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Ballarpur Industries FY08 Results - Concall Notes

Keynote Capitals presents the highlights of their analysis note on the FY08 (June 2008) results concall of Ballarpur Industries Ltd., a leading paper manufacturer with market cap of Rs1836Cr ($419mn).

Key takeaways

- On a full year basis (y-o-y), topline and bottomline were up by 19.9% and 17.2% respectively. EBITDA margin remained flat at 24.7%. Topline growth was attributable largely to price hikes, with slim volume growth in paper & pulp of 3%. Pulp and paper sales grew by 31% and 19.6% respectively.

- On a quarterly basis (y-o-y), revenues and PAT were up by 13.2% and 0.3% respectively. EBITDA margin declined by 210bps. BILT’s operations at Sabah, Malaysia was affected due to rising crude prices.

- On sequential quarter basis (q-o-q), revenue growth was slimmer, at 13.0% whereas PAT declined by 6.5%. Topline growth was attributable to timber sales, which however being a low-margin product impacted overall margins by as much as 490 bps. Timber sales are peculiar to the June quarter. BILT does not expect any significant impact in revenues and margins from timber sales in coming quarters.

- The excise duty charged on a full year basis declined from 8.2% to 6.4%.

- It declared a dividend of 35%, translating into a payout ratio of around 15%.

Capex Plans

Phase 1

- $450mn (Rs14bn) capex planned over next 2 years to increase paper capacity by 400,000 tons, and additional pulp capacity of 70,000 tons at its Indian and Malaysian plants.

- Expansion plans at Bhigwan and Ballarpur units are on schedule. The recently acquired SFI has been integrated with BILT.

- Funding for the capex has been tied up through debt and internal accruals. Additional debt of Rs100Cr would also be taken. There are no equity dilution plans.

Phase 2

- To set-up a pulp capacity of 1mn tpa in 7 years.

Outlook

- Revenue guidance of around Rs5250Cr ($1.2bn) for FY10 (1mn tonnes of pulp and paper).

- It has recently opened retail stores in Gurgaon. By Dec. 2008, it plans to open 2 additional retail stores. It expects revenues of Rs 3.5bn in FY10 from the office supplies and stationery segment.

Valuation

It trades at a p/e of 6.1x FY08.