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Piramal: Margins play spoilsport - Views on News from Equitymaster
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Piramal: Margins play spoilsport
Oct 22, 2009

Performance summary
  • Revenues grow by 12% YoY in 2QFY10 largely driven by the domestic branded formulations and global critical care businesses.
  • Operating margins reduce by 2.8% due to an increase in raw material and staff costs (as percentage of sales).
  • While net profits register a growth of 45% YoY, the same is largely due to the extraordinary expenses and forex loss reported last quarter. Thus, excluding this impact, net profits decline by 15% YoY during the quarter.


Financial snapshot (Consolidated)
(Rs m) 2QFY09 2QFY10 Change 1HFY09 1HFY10 Change
Net sales 8,893 10,000 12.4% 15,976 18,215 14.0%
Expenditure 7,066 8,226 16.4% 12,724 14,884 17.0%
Operating profit (EBDITA) 1,827 1,774 -2.9% 3,252 3,331 2.4%
EBDITA margin (%) 20.5% 17.7%   20.4% 18.3%  
Other income 1 -   2 0  
Interest (net) 170 254 49.0% 291 508 74.7%
Depreciation 288 375 30.2% 558 760 36.3%
Profit before tax 1,369 1,145 -16.3% 2,406 2,064 -14.2%
Extraordinary item (96) (4)   (136) (4)  
Forex loss/(gain) 408 (15)   639 (60)  
Tax 114 94 -17.6% 201 207 2.9%
Minority interest 17 (0)   15 (1)  
Profit after tax/(loss) 734 1,063 44.8% 1,415 1,914 35.3%
Net profit margin (%) 8.3% 10.6%   8.9% 10.5%  
No. of shares (m)       209.0 209.0  
Diluted earnings per share (Rs)         17.5  
Price to earnings ratio (x)         20.8  

What to expect?
At the current price of Rs 364, the stock is trading at a price to earnings multiple of 10.5 times our estimated FY12 earnings. We shall put up a detailed analysis of the results post the conference call scheduled later this evening.

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