ITC posts sharp improvement in OPM for FY00 - Views on News from Equitymaster

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ITC posts sharp improvement in OPM for FY00

May 24, 2000

ITC has reported a sharp improvement in net profit margins for the year ended 31st March 2000. The company has benefited from a 470 basis points jump in operating margins and a 31% drop in interest expenditure.

(Rs m) FY1999 FY2000 Change
Net Sales 35,159 38,192 8.6%
Other Income 1,218 1,163 -4.5%
Expenditure 24,433 24,755 1.3%
Operating Profit (EBDIT) 10,726 13,437 25.3%
Operating Profit Margin (%) 30.5% 35.2%  
Interest 1,641 1,126 -31.4%
Depreciation 1,023 1,185 15.8%
Profit before Tax 9,380 12,290 31.0%
Tax 3,146 4,365 38.8%
Profit after Tax/(Loss) 6,234 7,925 27.1%
Net profit margin (%) 17.7% 20.8%  
Earnings per share 25.4 32.3  

The topline growth has been modest at 8.6% despite the fact that volumes dipped 3.5%. However, it is necessary to point out that during the fourth quarter sales actually jumped 14%. The rise in margins can be attributed to the improved product mix.

The stock currently trades at a P/E multiple of 20, which is significantly lower than multiples recorded at the end of the previous three financial years (FY97 - 33.3, FY98 - 35.3, FY99 - 41.1).

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