ICI India has reported a 41% drop in net profit for the third quarter ended 31st December 2000 to Rs 77 m. Sales declined by 4% during the respective quarter to Rs 2,168 m. The decline in sales is even sharper when we consider the first nine months performance of the company. Sales has dropped to Rs 6,433 m in the first nine months of the current year from Rs 7,024 m in the corresponding period of the previous year.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy) (m)
Diluted number of shares
Earnings per share*
However, the company sold its explosives division to Indian Explosives Limited (explosives contributed to 7% of FY99 turnover). Hence, the results of the current year are not comparable. Operating profit has dropped sharply in 3QFY01 by 34% to Rs 1,994 m. The reason could be attributed to the sharp rise in titanium dioxide prices (per tonne price has gone up to US$ 1,950 from US$ 1,600 last year) primarily led by higher crude prices. Besides, the company's other businesses like rubber chemicals and textile auxillaries are also witnessing subdued demand in the current year.
Interest costs have come down sharply by 78% in 3QFY01 to Rs 7 m, which is led by debt restructuring and minimizing inventory levels (in FY00, total debt of the company stood at Rs 473 m at an average cost of 17% per annum).
Under the decade old restructuring process, the company is in the process of selling off its polyurethanes and motors & industrial paints business to the joint venture with Berger Paints (polyurethane and industrial paint businesses contributed to 12% and 4% of FY99 turnover respectively). This, we believe is crucial for a consistent growth in profits in coming years. Since the company has a diversified product portfolio (includes pharmaceuticals, textile auxillaries, polyurethanes and rubber chemicals), some of the these divisions have been a drag on the company's margins.
The stock is currently trading at Rs 75 at a P/E multiple of 8.1x the annualised nine months earnings. On the annualised sales of Rs 8,578 m, market capitalisation to sales works out to 0.3 times (market capitalisation is Rs 3,065 m).
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407