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Company Report

Indian Rayon and Industries

Indian Rayon’s first quarter performance is a mix of effective cost cutting and a higher other income. Total income at Rs 341.84 crore (Rs 366.34 crore) was down 7 per cent from the year-ago period. Against this, its total cost was down 9 per cent from the corresponding previous period at Rs 320.28 crore (Rs 351.22 crore), resulting in a 43 per cent year-on-year growth in net profit.

At Rs 339 crore (Rs 365.28 crore) the income from operations was down 7 per cent YoY. The company has de-merged its insulators business last year. Excluding insulators net sales were up by just about 1 per cent YoY at Rs 325.50 crore (Rs 321.28 crore). Garments division has performed well with sales rising by a fairly decent 14 per cent over last year to Rs 89.20 crore (Rs 78.40 crore). Textiles followed suit with 8 per cent rise in turnover. Surprisingly, the carbon black and VFY divisions have suffered with sales declining by 2 per cent and 16 per cent, respectively.

Operational cost at Rs 288.48 crore (Rs 308.66 crore) was down 7 per cent. Stock rationalisation and a 13 per cent saving in staff cost has seen the overall operational cost decline despite an 8 per cent increase in the raw material consumption and a 44 per cent rise in royalty payments.

Lower revenues led to shrinking margins. Operating profit at Rs 50.52 crore (Rs 56.62 crore) was down 11 per cent from the same period last year.

Better treasury operations have seen other income rise by a healthy 168 per cent over the same period last year to Rs 2.84 crore (Rs 1.06 crore). Further consolidation came in the form of a 66 per cent fall in interest cost which stood at Rs 4.34 crore (Rs 12.95 crore). Depreciation was almost flat.

Indian Rayon’s PBDIT (excluding royalty) was down 6 per cent from the year-ago period at Rs 55.80 crore (Rs 59.30 crore). Tax provision at Rs 8.94 crore (Rs 11.10 crore) was down 19 per cent YoY. Net profit was up 43 per cent at Rs 21.56 crore (Rs 15.12 crore).

The garments division has reported a 24 per cent increase in volumes and a 14 per cent increase in sales at Rs 89.20 crore (Rs 78.40 crore). Turnover was up by 24 per cent and control over advertisement spend led to a significantly higher profit.

The stock currently trading at Rs 168 discounts its June quarter annualised EPS of Rs 14.40 by 12 times.

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