Kopran: Restructuring pays off - Views on News from Equitymaster

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Kopran: Restructuring pays off

Aug 4, 2000

Kopran has reported a 70% growth in net profits in the first quarter of the current year despite a 5% reduction in turnover. While other income (which accounted for 21% of the PBT) was partly responsible for the growth the main reason for the demerger was the spin off the low margin yielding semi synthetic penicillin (SSP) business into a separate company last year.

(Rs m) 1QFY00 1QFY01 Change
Sales 543 515 -5.2%
Other Income 3 8 175.0%
Expenditure 465 413 -11.2%
Operating Profit (EBDIT) 79 103 30.5%
Operating Profit Margin (%) 14.5% 19.9%  
Interest 40 50  
Depreciation 19 22 17.6%
Profit before Tax 23 38 70.7%
Other Adjustments      
Profit after Tax/(Loss) 23 38 70.7%
Net profit margin (%) 4.1% 7.5%  
No. of Shares (m) (eoy) 14.3 14.3  
Diluted no. of shares (m) 14.3 14.3  
Diluted Earnings per share* 6.3 10.7  

The company had a joint venture with Synpac Pharma one of the largest single site penicillin manufacturers in the world. The world over it has been seen that as far as semi synthetic penicillin (SSP) is concerned it is the only the integrated players who have emerged successful.

To the shareholders of Kopran, one share in the new company KDL Biotech was given for every two shares that they held in Kopran Ltd. The latter is now basically focused on five therapeutic areas: cardiology, respiratory, gastrointestinal, antibiotics and pain management. Of the company’s domestic dosage sales around 20% accrues from products under the DPCO.

The stock quotes at Rs 84 (its 52 week low) which implies an earning multiple of 7.8 times its first quarter annualised earnings. The market, however, does not seem to be appreciating the steps that the management has taken to improve transparency and shareholder value.

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Sep 21, 2020 (Close)


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