Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Paper Products: Benefits from forex gains - Views on News from Equitymaster
  • MyStocks


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

Paper Products: Benefits from forex gains
Jan 28, 2010

Performance summary
  • Sales for the company declined by 9% YoY during the quarter. This comes on the back of sales black out in the month of October.
  • Operating (EBITDA) margins for the company increased by 1.4% during the quarter to end at 12.5%. The increase in margins is attributed to a more favourable product mix and better cost efficiency margins.
  • Net profit grew by 90% during the quarter. This increase comes on the back of a forex gain during the quarter. When adjusted for forex gain, net profit is seen to fall by 1% YoY.
  • Bottom line for CY09 grew by 76% YoY. This growth comes from higher operating profits and forex gain recorded during the year. When adjusted for the forex gain, net profits are seen to increase by only 4% YoY.

Rs (m) 4QCY08 4QCY09 Change CY08 CY09 Change
Net Sales 1,448 1,315 -9.2% 6,208 5,843 -5.9%
Expenditure 1,288 1,152 -10.6% 5,497 5,065 -7.9%
Operating Profit (EBDIT) 160 164 2.2% 711 778 9.5%
Operating Profit Margin (%) 11.1% 12.5%   11.4% 13.3%  
Other Income 3 3 14.8% 15 13 -12.5%
Interest 4 1   10 (1)  
Depreciation 71 83 17.1% 286 312 8.8%
Profit before Tax 88 83 -6.2% 430 480 11.8%
Extraordinary item (27) 8   (132) 15  
Tax 23 19 -20.5% 85 122 43.8%
Profit after Tax 38 72 90.0% 213 374 75.6%
Net profit margin (%) 2.6% 5.5%   3.4% 6.4%  
No. of Shares (m) 63 63   63 63  
Diluted earnings per share* (x)         6.0  
P/E ratio (x)         10.1  
(*trailing 12 months)

What has driven performance during 4QCY09?
  • Sales of the company fell during the quarter due to the company implementing oracle ERP system which resulted in sales black out as a result of teething problems.

    Cost break-up
    As a % of net sales 4QCY08 4QCY09 CY08 CY09
    Raw material 68.3% 65.7% 68.7% 65.5%
    Staff 9.0% 7.6% 8.2% 8.4%
    Other expenditure 11.7% 14.2% 11.7% 12.8%

  • Operating income grew by 2.2% YoY during the quarter due to reduction in raw material costs and lower staff costs partly offset by higher other expenditure.

  • Net profit margin grew by 2.4% to 5.5% during the quarter. This improvement in margins is due to increase in operating margins as well as an absence of forex loss registered in the corresponding quarter last year.

What to expect?
At a price of Rs. 60, the stock is trading at 8.3 times our estimated CY11 earnings. While the company saw a fall in sale, it was due to a onetime event and the sales have now stabilised. Moreover, growth in operating margins was a positive sign. With good growth expected in the FMCG space and the importance of packaging material for this sector, we remain bullish on the company’s business. However, at this price levels we believe the company’s valuations are expensive.

To Read the Full Story, Subscribe or Sign In

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Feb 21, 2018 (Close)


  • Track your investment in HUHTAMAKI PPL with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks