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Nalco: Profits surge on higher volumes - Views on News from Equitymaster
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Nalco: Profits surge on higher volumes
Nov 1, 2010

Nalco has announced its 2QFY11 results. The company has reported a 27% YoY and 40% YoY growth in sales and net profits respectively. Here is our analysis of the results.

Performance summary
  • Topline grows by 27% YoY on higher production and sales.
  • Operating profits increases by over 200% YoY. This was led by lower operating costs coupled with higher realizations. Thus EBITDA margins improve by 13% during the quarter to 22.2%.
  • Net profits grow by 40.4% YoY. Growth was lower than operating profits mainly on account of lower other income, and a jump in taxes.
  • Bottomline in 1HFY11 grows by 78% YoY on the back of a 33% YoY growth in topline.
Financial performance snapshot
(Rs m) 2QFY10 2QFY11 Change 1HFY10 1HFY11 Change
Net sales 11,431 14,548 27.3% 20,646 27,465 33.0%
Expenditure 10,374 11,314 9.1% 18,053 20,457 13.3%
Operating profit (EBDITA) 1,057 3,233 206.0% 2,593 7,007 170.2%
Operating profit margin (%) 9.2% 22.2%   12.6% 25.5%  
Other income 1,762 1,098 -37.7%  2,911   2,159 -25.9%
Interest 8  1 -88.0% 19 (3) -115.5%
Depreciation   764   952 24.5%  1,521   1,868 22.8%
Profit before tax 2,046 3,378 65.1% 3,965  7,298 84.1%
Tax   451  1,139 152.3% 1,105  2,217 100.7%
Profit after tax/(loss) 1,595 2,240 40.4% 2,859  5,081 77.7%
Net profit margin (%) 14.0% 15.4%   13.8% 18.5%  
No. of shares       644.3  644.3  
Diluted earnings per share (Rs)*              16.1  
P/E ratio (x)*         25.0  

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