Indal: Operating margins rise in 1QFY01 - Views on News from Equitymaster

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Indal: Operating margins rise in 1QFY01

Jul 21, 2000

Indian Aluminium Company, a part of the Aditya Birla Group, has posted a 46% rise in net profits for the first quarter ended 30th June 2000.The company has benefited from higher realisations and a sharp 70% rise in exports (which earn better realisations).

(Rs m) 1QFY00 1QFY01 Change
Net Sales 2,229 2,834 27.1%
Other Income 22 11 -47.4%
Expenditure 1,794 2,248 25.3%
Operating Profit (EBDIT) 435 586 34.8%
Operating Profit Margin (%) 19.5% 20.7%  
Interest 87 92 5.5%
Depreciation 133 153 14.7%
Profit before Tax 236 353 49.4%
Other Adjustments -17 -17  
Tax 43 80 85.2%
Profit after Tax/(Loss) 176 256 45.6%
Net profit margin (%) 7.9% 9.6%  
No. of Shares (eoy) (m) 71.1 71.1  
Diluted Earnings per share* 9.9 14.4  

Among the other highlights of the company’s performance is the decline in other income despite which the profit growth has been generated. This has resulted in an improvement in the quality of earnings. Also, the company’s initiatives to reduce its workforce seem to be on target and this should benefit its efficiency and productivity levels.

The company’s operating margin at 20.7% is significantly higher than our full year estimate of 17%. The growth too has been faster than anticipated. We will be taking a re-look at the numbers, which have assumed a slower than actual growth in realisations.

The company currently trades at Rs 116, implying a P/e multiple of 8 times annualised earnings.

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