APAR Industries (APARINDS) Q4 06/07 earnings summary

Executive summary

• FY 2006-07 consolidated sales rose 36.12% to Rs. 15,141.44 million; EBITDA increased 32.61% to Rs. 1,115.71 million, while PAT grew 15.91% to Rs. 485.21 million.

• Top-line growth exceeded the 25–30% target; PAT growth was below the 20% estimate, affected by higher taxes and deliberate speciality-oil price reductions.

Financial highlights

• Consolidated PBT before exceptional items rose to Rs. 691.24 million from Rs. 545.50 million; exceptional items were Rs. 38.45 million.

• Exports increased to Rs. 3,174 million from Rs. 1,956 million; exports represented 20.96% of revenue, versus 17.58% in FY 2005-06.

• Basic EPS increased 11.49% to Rs. 15.53; diluted EPS rose 7.75% to Rs. 15.01.

• Operating and other expenses fell 55 bps as a share of total income to 93.11%; raw materials were 92.49% of operating costs and rose 39.74% in value.

Outlook and guidance

• FY 2007-08 revenue growth targets: conductors 25–30% and speciality oils 20%; overall revenue target of Rs. 22 billion by 2010.

• Conductor orders were expected to improve from September 2007 as delayed tenders moved forward; installed capacity was expanded 25% ahead of anticipated demand.

• Speciality oils outlook was supported by major users' 6–10-year order coverage and plans to expand sales in Africa; polymer demand prospects were tied to automotive and industrial growth.

• Planned conductor capacity rises from 55,000 MT in FY 2007 to 65,000 MT in FY 2008 and 75,000 MT in FY 2009; capacity was planned to double by 2012.