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KRL: PAT skids on crude surge

Nov 6, 2000

The rise in downstream refined product prices has helped Kochi Refineries Ltd. (KRL) post a healthy growth in sales. However, the rise in sales has not been of much avail, as petroleum product prices did not increase as much as crude oil prices. Petroleum products are sold to the marketing companies at import parity price determined by the Government. Therefore, with international petroleum prices sky rocketing, the Government may not be providing a 100% linkage to import parity.

(Rs m)2QFY002QFY01Change
Sales 14,066 19,663 39.8%
Other Income 198 291 46.8%
Expenditure 12,853 19,002 47.8%
Operating Profit (EBDIT) 1,213 661 -45.5%
Operating Profit Margin (%)8.6%3.4%
Interest 84 298 254.6%
Depreciation 145 245 68.7%
Profit before Tax1,182410-65.3%
Tax 182 34 -81.6%
Profit after Tax/(Loss) 1,000 376 -62.4%
Net profit margin (%)7.1%1.9%
No. of Shares (eoy) 69 69
Earnings per share*58.021.8
P/E Ratio 3.9
(*annualised)

Consequently, the company's operating margin has plummeted drastically by 520 basis points. This has put pressure on the bottomline of the company.

Borrowings have increased to meet working capital requirements consequently, interest charges have gone up substantially. The rise in depreciation is due to capitalisation of the diesel hydrodesulphurisation plant, which was commissioned in FY00.

All the above factors have contributed to the bottomline being hit. At Rs 86 the company is trading at a multiple of 3.9 on 2QFY01 annualised earnings.

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