The net
revenues grew by 5.7% year on year (yoy) to Rs201 crore despite
the discontinuation of the surfactant businesses
(Uniqema).
The sales from
the continuing businesses (ie paints and chemicals) have shown a
growth of 23%. The paint business grew by 26% yoy to Rs170 crore.
The continued chemical business grew by 13% yoy to Rs31
crore.
The profit
before interest and tax (PBIT) from the continued businesses grew
by 51% in the quarter under review on the back of improved PBIT
margin of both the businesses. The PBIT in the paint business grew
by 67% yoy with a 170-basis-point expansion in the margin. The
PBIT in the residual chemical business grew by 11.5% yoy with an
20-basis-point expansion in the margin.
The overall
operating profit (including all businesses) dropped by 10% yoy
with a 150-basis-point contraction in the operating profit margin
(OPM).
With a higher
other income (due to a dividend income of Rs31 crore) and stable
depreciation, the net profit grew by 20% yoy to Rs12.7
crore.
ICI India's
Q4FY2007 net profit (adjusted for extraordinary items and taxes)
at Rs12.7 crore was slightly below our expectations. The net
profit grew by 20% yoy.
The company
has announced that it would be utilising Rs210 crore to buy back
its own shares from the minority shareholders at a price not
exceeding Rs575 per share through market operations.
Taking into
account the sell-off of Quest International and the auto refinish
business, we are also introducing our FY2009 numbers. At the
current market price of Rs520, the stock trades at 18x its FY2008E
EPS of Rs29 and 15.7x its FY2009E EPS of Rs33. In view of the cash
per share of Rs202 and 21x FY2008 core earnings per share (EPS) of
Rs18, we have revised upward our price target to Rs581. We
maintain our Buy recommendation on the stock.
