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Monday, April 27, 2009

Essel Propack Ltd:-Switch to better bets

Scripscan:Essel Propack Ltd
cmp:47
Traded in:Nse-bse

Story:Essel Propack, which declared its consolidated audited results, reported a loss of Rs 82 crore for the year ended December 2008 compared to net profit of Rs 65 crore in the previous year. However, a closer look shows stable operating performance and pick-up in sales. Sales growth stood at 8% and core operating costs rose by about 10% for the full year. However, the PBDIT declined by 37% due to a contraction in other income from Rs 25.6 crore to Rs 5.8 crore.All non-operational costs saw a significant increase, with the interest costs going up 27% to Rs 62 crore and depreciation more than doubling to Rs 112. Depreciation had come down in FY07 over FY06 due to a change in the computation method. Costs ballooned further with booking of extraordinary expense of Rs 51 crore as mark to market (MTM) losses. And with taxes going up by 69% to Rs.34.6 crore, the company ended up with a loss of Rs 82 against profits of Rs 65 crore in the previous year. The company has been awarding lower dividends due to poor profitability. In the past three years, the dividend payout has shrunk by one-fourth.Essel Propack operates in four segments, serving the regions of Africa and South Asia (AMESA), East Asia (EAP), America and Europe. America registered the maximum sales growth of 29%, whereas Europe showed the maximum decline of 28%. Aided by the sales growth, America recorded a profit of Rs 13 crore, up from 0.16 crore in the previous year. The losses for Europe went up from Rs 17 crore to Rs 92 crore. The other segments showed average sales growth, although AMESA recorded a marginal profit decline of 3%. EAP is the other profitable segment for the company, accounting for a profit margin of almost 34%. Despite the record profit growth, America still has a margin of only 3%.The economic uncertainty in America and Western Europe led to slowdown in the company's performance. But as the company caters to the needs of FMCG and pharma sectors, which have not been impacted much by the financial meltdown; it is expected to see a faster revival.This is borne out by the sales growth in the December quarter.Exit and switch to better growth oriented bets.


Latest update on 29th july 2013:Expects PAT of north of Rs 100 crore for FY'14.Stock looks good,keep holding and buy more at declines

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