Ingersoll: 2QFY01 is a dampner - Views on News from Equitymaster

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Ingersoll: 2QFY01 is a dampner

Oct 25, 2000

Ingersoll Rand has recorded a 28% decline in its bottomline in 2QFY01. This is on the back of a marginal 1% decline in its turnover during same period. Even a 65% surge in other income and a whopping 92% decline in tax provisions could not save its bottomline from taking this hit.

(Rs m)2QFY002QFY01Change1HFY001HFY01Change
Sales769759-1.2% 1,914 1,439 -24.8%
Other Income355765.3% 67 103 54.9%
Expenditure63771312.0% 1,569 1,315 -16.1%
Operating Profit (EBDIT)13247-64.8% 345 123 -64.2%
Operating Profit Margin (%)17.2%6.1% 18.0%8.6% 
Interest 00- 1 0 -
Depreciation1616-3.0% 34 31 -8.5%
Profit before Tax15088-41.5% 377 196 -48.1%
Other Adjustments05  0 390 -
Tax393-92.3% 120 134 11.4%
Profit after Tax/(Loss)11180-27.7%25645175.9%
Net profit margin (%)14.4%10.6% 13.4%31.4% 
No. of Shares (eoy) (m)31.631.6 31.631.6 
Earnings per share*14.110.2 16.228.6 
*(annualised)      
Current P/e ratio  13.8     

A 12% jump in expenditure did most of the damage to the company's bottomline.

Ingersoll sold off its gas compressor business in 1QFY01, resulting in an extraordinary profit of Rs 441 m. It also paid off Rs 51 m as VRS expenses to trim its workforce. All this resulted in a 76% jump in its first half (1HFY01) bottomline to Rs 451 m. But in real terms (i.e. including only operational profits and expenses) its net profit actually declined by 49% to Rs 62 m when compared to 1HFY00.

The company's stock trades at Rs 140 at a P/e multiple of 13.8 times its annualised FY01 earnings. This price its near its 52 week low. Well, in light of its performance, this is not surprising.

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