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JK Paper – Performance Sliding

June 27, 2008

JK Paper reported Q3FY08 results. Net revenues increased by 17.8% YoY / 7.1% QoQ to Rs 2.2 bn. EBITDA margins declined sharply by 530 bps YoY / 240 bps to 15.2%, as against consensus expectations of 18%.

Increase in raw material by 54.9% YoY and 60.2%YoY increase in power and fuel cost put pressure on margins. Raw material as percentage of sales for the quarter was 27.1% (20.6% previous year) and power and fuel was 10.7% (7.9% previous year). As a result, EBITDA was down by 12.4%YoY / -7.6% QoQ to Rs 336 mn (we expected Rs 383 mn). Higher other income of Rs 52 mn as against mere Rs 2 mn previous year supported financials. Commissioning of new packaging plant led to increase in depreciation and interest charge. Depreciation increased by 35.7% YoY to Rs 170 mn while interest increased by 83.8% to Rs 143 mn. As a result PBT declined by 58.3% to Rs 76 mn.

Company on fully diluted basis reported EPS of Rs 2.0 as against Rs 1.5 previous year.

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