Sunday, June 21, 2009


Paper division acts as a drag...

Orient Paper has reported a YoY revenue growth of 23.1% to Rs 467 crore. The EBITDA margin has improved by 150 bps due to improvement in margin in the electrical consumer durables division. The adjusted net profit has grown by 24.6% YoY to Rs 66.7 crore.

Highlight of the quarter
Net sales grew 23.1% YoY to Rs 467 crore in Q4FY09 from Rs 379.3 crore in Q4FY08. This was due to increase in revenues from the cement, paper and electrical consumer durables divisions. The EBITDA margin improved by 150 bps YoY to 25.2% due to improvement in margins in the electrical consumer durables division. Other income grew 331% YoY to Rs14.6 crore due to income from carbon credit of Rs 8 crore. The reported net profit has increased by 14.1% YoY to Rs 54.9 crore. During the quarter, the company has written off dues from the Kenyan JV and made a provision for water tax for the earlier year. Thus, adjusted net profit has grown by 24.6% to Rs 66.7 crore. On a QoQ basis, net sales grew 35%. The EBIDTA margin has improved by 40 bps to 25.2%. The reported and adjusted net profit has grown by 7.2% and 30.1%, respectively.

At the CMP of Rs 57 per share, the stock is trading at 4.5x and 4.6x its FY10E and FY11E earnings, respectively. We are assigning a PERFORMER rating to the stock with a price target of Rs 66 per share.

Segmental results


The cement division has reported revenue growth of 20.9% YoY to Rs 233.5 crore. Cement dispatches grew 13.8% YoY to 7.5 lakh tonnes while realisation improved by 6.2% YoY to Rs 3132 per tonne. The EBIT margin has remained almost flat at 39.9%. Due to growth in revenue, the EBIT has reported growth of 20% YoY to Rs 93.1 crore.

The paper division has reported revenue growth of 51.4% YoY to Rs 91 crore. However, due to the disturbed pulp mill operations division, Paper division has reported a loss of Rs 0.2 crore in Q4FY09 as compared to profit of Rs 1.4 crore in Q4FY08.

Electrical consumer durables

The electrical consumer durables division has reported revenue growth of 13.7% to Rs 142.5 crore due to incremental revenue from the CFL business. The EBIT margin has improved by 600 bps on account of a decline in metal prices. Thus, EBIT has surged by 76.4% YoY to Rs 23.9 crore.

To see full report: ORIENT PAPER & INDUSTRIES