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Indo Gulf: Good show

Aug 1, 2001

Indo Gulf, an Aditya Birla group company, has declared good performance for 1QFY02. While sales have increased by 30%, PBT flared up by 49%. However, in accordance with the new accounting policy for taxation, the company made a provision of Rs 17 m for deffered taxation. The tax provision for the current quarter also increased considerably in accordance with the new policy.

(Rs m)1QFY011QFY02ChangeFY01
Sales 4,467 5,812 30.1% 21,988
Other Income 115 95 -17.1% 499
Expenditure 3,458 4,604 33.2% 17,102
Operating Profit (EBDIT) 1,009 1,208 19.6% 4,887
Operating Profit Margin (%)22.6%20.8%22.2%
Interest 362 287 -20.9% 1,453
Depreciation 289 312 7.6% 1,176
Profit before Tax 472 705 49.2% 2,757
Other Adjustments (17) -
Tax 39 183 369.7% 240
Profit after Tax/(Loss) 433 505 16.5% 2,517
Net profit margin (%)9.7%8.7%11.4%
No. of Shares (eoy) (m) 225.2 225.2 225.2
Diluted Earnings per share 1.9 9.0 11.2
P/E (at current price)3.6 2.9

The copper business of the company seems to have done well on the back of good realisations in the last quarter. However, the urea business negatively impacted profitability. The government did an interim reduction in retention prices and restricted the production at 100% level of reassessed capacity. Savings in interest cost also contributed considerably to increase in PBT. As part of corporate debt restructuring, the company re-paid its high cost term loans through issue of NCD's at a lower interest rate.

Though the results declared by Indo Gulf reflect firm copper prices, the trend in the last month has been heading south. The current copper prices are ruling around US $ 1,475 levels as against average copper prices of US $ 1,600-1,650 in FY01. However, the growth in coming quarters is expected to be fuelled by increase in volumes on the back of expansion in copper capacity.

At the current market price of Rs 32, the scrip is trading at a P/E of 2.7 times FY02 expected earnings.

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