Higher paper volumes and operational efficiency improve numbers
The consolidated operating profit grew 34.2 per cent to Rs 179.6 crore and adjusted net sales grew 24.1 per cent y-o-y to Rs 657.7 crore, during the quarter. The company's consolidated results include the financials of Sabah Forest Industries in Malaysia from March 16, 2007. Ballarpur Paper Holdings (BPH), where the company has an 80 per cent stake, owns 98 per cent in Sabah Forest. The consolidated operating profit margin grew 200 basis points on a yearly basis to 27.3 per cent. The standalone operating profit margin also went up 210 basis points year on year to 27.3 per cent in the September 2007 quarter. Rival JK Paper's operating profit margin also expanded 145 basis points y-o-y to 21.3 per cent in the September quarter. Meanwhile, Bilt's consolidated sales in the September 2007 quarter stood at 144,131 tonnes compared with 111,760 tonnes a year earlier, point out analysts. |
The realisations were estimated at Rs 39,071 per tonne in the last quarter, a marginal fall on a y-o-y basis. |
The company announced a restructuring plan in July 2007, involving the transfer of three manufacturing units to a separate company called Bilt Graphic Paper Products, which will be transferred to BPH after receiving the court's approval. |
Ballarpur will receive Rs 1,950 crore from BPH, of which Rs 940 crore is to be used for buying back shares and the remaining will go into retiring debt. BPH will raise the money through equity and debt. |
Bilt will thus transfer the capital-intensive commodity business to BPH and focus on the speciality and consumer products business. |
The restructuring will result in Bilt going lean on both assets and liabilities, while BPH will be able to attract investments and scale up faster, and even list abroad. At a price of Rs 159, the stock of Bilt trades at a reasonable 11.4 times trailing 12-months earnings, given the strong demand for paper products in the medium term. |
Adlabs Films: Dull colours |
The profit after tax was flat at Rs 20.3 crore, thanks primarily to an operating loss in the company's film production and distribution business. The film processing business continues to grow at a steady pace, but the performance of exhibition division was a trifle disappointing. While revenues rose by a strong 71 per cent to Rs 40.6 crore, the operating profit remained flat, on a consolidated basis. The numbers from the film production and distribution business were even more disappointing. While here too the company posted strong revenues of Rs 82.7 crore, an increase of 316 per cent y-o-y, the weak response to some of the releases resulted in the division turning in an operating loss of Rs 2.6 crore. At the current price of Rs 945, the stock trades at an expensive 45 times FY08 estimated earnings and just under 38 times FY09 earnings. The prospects for all businesses appear undoubtedly bright. There is some amount of de-risking, with the share of the processing business declining by 15 per cent in the September quarter compared with 32 per cent in September 2006. |
While buoyant outlook is pushing the stock price higher - it gained nearly 7 per cent on Wednesday while the broad market was down "" valuations are demanding. |
With contributions from Amriteshwar Mathur and Shobhana Subramanian |