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Indo Count: Volume Pressures Dent Growth - Views on News from Equitymaster
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Indo Count: Volume Pressures Dent Growth
Aug 14, 2017

Indo Count Industries announced its results for the quarter ended June 2017 (1QFY18). During the period, the company's revenues dropped by 16% YoY, while profits were up down 47% YoY.

Performance summary
  • Revenues fall by 16% YoY during 1QFY18 on the back of low volume growth. Apart from the volatility in raw material prices, a one-time charge on account of devaluation of inventory at its international subsidiary and de-stocking by some its clients in the US, affected Indo Count's sales and margins in 1QFY18.
  • Operating margins decline marginally to 8.3% in 1QFY18 from 19.8% in 1QFY17 due to higher cotton costs.
  • Interest costs came down as the net debt to equity ratio fell to 0.34x from 0.58 x levels a year ago.
  • Net profits fell by 47% YoY in 1QFY18, despite growth in other income and lower tax incidence.

    (Rs m) 1QFY17 1QFY18 Change
    Net sales 4,766 3,994 -16.2%
    Expenditure 3,824 3,664 -4.2%
    Operating profit (EBDITA) 942 330 -65.0%
    Operating profit margin (%) 19.8% 8.3%  
    Depreciation 80 75 -6.3%
    EBIT 862 255 -70.4%
    EBIT margin (%) 18.1% 6.4%  
    Interest 98 82 -16.3%
    Other income 159 323 103.1%
    Profit before tax 923 496 -46.3%
    Exceptional items 0 0  
    Tax 320 176 -44.9%
    Profit after tax/(loss) 603 320 -47.0%
    Net profit margin (%) 12.7% 8.0%  
    No. of shares (m)   197.4  
    Fully diluted EPS (Rs)*   10.1  
    P/E (x)*   11.3  

    *Based on trailing 12-months earnings

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