Ballarpur Ind: Slowdown in overall sales - 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?  

Ballarpur Ind: Slowdown in overall sales

Feb 13, 2012

BILT has announced its results for the second quarter of FY12. The company has reported a 7.2% YoY growth in sales and 71.6% YoY fall in net profits during 2QFY12. Here is our analysis of the results.

Performance summary
  • Topline grew by 7.2% YoY during 3QFY12. For the half year ended December 2011, topline grew by 7.9% YoY.
  • Operating profits were down by 12.7% for the quarter and by 7.5% for the half year period. Operating margins reduced by 3.6% this quarter on account of 12% increase in operating expenditure.
  • Lower tax incidence (down by 75.9%) did not aid bottomline as the net profit fell by 71.6% YoY for the quarter ended December 2011. For the 6 month period, net profits were down by nearly 56% YoY.


Financial performance snapshot
(Rs m) 2QFY11 2QFY12 Change 1HFY11 1HFY12 Change
Net sales 11,310 12,121 7.2% 21,537 23,235 7.9%
Expenditure 9,129 10,218 11.9% 17,266 19,284 11.7%
Operating profit (EBDITA) 2,181 1,904 -12.7% 4,271 3,951 -7.5%
EBDITA margin (%) 19.3% 15.7%   19.8% 17.0%  
Interest 642 773 20.3% 1,352 1,504 11.3%
Depreciation & amortisation 814 909 11.7% 1,608 1,799 11.9%
Profit before tax 725 222 -69.4% 1,311 647 -50.6%
Profit before tax margin (%) 6.4% 1.8%   6.1% 2.8%  
Tax 136 33 -75.9% 219 108 -50.8%
Profit after tax before minority 589 189 -67.9% 1,092 540 -50.6%
Share of minority 109 53   203 150  
Profit after tax 480 136 -71.6% 889 390 -56.2%
Net profit margin (%) 4.2% 1.1%   4.1% 1.7%  
No. of shares (m)         655.5  
Diluted earnings per share (Rs)*         2.48  
P/E (x)         9.67  

What has driven performance in 2QFY12?
  • Sales were up by 7.2% YoY during the quarter. Sale of papers increased by nearly 6% YoY while those of paper products by 5% YoY during the quarter. Growth in volume of pulp sales was a negligible 2.5% YoY.

  • Operating expenses grew by nearly 12% YoY led manly by increase of 22% in power, fuel and water costs. Staff costs however declined during the quarter by 8% YoY. The operating margins were down by 3.6% during the quarter and by 2.8% during the half year period.

  • Higher interest rates (up by 20.3%) had an adverse impact on the net profits. This combined with higher depreciation (up by 11.7%) led to a fall of 71.6% in the net profits of the company.

    Segmental snapshot
      2QFY11 2QFY12 Change 1HFY11 1HFY12 Change
    Paper 8,816 9,342 6.0% 16,723 18,162 8.6%
    PBIT margin (%) 11.4% 7.2%   12.0% 8.2%  
    Paper products & office supplies 1075.7 1,048 -2.6% 2259.7 1,963 -13.1%
    PBIT margin (%) 7.0% 4.0%   7.0% 4.9%  
    Pulp 1221 1353 10.8% 2122 2405 13.4%
    PBIT margin (%) 25.6% 22.9%   26.3% 25.8%  
    Others 189 284 50.2% 448 597 33.2%
    PBIT margin (%) -4.0% -4.0%   -4.0% -4.0%  
    Total 11,302 12,027 6.4% 21,553 23,127 7.3%
    PBIT margin (%) 12.3% 8.3%   12.6% 9.4%  

What to expect?
The consolidated revenues of the paper company were impacted due to maintenance shutdown and commissioning of new pulp mill at Sabah Forest Industries during the quarter. However, the costs too continued to remain high. Power that constitutes almost 18% of total operating costs was a big cause of concern during the quarter. BILT has linkages with coal companies for supply of coal. One of these coal companies is under the process of changing its pricing regime that will lead to increased price of coal. In such an event the margins of BILT will be under more pressure. At the current price of Rs 24, the stock is trading at a price to earnings multiple of 9.7 times trailing twelve month earnings. We are trying to contact the management and shall update our estimates post our interaction with them.

To Read the Full Story, Subscribe or Sign In
To Read the Full Story, Subscribe or Sign In


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

BALLARPUR INDUSTRIES SHARE PRICE


Jun 23, 2021 (Close)

TRACK BALLARPUR INDUSTRIES

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

MORE ON BALLARPUR INDUSTRIES

BALLARPUR INDUSTRIES 5-YR ANALYSIS

COMPARE BALLARPUR INDUSTRIES WITH

MARKET STATS