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.
Ballarpur Ind: Operating costs dent profits - 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: Operating costs dent profits
May 3, 2012

Ballarpur Industries (BILT) has announced its results for the third quarter and first nine months of FY12. The company has reported a 6.8% YoY growth in sales and 43.4% YoY fall in net profits during 3QFY12. Here is our analysis of the results.

Performance Summary
  • Topline grew by 6.8% YoY during 3QFY12. During the 9 month period ended March 2012, topline grew by 7.5% YoY.
  • Operating expenses went up higher during the quarter and thus operating profits fell by 11.2% YoY as compared to same quarter last year.
  • Operating margins shrank by 3.3% during the quarter and by 2.9% during the 9 month period.
  • During March quarter, although tax payment fell down by 67.7% YoY, net profits continued to fall by 43.4% YoY. For the 9 month period, net profits were down by 35.3% YoY.

Financial performance snapshot
(Rs m) 3QFY11 3QFY12 Change 9mFY11 9mFY12 Change
Net sales 11,692 12,490 6.8% 33,229 35,724 7.5%
Expenditure 9,437 10,488 11.1% 26,700.80 29,769.60 11.5%
Operating profit (EBDITA) 2,255 2,002 -11.2% 6,528 5,955 -8.8%
EBDITA margin (%) 19.3% 16.0%   19.6% 16.7%  
Other income - -   - -  
Interest 667 689 3.2% 2,019 1,967 -2.6%
Depreciation & amortisation 844 926 9.6% 2,455 2,727 11.1%
Profit before tax 743 388 -47.8% 2,054 1,260 -38.7%
Profit before tax margin (%) 6.4% 3.1%   6.2% 3.5%  
Exceptional items - -   - -  
Tax 137 44 -67.7% 356 152 -57.3%
Profit after tax before minority 606 343 -43.3% 1,699 1,108 -34.7%
Share of minority 115 65   318 215  
Profit after tax 492 278 -43.4% 1,381 894 -35.3%
Net profit margin (%) 4.2% 2.2%   4.2% 2.5%  
No. of shares (m)         655.5  
Diluted earnings per share (Rs)*         2.16  
P/E (x)         11.36  
(*trailing twelve month earnings)

What has driven performance in 3QFY12?
  • Sales were up by 6.8% YoY during the quarter. This was largely led by 20% growth in other segment and 16.6% YoY growth in paper products and office supplies. Paper grew by 5.3% YoY while pulp de-grew by 4.2% YoY.

  • Operating expenses have increased by 11.1% YoY during the quarter. Employee expenses in particular shot up by 14%. Operating profits registered a fall of 11.2% YoY and 8.8% YoY during the quarter and the year so far.

  • Operating margins shrank by 3.3% during the quarter and by 2.9% during the 9 month period.

  • Interest costs were up by 3.2% YoY during the quarter and depreciation was up by 9.6% YoY.

  • Although tax payment fell by 67.7%, lower profits at operating level resulted in a fall in net profits of 43.4% YoY. Net profits for the year so far were down by 35.3% YoY.

    Segmental snapshot
      3QFY11 3QFY12 Change 9mFY11 9mFY12 Change
    Paper 9,148 9,632 5.3% 25,871 27,794 7.4%
    PBIT margin (%) 9.6% 7.9%   11.2% 8.1%  
    Paper products & office supplies 1011.2 1,179 16.6% 3270.8 3,142 -3.9%
    PBIT margin (%) 7.0% 4.0%   7.0% 4.6%  
    Pulp 1305 1250 -4.2% 3427 3655 6.7%
    PBIT margin (%) 37.7% 23.2%   30.6% 24.9%  
    Others 213 261 22.3% 661 858 29.7%
    PBIT margin (%) -4.0% -4.0%   -4.0% -4.0%  
    Total 11,677 12,322 5.5% 33,230 35,449 6.7%
    PBIT margin (%) 12.3% 8.7%   12.5% 9.2%  

What to expect?
Production at Sabah Forest Industries was as per set targets. This helped BILT improve its operating margin slightly over last quarter of FY12. In the previous quarter, this unit was shut down due to maintenance and commissioning of new pulp mill. However, concerns over rising raw material costs, power and fuel costs remain. At the current price of Rs 24.5, the stock is trading at a high price to earnings multiple of 9.5 times our estimated FY14 earnings. We maintain our negative view on the stock.

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

BALLARPUR INDUSTRIES SHARE PRICE


Jul 20, 2018 (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 - ORIENT PAPER COMPARISON

COMPARE BALLARPUR INDUSTRIES WITH

MARKET STATS