Inox

As far as the growth is concerned, sales grew by 19.62 per cent, much lower than previous years 25 per cent. Slowdown in demand for companys products has been the prime reason.

Net profit fell mainly due to rising interest burden, drop in other income, higher depreciation and a huge tax burden. While interest, lease rent and hire purchase costs have risen by 28 per cent to Rs 13.47 crore on account of higher borrowings and high rates of interest, Inox provided Rs 2.25 crore for taxation. During 1995-96, it had provided Rs 0.10 crore for tax.

The results have failed to have any impact on the stock price, which has been hovering in the range of Rs 80-90 for the last five months. Based on the latest earnings, the stock gets a discounting of 5.19.

 

The fact that Inox failed to keep its promise could be the main reason for low discounting, apart from wrong pricing at the time of its public issue. Presently, the stock is available at 60 per cent discount to its offer price.

The decision to merge SMS Udyog also seems to have affected the sentiment badly. SMS Udyog is closely held by the promoters of Inox and produces industrial gases. As a result of the amalgamation, the promoters' holding in Inox would increase from 72.12 per cent to 74.51 per cent. Since demand for companys products is yet to show any major improvement, and equity would increase on account of the merger, earnings per share in the current year is expected to come under pressure.