BPL Limited is among the top losers over the year in BSE National Index, in terms of market capitalisation. The erosion is a whopping Rs 10 bn! The share price has come down from a high of Rs 534 (27th September 1999) to Rs 138 currently. What could be the rational behind this large value erosion?
BPL is the market leader with 26% share in colour television segment. It also manufacturers refrigerators, alkaline batteries (exported to Japan), home appliances and audio systems. In spite of sales growth slowing down from 38% in FY98 to 4% in FY00, operating margins have been faring well for three consecutive years (prices of colour televisions have halved in last three years). Since it is has gone for backward integration, BPL has a clear cost advantage over its competitors as almost 75% of its raw material requirements are met internally. Moreover, contributions from high-end digital products, in the sales mix, are on the rise (It has a range of colour televisions starting from Rs 8,000 to Rs 75,000).
Profit before tax
Profit after tax
Number of shares
The reason for the erosion in value is that BPL is a conglomerate with diversified interest in various sectors including consumer durables, power, telecom, mobile telephony, Internet and home appliances. In fact, the company has floated separate companies for different joint ventures, though the core areas of these businesses are competitive in nature (for BPL). The list of companies includes BPL Sanyo Technologies, BPL Refrigerators, BPL Sanyo and BPL Engineering, to name a few. Added to the woes, these companies are losing market share steadily over the last three years.
BPL Refrigeration (refrigerators)
BPL Sanyo Utilities (washing machines)
BPL Sanyo Technologies (audio)
Market price (Rs)*
Market cap (Rs m)
*price as on September 27th of the respective year
Clearly, the group lacks focus. The ‘reward’ for this lack of focus is the huge erosion in market capitalisation. The best solution for the company is to move out these businesses and focus on its core areas through BPL Limited. Only then, investors would ‘believe in the best’.
More Views on News
Sorry! There are no related views on news for this company/sector.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407