Interloop: 1QFY23 – result above expectations

Interloop Limited (ILP) recorded earnings of Rs4.96bn (EPS: Rs5.31) in 1QFY23 compared to earnings of Rs2.69bn in 1QFY22 (EPS: Rs2.88). Earnings however, declined by 7% QoQ which stood at Rs5.36bn (EPS: Rs5.74) in 4QFY22.

Gross Margins recorded at 33.2%, almost flat QoQ, however increased on YoY basis from 28.6% recorded in 1QFY22. The YoY increase in gross margins is due to inventory gains.

Sales during the period clocked in at Rs30.46bn, up by 58% YoY due to increased utilization levels of both Hoisery & Denim segments. According to the management Denim segment was operating at full capacity and Hoisery at 85% utilization levels. Besides this, exchange gain contribution in revenue was approximately Rs3bn.

Cost of sales increased by 48% YoY to Rs20.35bn due to (i) increased cotton prices in local and international market and (ii) higher depreciation expense on account of Hosiery Plant-V and Apparel expansions.

Distribution expenses increased by 42% YoY and 21% QoQ to Rs1.15bn. Distribution expenses as a percentage of sales stood at 3.8% compared to 3.1% in 1QFY22.

Administrative expenses increased by 67% YoY to Rs1.6bn due to increasing inflationary pressures, and expansion.

Finance cost also saw strong increase of 238% YoY and 35% QoQ amid higher borrowing and higher interest rates.

Effective tax rate of ILP clocked in at 6.5% in 1QFY23 compared to 5.8% in 1QFY22 and 8.8% in 4QFY22.

Courtesy – Topline Securities


Posted in Textile Industry.

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