BILT Vs TN Newsprint: The numbers story - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

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

BILT Vs TN Newsprint: The numbers story

Dec 14, 2011

In our previous article we discussed the business models of Ballarpur Industries (BILT) and Tamil Nadu Newsprint (TNPL). We also discussed the management strategies adopted by the companies and concluded that Tamil Nadu Newsprint (TNPL) over the years has grown organically by expanding capacity. On the other hand, Ballarpur Industries (BILT) has grown through acquisitions. In this article, we will compare both the paper companies based on financial parameters.

As mentioned earlier, the paper companies are in an expansion mode and have been adding on to their existing capacities. Merely adding capacities will not help, we need to see whether this has resulted in revenue increase. We note here that BILT's revenues, on an average, have grown by 11.5% over the last decade and by 19% over the last 5 years. However, growth in TNPL's revenues have been subdued but maintained at an average of 7.5%- 8%. There was a sudden spurt in the revenues of BILT post the acquisition of Sabah Forest Industries. Also, TNPL's 2011 revenues are nearly 1/4th of BILT's revenues for the same period.

BILT has been able to maintain an EBITDA (operating) margin of around 22% over the last 10 years. Using bagasse as primary raw material along with a few other innovations has helped TNPL maintain its operating margins close to 25%. TNPL's raw material as a percentage of sales has been contained within 20% throughout. The same has touched the level of 37% in 2011 for BILT.

Interest expenses exert pressure on the bottom line of the companies. On average interest coverage ratio has been2.5 times and 5 times for BITL and TNPL respectively. This speaks about the earnings strength of TNPL. In terms of profit margins too, TNPL scores over BILT. While BILT's net profit margins hovered around 7.5-8% , for TNPL profit margins have been a tad better at 10%-10.5%. TNPL's margins have been gradually increasing over the last 5 years timeframe.

Paper being a capital expenditure intensive industry requires huge amounts of investments. The companies thus have a tendency to borrow more thereby distorting the debt-equity ratio. BILT's debt equity ratio has been around 1.5. Here too, TNPL seems to be the winner with an average debt-equity ratio ranging between 0.9-1.2. However, TNPL's debt levels are rising steadily and in fact the debt has increased by more than 160% over the last 5 years.

To service the year round demand for paper, paper companies have to ensure ready availability of products at all times. This implies more working capital and thus sales to working capital also becomes a crucial aspect to look at before deciding on your investment. For BILT, sales/ working capital equals 3.7 times while for TNPL it is 6.9 times.

In our analysis so far, we have compared BILT and TNPL based on the financials. While TNPL seems to score over BILT in the parameters considered so far, further analysis of return ratios and valuations will help us in coming to a final conclusion as to which among the two is better. In our next article, we will discuss whether any of these two paper companies is worth investing into from a long term perspective.

BILT Vs TN Newsprint - Previous article | Next article


Equitymaster requests your view! Post a comment on "BILT Vs TN Newsprint: The numbers story". Click here!

  

More Views on News

JK PAPER Announces Quarterly Results (1QFY21); Net Profit Down 81.6% (Quarterly Result Update)

Aug 24, 2020 | Updated on Aug 24, 2020

For the quarter ended June 2020, JK PAPER has posted a net profit of Rs 250 m (down 81.6% YoY). Sales on the other hand came in at Rs 5 bn (down 34.9% YoY). Read on for a complete analysis of JK PAPER's quarterly results.

JK PAPER Announces Quarterly Results (4QFY20); Net Profit Down 18.6% (Quarterly Result Update)

May 14, 2020 | Updated on May 14, 2020

For the quarter ended March 2020, JK PAPER has posted a net profit of Rs 914 m (down 18.6% YoY). Sales on the other hand came in at Rs 7 bn (down 9.5% YoY). Read on for a complete analysis of JK PAPER's quarterly results.

ORIENT PAPER 2018-19 Annual Report Analysis (Annual Result Update)

Jun 26, 2019 | Updated on Jun 26, 2019

Here's an analysis of the annual report of ORIENT PAPER for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of ORIENT PAPER. Also includes updates on the valuation of ORIENT PAPER.

WEST COAST PAPER MILLS 2017-18 Annual Report Analysis (Annual Result Update)

Apr 2, 2019 | Updated on Apr 2, 2019

Here's an analysis of the annual report of WEST COAST PAPER MILLS for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of WEST COAST PAPER MILLS. Also includes updates on the valuation of WEST COAST PAPER MILLS.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

COMPARE COMPANY

MARKET STATS