Alok Industries (ALOKINDS) Q4 14/15 earnings summary

Executive summary

• 18-month period ended Mar 31, 2015: consolidated net sales rose 12.79% to ₹24,153.06 crore, while operating EBITDA was nearly flat at ₹5,636.55 crore; higher finance costs weighed on profit.

• Operations shifted toward sweating existing assets, improving ROCE, controlling costs and working capital, growing exports, and reducing debt.

• Standalone accounts received an unqualified audit opinion; consolidated accounts received a qualified opinion related to unaudited financial information from six subsidiaries and an associate.

Financial highlights

• Consolidated operating EBITDA was ₹5,636.55 crore, down 0.15% YoY; operating EBIT was ₹4,114.77 crore, down 2.65%.

• Consolidated operating PBT fell 57.40% to ₹602.05 crore; PBT was ₹471.05 crore and reported net profit after minority interest was ₹258.26 crore versus ₹296.72 crore.

• Standalone net sales rose 11.11% to ₹22,130.72 crore; operating EBITDA fell 8.61% to ₹5,270.41 crore and PAT fell to ₹348.76 crore from ₹920.16 crore.

• Consolidated material costs rose 30.10% to ₹15,897.32 crore, reaching 66.10% of sales versus 57.31%; operating EBITDA margin eased to 23.44% from 26.47%.

• Both the current and preceding periods covered 18 months; the period-end change to March 31 means figures are not strictly comparable.

Outlook and guidance

• Next-FY focus: expand exports with shorter cash cycles, increase higher-margin in-house domestic production, trim costs and continue deleveraging; performance was expected to align with the long-term plan.

• Export advances under the EPBG scheme were expected to lower finance costs, with initial-year savings estimated at USD 100 million; full scheme completion was targeted for Aug/Sep 2015.

• Demand prospects were seen improving with a US recovery, gradual Indian economic traction and global sourcing shifts toward India; lower oil prices could reduce polyester input costs.