X

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.
Godfrey Phillips: Facing margin pressure - Views on News from Equitymaster

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

MidCapSelect
  • MyStocks

MEMBER'S LOGINX

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

Godfrey Phillips: Facing margin pressure
Feb 1, 2010

Performance summary
  • Sales for 3QFY10 grew by 12.4% YoY largely aided by the cigarette and tobacco segment.
  • Operating (EBITDA) margin fell by 3.4% to 12% during the quarter. This fall was a result of rise in raw material costs during the quarter.
  • Net profit margin fell by 1.1% to 7.1% due to fall in operating income as a result of rising cost of tobacco.
  • Net profit during 9mFY10 increased by 17.5% YoY while net profit margins fell by 0.6% to 9.9%. This performance comes on the back of higher other income and fall in tax expense.


Financial picture
(Rs m) 3QFY09 3QFY10 Change 9mFY09 9mFY10 Change
Net sales 3,096 3,479 12.4% 8,435 10,506 24.5%
Expenditure 2,619 3,061 16.9% 7,162 9,131 27.5%
Operating profit 477 417 -12.6% 1,273 1,374 7.9%
Operating margins (%) 15.4% 12.0%   15.1% 13.1%  
Other Income 24 65 169.8% 288 389 35.1%
Interest (net) 11 18 57.7% 48 54 13.2%
Depreciation 64 96 50.2% 180 247 37.5%
Profit before Tax 427 369 -13.5% 1,334 1,462 9.6%
Extraordinary item - -   - -  
Tax 172 122 -29.4% 448 421 -6.0%
Profit after Tax/(Loss) 254 247 -2.7% 886 1,041 17.5%
Net profit margin (%) 8.2% 7.1%   10.5% 9.9%  
No. of Shares (m) 10 10   10 10  
Diluted earnings per share (Rs)*         119.6  
Price to earnings ratio (x)*         15.9  
* trailing twelve month earnings

What has driven performance in 3QFY10?
  • The strong growth in the company’s sales was a result of a strong performance from its cigarettes and tobacco products business divisions. Sales of cigarettes and tobacco products grew by 12.9% YoY during the quarter. Tea and other retail products saw a growth of 7.7% YoY.

    Segment-wise performance
    (Rs m) 3QFY09 3QFY10 Change 9mFY09 9mFY10 Change
    Cigarettes & Tobacco Products            
    Revenue 2,797 3,157 12.9% 7,699 9,621 25.0%
    % share 90.4% 90.8%   91.3% 91.6%  
    PBIT margin 19.0% 10.5%   18.3% 12.3%  
    Tea & other Retail Products            
    Revenue 299 322 7.7% 736 885 20.3%
    % share 9.6% 9.2%   8.7% 8.4%  
    PBIT margin -7.8% -1.4%   -14.6% -5.2%  
    Total            
    Revenue 3,096 3,479 12.4% 8,435 10,505 24.5%
    PBIT margin 13.8% 10.6%   15.8% 13.9%  

  • Operating income during the quarter fell by 13% due to higher raw material costs, a reflection of higher ruling tobacco prices during the quarter. Raw material costs increased by 24% YoY.

  • Godfrey Phillip’s net profit fell by 2.7% YoY. This is due to lower operating income coupled with higher interest costs and higher depreciation expense. However, the company got some relief due to higher other income and lower effective tax rates.

What we expect?
At a price of Rs. 1,900 the stock is trading at 13.1 times our estimated FY12 earnings. Given the recent run up on the stock we have a 'HOLD' view .

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

GODFREY PHILLIPS SHARE PRICE


Sep 21, 2018 09:09 AM

TRACK GODFREY PHILLIPS

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

MORE ON GODFREY PHILLIPS

GODFREY PHILLIPS 8-QTR ANALYSIS

COMPARE GODFREY PHILLIPS WITH

MARKET STATS