Earnings Decline At Icici

As a result, with a mere 5.24 per cent jump in operating profit, margins at the operational level dipped from 24.48 per cent to 21.14 per cent. The earnings per share has also declined from Rs 17.57 (annualised) to Rs 13.41.

The recent GDR issue which resulted in an equity dilution of 32 per cent has also played a major role in the erosion of the earnings per share. As a result of higher interest rates, cost of funds increased from 11.44 per cent during 1995-96 to 11.95 per cent in the first half of 1996-97.

Disbursements have shown an improving trend, especially if one compares this with the growth achieved in 1995-96. At Rs 4,544 crore, disbursements posted an increase of 39 per cent over Rs 3,266 crore during the corresponding period in the previous year.

 

The total assets increased from Rs 23,529 crore as on March 1996 to Rs 26,932 crore on September 20, 1996, representing an annualised growth of 29 per cent. However, due to change in the norms for income recognition, asset classification, provisioning and valuation of investments, the results of the first half are not comparable with previous years first half.

Since the credit policy is expected to have some positive impact on the cost of funds, one can expect some improvement in ICICIs performance. This could also be good for the stock because the management has no plans for further equity dilutions in the near future. Instead, the company will be raising more debt, probably from international markets.