Kochi Refinery: Bottomline up 218% - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Kochi Refinery: Bottomline up 218%

Jul 23, 2003

Kochi Refineries, a subsidiary of BPCL announced its quarterly results yesterday. The company reported a 1% increase in sales for the first quarter of FY04 while the bottomline improved by about 218% on a YoY basis. Let us take a detailed look at the results.

(Rs m)1QFY031QFY04Change
Net sales 22,500 22,686 0.8%
Other Income 45 74 64.4%
Expenditure 21,200 19,864 -6.3%
Operating Profit (EBDIT) 1,300 2,822 117.1%
Operating Profit Margin (%)5.8%12.4% 
Interest 240 115 -52.1%
Depreciation 275 293 6.5%
Profit before Tax8302,488199.8%
Tax 298 795  
Profit after Tax/(Loss) 532 1,693 218.2%
Net profit margin (%)2.4%7.5% 
No. of Shares 138.2 138.5  
Diluted earnings per share*15.448.9 
P/E Ratio  1.5  
(*annualised)   

While the company reported a marginal increase in sales, it has reported that it received Rs 776 m from the government as a result of its past dues with the government. If this income is removed, we actually see a decline in its topline by about 3%. Part of this decline may be on account of the truckers' strike during the June quarter. It should also be noted that the prices of petroleum products were reduced thrice during the current quarter.

Expenses declined during the first quarter by about 6%. Raw material costs as a percentage of sales, which accounts for about 95% of its total expenses, have declined to 86% as compared to 93% for the same period last year. An appreciation in the domestic currency seems to have helped the company to reduce its expenses. This has resulted in an improvement of operating profit margin by about 660 basis points. However if we remove the dues, the operating profit margin improvement is lower at 350 basis points.

  % of net sales
  1QFY03 1QFY04
Raw materials 93.2%82.6%
Staff Costs 0.9%1.2%
Other Exp 1.4%1.1%

Kochi Refinery was successful in reducing its interest outgo significantly (50%) during the first quarter and this has further helped the company to improve its profitability. On the back of reduced expenses and recovered dues from the government, the company reported a healthy 218% growth in the bottomline.

At Rs 75, Kochi Refinery is trading at a P/E multiple of 1.5x its annualised 1QFY04 earnings. The stock trades at a historical P/E band of between 3x-6x. KRL's refinery margins for the first quarter have remained at the same levels as compared to the same period last year. However on a QoQ basis, the refinery margins have declined. While crude oil prices have remained stable in the range of US$ 25 - US$ 28 post the Iraq war, we do not expect the company to show robust bottomline and topline growth as compared to FY03.

Equitymaster requests your view! Post a comment on "Kochi Refinery: Bottomline up 218%". Click here!

  

More Views on News

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

Most Popular

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

Apr 6, 2021

Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

An India Revival Stock I'm Bullish On... (Profit Hunter)

Apr 9, 2021

This could take India to the position of 3rd largest economy.

Why Did the Market Crash on Monday? (Fast Profits Daily)

Apr 13, 2021

In this video, I'll you what I think is the real reason behind yesterday's market crash.

A Unique Sector for Short-Term Profits (Fast Profits Daily)

Apr 12, 2021

This ignored sector could deliver big short-term profits.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

TRACK KOCHI REFINERIES

  • Track your investment in KOCHI REFINERIES with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MARKET STATS