 1,000% or more in the last one year.

The Biggest Winners and Losers in India's Transition to Electric Vehicles (Profit Hunter)

Nov 26, 2021

How India's EV transition could be a major headwind for the incumbents.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms