Nirma FY01: Capex woes continue - Views on News from Equitymaster

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

  • MyStocks


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

Nirma FY01: Capex woes continue

May 18, 2001

As expected, Nirma Limited has declared a huge 41% jump in turnover in FY01 YoY. This is the highest by far among the leading FMCG companies this year. However, capex costs continue to haunt Nirma's bottomline, which grew by a marginal 7%.

(Rs m) FY00 FY01 Change
Net Sales 14,552 20,521 41.0%
Other Income 349 123 -64.8%
Expenditure 11,055 15,514 40.3%
Operating Profit (EBDIT) 3,497 5,007 43.2%
Operating Profit Margin (%) 24.0% 24.4%  
Interest 557 1,007 80.8%
Depreciation 628 1,403 123.4%
Profit before Tax 2,661 2,720 2.2%
Tax 320 231 -27.8%
Extraordinary income - 8  
Profit after Tax/(Loss) 2,341 2,497 6.7%
Net profit margin (%) 16.1% 12.2%  
No. of Shares (eoy) (m) 33.9 79.4  
Diluted number of shares (m) 79.4 79.4  
Diluted earnings per share 29.5 31.5  
Current P/e ratio   13.4  

Nirma manufactures and sells detergents (cakes and powders), soaps, soap intermediates (alfa olefin sulphonate- AOS). A pioneer in introducing low-cost detergents through low-cost inputs and low overheads (production in the unorganised sector), it has by passed MNCs like HLL, P&G to become the market leader (in terms of volumes) in this price-sensitive industry. In value terms, Nirma holds 16% market share in the branded detergents segment.

While the company's backward integration into manufacturing linear alkyl benzene and N-Paraffin (both raw materials) has helped it control costs to gain an edge in this price sensitive sector, it has also meant ballooning interest and depreciation costs. The backward integration looks positive for the company in the long term given its 'value for money' business motto.

FY01 has been a good year for the company's toilet soap division. Nirma has entered toilet soaps in a big way only recently. But as its turnover growth indicates, this division has been a major gainer this year. In contrast FMCG major, HLL has shown a degrowth (down 6%) in this segment during its 1QFY01.

If Nirma continues its blazing turnover growth, the company is likely to be back on the growth track in bottomline terms sooner rather than later.

At the current price of Rs 420 Nirma trades at a P/E multiple of 13.4 x its FY01 earnings. The valuations are on a lower side in view of the staid growth in bottomline.

Equitymaster requests your view! Post a comment on "Nirma FY01: Capex woes continue". Click here!


More Views on News

Sorry! There are no related views on news for this company/sector.

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

How Much Money Do You Need to Be a Professional Trader? (Fast Profits Daily)

Sep 17, 2020

In this video I'll answer a question I get asked often: How much capital do I really need to trade the markets for a living? Let's find out...


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Mar 23, 2011 (Close)


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