• OUTLOOK ARENA
  • VIEWS ON NEWS
  • OCTOBER 11, 2002

BILT: Repeating 4QFY02

Similar to fourth quarter performance, Ballarpur Industries Ltd. (BILT) has registered a flat topline but sizable bottomline growth. Post tax profits have been lifted primarily by improvement in operating profit, lower interest expense and reduced deferred tax liability. As per reports, international paper industry is experiencing improvement in realisations.

(Rs m)1QFY021QFY03Change
Net Sales 3,548 3,573 0.7%
Other Income 16 16 -1.9%
Expenditure 2,787 2,776 -0.4%
Operating Profit (EBDIT) 761 797 4.7%
Operating Profit Margin (%)21.5%22.3% 
Interest 321 272 -15.1%
Depreciation 194 218 12.3%
Profit before Tax26332322.7%
Extraordinary items (12) (11) 
Tax 115 100 -13.6%
Profit after Tax/(Loss) 136 212 55.7%
Net profit margin (%)3.8%5.9% 
No. of Shares 71.6 128.5  
Diluted earnings per share*4.26.6 
P/E Ratio  6.2  
(*annualised)   

Over the past two years, the company has undergone restructuring and emerged a more focused player. The efforts are reflected in financial performance. Over the same period ending FY02, sales have almost doubled and profits have risen from Rs 161 m to Rs 1 bn. We reckon, for quarter ended September '02, improvement to topline is likely to have materialized from better realisations. As per reports, year-to-date, the industry has initiated price hikes. The increase is likely to have been in the branded paper segment. At the end of last fiscal, the company has guided improvement in realisations & volumes.

Key operating expense heads across the board have declined YoY, which seems to suggest reduced production and better operating efficiency. Volume sales are likely to have been maintained through de-stocking. The 80 basis points improvement in operating margins could be driven by better realisations and inventory de-stocking. The company has implemented an ERP system, which is likely to streamline working capital cycle. A reflection of the same could be the impact on interest expense. Having said that, the company has re-financed debt to benefit from lower interest rates.

Continuing with re-structuring, the company is in the process of amalgamating subsidiary company, Bilt Paper Graphics Ltd. (BPGL), erstwhile Sinar Mas. The proposed amalgamation ratio is 1 share of BILT for every 17 shares in BPGL. In FY01, BILT acquired Sinar Mas for an estimated Rs 5.2 bn to emerge the leading paper company in the country. Sinar Mas gave the company leadership position in the coated paper business. Also, corroborating on-the-road trends, the company has leadership position in the premium executive bond segment under 'Royal' brand. That said, as per reports, leading competitor, J.K Paper Ltd. is also increasing focus on the branded paper segments, which is likely to heat up competition. Marketing activity is likely to be focused on branded paper, with the segment registering double digit growth.

In FY02, the company made a rights issue, raising Rs 2.2 bn through a mix of equity and 9.5% fully convertible debentures. Consequently, the share capital has increased. At Rs 41, the scrip is trading on a multiple of 6.2x 1QFY03 annualised earnings.

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst)
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407