New Delhi, June 18: The proposed 40 per cent dividend on the back of a 152 per cent rise in net profit by Oswal Chemicals and Fertilisers Ltd (OCFL) during fiscal 1998 translates into a clean 20 per cent yield at the current stock price of Rs 20 on the Bombay Stock Exchange (BSE). If we consider the record date to be three months hence (which is yet to be fixed and could even be earlier), the yield on investemnts in the scrip at the current price works out to at least 80 per cent per annum.The market appears to have expected a phenomenal rise in net profit. The overall market volatility notwithstanding, the OCFL scrip on BSE has been on the rise since June 8. From a level of Rs 15 the scrip, within nine trading sessions, had risen to Rs 21 on June 17. After the results were announced, corrections set in to push it down to Rs 20.
The company's impressive performance was due to higher capacity utilisation of 128 per cent at its Shahjahanpur unit during the year. For the fiscal 1998, OCFL has earned a netprofit of Rs 95.82 crore (up Rs 57.76 crore) from a total income of Rs 743.61 crore (up Rs 60.16 crore). While its total income was only 9 per cent higher than the previous fiscal's Rs 683.45 crore, its net profit spurted 152 per cent over the previous fiscal's Rs 38.06 crore.
On an equity base of Rs 227.41 crore, OCFL's earnings per share works out to Rs 4.21. Given the company's Rs 479.46 crore reserves, the book value stands at Rs 31.08. At the current stock price of Rs 20, the EPS of Rs 4.21 gives a price-earnings multiple of 4.75 and a price-to-book value ratio of 0.64.The company's cash profit (gross profit before depreciation and taxation) rose by 20 per cent to Rs 287.78 crore from Rs 240.57 crore in the previous fiscal. Although the company's total income had grown by 9 per cent, the rise in total expenditure during fiscal 1998 went up by only 5.5 per cent to Rs 360.01 crore from the earlier Rs 341.13 crore.
Also OCFL's interest outgo and depreciation provisions were lower than that incurredduring fiscal 1997. At Rs 95.82 crore, the company's interest outgo was 5.8 per cent lower than the Rs 101.75 crore incurred the previous fiscal. During fiscal 1998, OCFL's depreciation provisions declined by 9 per cent to Rs 187.68 crore from the fiscal 1997 figure of Rs 202.51 crore.
During the next two yeras, OCFL has planned to an Rs 7,000 crore expansion project. The expansion will be to set up a Rs 1,803 crore phosphatic fertiliser complex at Paradeep and a Rs 5,150 crore coal based ammonia/urea plant at Talcher, both in Orissa. The entire project will be funded through debt and internal accurals in the ratio of 2:1.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
