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BPL Ltd subdued demand results in marginal 4% topline growth. - Views on News from Equitymaster
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  • Jun 20, 2000

    BPL Ltd subdued demand results in marginal 4% topline growth.

    BPL Limited, the flagship company of the BPL group, has posted a 4% growth in sales and a marginal 5% growth in bottomline. The sales for the fourth quarter however were down by 6% from Rs 5,332 m in FY99 to Rs 5,020 m in FY00. The operating margins were up from 9% in FY99 to 10% for FY00 whereas the net profit margin remained at 5.3%.

    (Rs m) FY1999 FY2000 Change
    Sales 19,397 20,147 3.9%
    Other Income 8 3 -64.3%
    Expenditure 17,650 18,216 3.2%
    Operating Profit (EBDIT) 1,747 1,930 10.5%
    Operating Profit Margin (%) 9.0% 9.6%  
    Interest 404 485 19.9%
    Depreciation 212 260 22.9%
    Profit before Tax 1,140 1,188 4.3%
    Tax 115 117 1.8%
    Profit after Tax/(Loss) 1,025 1,071 4.5%
    Net profit margin (%) 5.3% 5.3%  
    Earnings per share 37.0 38.7  

    The demand for colour televisions was subdued due to lack of major events like the World Cup. Moreover, all the major companies saw their credit periods going up thus affecting their bottomline. Though the market leader in the colour television segment, the company is losing ground to competitors like LG Electronics, Aiwa, Akai, who have advanced technololgy and are more aggressive in the rural market, which has huge potential.

    The colour television market grew by 35% compared to 58% for FY99. The import duty on picture tubes, the main component in the colour television, remained at the same level thus making it impossible for the companies to reduce the prices (remember the prices of television are already at their lowest level. For example, the prices of 21' inch colour television is Rs 7,000 now compared to Rs 15,000 and above four years back). This has prevented companies from stimulating demand by slashing prices. .

    BPL Limited is planning to introduce a new range, BPL Digital, based on the convergence of Internet and cellular services with the entertainment electronics industry. With the company introducing sophisticated models, the margins are expected to increase.

    The share is currently trading at Rs 162 at a P/E multiple of 4.1 on FY00 earnings.



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