X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 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.
Indo Rama: Turning around - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jul 17, 2001

    Indo Rama: Turning around

    Indo Rama Synthetics Ltd. faced severe financial hardships over FY98 to FY00, as the polyester industry was at the peak of the downcycle. Since then prices have recovered, which has helped the company turn around over the past two years. However, with a global slowdown the cycle is again showing signs of weakening. Nevertheless, the company has managed to report a respectable topline growth.

    (Rs m) 1QFY01 1QFY02 Change
    Sales 4,295 4,613 7.4%
    Other Income 35 19 -45.1%
    Expenditure 3,564 3,809 6.9%
    Operating Profit (EBDIT) 732 804 9.8%
    Operating Profit Margin (%) 17.0% 17.4%  
    Interest 424 368 -13.3%
    Depreciation 260 263 1.2%
    Profit before Tax 82 192 133.1%
    Tax - -  
    Profit after Tax/(Loss) 82 192 133.1%
    Net profit margin (%) 1.9% 4.2%  
    No. of Shares (eoy) 156 166  
    Earnings per share* 2.0 4.6  
    P/E Ratio   1.6  
    (*annualised)      

    The company cut down on costs during the downcycle and could still be benefiting from such measures. Also, the company has implemented an ERP package, J.D. Edwards, which could have reduced working capital costs. Consequently, the OPM of the company has increased by 40 basis points. The operating expenditure is inclusive of doubtful; debts amounting to Rs 38.3 m. Excluding this amount, the OPM increases by 130 basis points.

    The bottomline has shown a marked improvement supported by higher operating profits and lower interest costs. The company is attempting to reduce its debt burden. However, even at the end of FY01 the leverage ratio is estimated at 4.6x (excluding revaluation reserves). The company seems to be undertaking capital restructuring to reduce the interest burden and buoy EPS.

    In FY00, the company converted debt of Rs 25 m into equity shares and in FY01, loans amounting to Rs 102.7 m was converted into equity issued at par. Consequently, the equity share base has increased by 10 m in the previous fiscal. IFCI, on both occasions, converted its loans into equity. Indo Rama is also, reportedly, in dispute with International Finance Corporation (IFC) over rescheduling of loans amounting to Rs 1,324 m.

     

     

    Equitymaster requests your view! Post a comment on "Indo Rama: Turning around". Click here!

      
     

    More Views on News

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

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    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: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    MARKET STATS