X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
EID Parry: Higher realisations benefit - Views on News from Equitymaster
MidCapSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

EID Parry: Higher realisations benefit
Nov 4, 2008

Performance summary
  • Reports a standalone topline growth of 59% YoY during 2QFY09 and 97% YoY during 1HFY09.
  • Standalone operating margins turns positive as compared to the corresponding quarter of the previous year mainly due to lower raw material costs
  • Bottomline receives a big boost on the back of stake sale in a group company
  • The Board of Directors has approved the proposal to buy-back the fully paid equity shares of Rs. 2/- each of the company from the shareholders at a maximum price of Rs.160 per equity share.


Standalone picture
Rs(m) 2QFY08 2QFY09 (%) Change 1HFY08 1HFY09 (%) Change
Net sales 1,719 2,729 58.8% 2,503 4,920 96.6%
Expenditure 1,818 2,496 37.3% 2,761 4,507 63.2%
Operating profit (EBDITA) (100) 233   (258) 413  
EBDITA margin (%) -5.8% 8.5%   -10.3% 8.4%  
Other income 177 443 149.7% 195 480 146.5%
Interest 25 68 174.5% 29 124 325.7%
Depreciation 109 124 13.6% 216 244 13.3%
Profit before tax (56) 484   (308) 524  
Extraordinary item - 7,492   - 7,492  
Tax 2 1857 103072.2% 3 1869 58318.8%
Profit after tax/(loss) (57) 6,119   (312) 6,147  
Net profit margin (%) -3.3% 224.3%   -12.4% 124.9%  
No. of shares (m) 89.3 89.3   89.3 89.3  
Diluted earnings per share (Rs)*         70.5  
Price to earnings ratio (x)*         2.4  
* 12 month trailing earnings

What has driven performance in 2QFY09?
  • EID parry reported a standalone topline growth of 59% YoY during 2QFY09 and 97% YoY during 1HFY09. Higher sugar and bio product sales aided the jump. During the quarter, the company crushed 0.91 m tonnes of cane compared to 1.2 m tonnes in 2QFY08. The overall production of sugar was 83860 MT, lower by 28.4% YoY. Delay in start of crushing season led to lower production. The average sugar realization per MT for the quarter was Rs. 14,837 as compared to Rs 12,799 during 2QFY09. With sugar production estimated to be lower, the sugar realisations have improved as compared to last year. The company exported 78.5 m units (higher by 9.3% YoY) to the TNEB Grid. The cogen sales were higher by 7% YoY.

    Segment-wise performance
    (Rs m) 2QFY08 2QFY09 (%) Change 1HFY08 1HFY09 (%) Change
    Sugar 1,408 2,351 67.0% 1,904 4,139 117.4%
    PBIT margin (%) -21.6% -0.3%   -34.2% 2.0%  
    % of revenue 79.4% 84.5%   73.1% 82.2%  
    Co-generation 266 284 6.9% 511 637 24.7%
    PBIT margin (%) 36.7% 39.4%   40.4% 42.3%  
    % of revenue 15.0% 10.2%   19.6% 12.7%  
    Bio products 97 124 26.9% 172 222 28.8%
    PBIT margin (%) 13.1% 10.5%   5.9% 6.0%  
    % of revenue 5.5% 4.4%   6.6% 4.4%  
    Others 1 23 1507.1% 17 38 -33.4%
    % of revenue 0.1% 0.8%   0.6% 0.8%  
    Total revenues 1,773 2,781 56.9% 2,603 5,036 93.5%

  • On the consolidated front, the topline jumped 83.2% YoY and 108% YoY during both the period under consideration respectively. Strong growth was witnessed across its segments.

    Consolidated view
    Rs(m) 2QFY08 2QFY09 (%) Change 1HFY08 1HFY09 (%) Change
    Net sales 20,065 36,762 83.2% 25,559 53,075 107.7%
    Expenditure 18,344 33,658 83.5% 23,196 48,066 107.2%
    Operating profit (EBDITA) 1,720 3,104 80.4% 2,363 5,009 111.9%
    EBDITA margin (%) 8.6% 8.4%   9.2% 9.4%  
    Other income 85 259 206.3% 117 317 171.1%
    Interest 183 282 54.4% 405 494 21.9%
    Depreciation 207 255 23.0% 451 500 10.9%
    Profit before tax 1,415 2,826 99.7% 1,624 4,332 166.7%
    Extraordinary item - 7,492   - 9,078  
    Tax 575 2704 370.0% 770 3842 399.1%
    Profit after tax/(loss) 840 7,614 806.5% 854 9,568 1020.0%
    Less:Minority interest 401 671   513 1,391  
    Net profit 439 6,943 1480.1% 341 8,177 2296.6%
    Net profit margin (%) 2.2% 18.9%   1.3% 15.4%  

  • Standalone operating margins turned positive as compared to the corresponding quarter of the previous year mainly due lower raw material costs. The company had witnessed pressure on its sugar realisations during 2QFY08 and hence the margins had declined. With realisations improving during 2QFY09, the situation turned better. Even labour and other costs were lower as a percent of sales, which further aided the jump. On the consolidated front, the margins remained more or less stable.

  • During the quarter, the company sold 0.1 m shares held in Parryware Roca Private Limited (47%) for a consideration of Rs 7.47 bn. It also sold the investment in Parry Monsanto Seeds Private Limited for a profit of Rs. 27.9 m. Higher interest costs on account of higher rate of interest and tax outgo led to the decline. On the consolidated front, excluding the extraordinary item (income received by Coromandel Fertilisers), the company has reported losses due to higher interest and tax outgo.

What to expect?
At the current price of Rs 170, the stock of EID Parry is trading at 2.4 times its 12 months trailing earnings. With lower production expected this year, the sugar realisations have improved. This has helped EID parry to witness better margins. Its expansion plans of 20 MW Cogeneration Project at Pettavaittalai and sugar production capacity increase are progressing well. The company is also in the process of putting up distilleries at Pudukottai and Sivaganga to produce value added products from molasses. We expect the performance to improve due to higher realisations and capacity expansions. The Board of Directors has approved the proposal to buy-back equity shares at a maximum price of Rs.160 per equity share. The buy back would most likely get a tepid response considering that the current market price is above the buyback price.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

E.I.D. PARRY SHARE PRICE


Feb 23, 2018 (Close)

TRACK E.I.D. PARRY

  • Track your investment in E.I.D. PARRY with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

E.I.D. PARRY - 3M INDIA COMPARISON

COMPARE E.I.D. PARRY WITH

MARKET STATS