(Rs m) | 1QFY06 | 1QFY07 | Change |
Net sales | 19,830 | 24,150 | 21.8% |
Expenditure | 15,610 | 18,970 | 21.5% |
Operating profit (EBDITA) | 4,220 | 5,180 | 22.7% |
EBITDA margin (%) | 21.3% | 21.4% | |
Other income | 400 | 600 | 50.0% |
Interest | 290 | 450 | 55.2% |
Depreciation | 1,160 | 1,120 | -3.4% |
Profit before tax | 3,170 | 4,210 | 32.8% |
Tax | 920 | 1,300 | 41.3% |
Profit after tax/(loss) | 2,250 | 2,910 | 29.3% |
Net profit margin (%) | 11.3% | 12.0% | |
No. of shares (m) | 249 | 249 | |
Diluted earnings per share (Rs) | 9.0 | 11.7 | |
Price to earnings ratio (x)* | 5.6 |
Flat margin growth: Consumption of raw material increased by 46% YoY as prices of gas, naphtha, and propane increased significantly. Input prices of semi rich gas and propane increased by 98% and 16% YoY. Employee's cost registered a 13% increase due to performance linked incentive payment to the employees. However, the reduction in other expenditure was seen due to lower provision for excise duty on finished goods due to depletion of stock. Thus, lower provisioning helped offset the effect of higher raw material prices and arrest the decline in operating margins.
(Rs m) | 1QFY06 | 1QFY07 | Change |
Consumption of raw materials | 8,710.0 | 12,690.0 | 45.7% |
as % of sales | 43.9% | 52.5% | |
Staff cost | 910.0 | 1,070.0 | 17.6% |
as % of sales | 4.6% | 4.4% | |
Other expenditure | 5,990.0 | 5,210.0 | -13.0% |
as % of sales | 30.2% | 21.6% |
Bottomline: Net profits grew by 29% YoY during the quarter. Other income for the company increased by 50% during the quarter on the account of interest income on surplus funds. However, the interest cost was on the higher side due to adverse exchange difference. Higher tax provisioning also had a negative impact on bottomline growth.
(YoY) | 1QFY06 | 2QFY06 | 3QFY06 | 4QFY06 | 1QFY07 |
Net sales growth | 9.6% | 12.4% | 11.2% | -13.1% | 21.8% |
Operating profit growth | 27.5% | 13.3% | 7.6% | -7.9% | 22.7% |
Net profit growth | 82.9% | 119.6% | 20.6% | -25.9% | 29.3% |
Operating profit margin | 21.3% | 20.4% | -80.2% | -78.8% | 21.4% |
Net profit margin | 11.3% | 14.8% | 10.6% | 10.8% | 12.0% |
After the merger with its 6 subsidiaries, company's operations will be further integrated. These subsidiaries are manufacturers of polyester staple fibre (PSF) and polyester filament yarn (PFY) which have feedstock in the form of Mono Ethylene Glycol (MEG). IPCL is a manufacturer of MEG and considering the global demand-supply dynamics of MEG; it is advantageous to convert MEG into higher value products rather than selling it off at intermediate level. Thus the merger, which is approved by the shareholders, will further improve its operational efficiencies. Having said that, much will depend on how long the current high petrochemical prices will sustain themselves.